Monster Loans, Lend Tech Loans, and Student Loan Debt Relief Companies

Agency: Consumer Financial Protection Bureau
Date: Jan. 9, 2020
Type: enforcement action
Source: consumerfinance.gov/enforcement/actions/monster-loans-lend-tech-loans-
Pages: 312
PDFs: 14 documents (links below)

Documents in this case

Complaint · Jan. 2020 · 33 p.
Stipulation · May 2020 · 23 p.
Stipulation · July 2020 · 18 p.
Amended complaint · July 2020 · 42 p.
Amended complaint · Aug. 2020 · 44 p.
Stipulation · Oct. 2020 · 7 p.
Judgment · May 2021 · 12 p.
Stipulation · May 2021 · 19 p.
Stipulation · May 2021 · 18 p.
Judgment · May 2021 · 18 p.
Stipulation · May 2021 · 19 p.
Stipulation · May 2021 · 11 p.
Judgment · Sept. 2021 · 39 p.
Memorandum · Dec. 2022 · 8 p.

Case summary

Monster Loans, Lend Tech Loans, and Associated Student Loan Debt-Relief Companies

On January 9, 2020, the Bureau filed a lawsuit against Chou Team Realty, LLC f/k/a Chou Team Realty, Inc., d/b/a MonsterLoans, d/b/a Monster Loans;Lend Tech Loans, Inc.; Docu Prep Center, Inc., d/b/a DocuPrep Center, d/b/a Certified Document Center; Document Preparation Services, LP, d/b/a DocuPrep Center, d/b/a Certified Document Center; Certified Doc Prep, Inc.; Certified Doc Prep Services, LP; Assure Direct Services, Inc.; Assure Direct Services, LP; Direct Document Solutions, Inc.; Direct Document Solutions, LP; Secure Preparation Services, Inc.; Secure Preparation Services, LP; Docs Done Right, Inc.; Docs Done Right, LP; Cre8labs, Inc.; XO Media, LLC; TDK Enterprises, LLC; Bilal Abdelfattah a/k/a Belal Abdelfattah a/k/a Bill Abdel (“Bill Abdel”); Thomas “Tom” Chou; Sean Cowell; Robert Hoose; Kenneth Lawson; Eduardo “Ed” Martinez; Jawad Nesheiwat; Frank Anthony Sebreros; and David Sklar. The Bureau alleged that many of the defendants violated the Fair Credit Reporting Act (FCRA) by wrongfully obtaining consumer report information and that, in connection with the marketing and sale of student loan debt relief products and services, certain defendants charged unlawful advance fees and engaged in deceptive acts and practices. The complaint also alleged that certain entities and individuals are liable as relief defendants because they received profits resulting from the illegal conduct.

On May 14, 2020, the Bureau, and Chou Team Realty, LLC, Thomas Chou, TDK Enterprises, LLC, Cre8labs, Inc., and Sean Cowell moved for entry of a stipulated final judgment, which the court entered the same day and which resolves the Bureau’s claims against those defendants and relief defendants. The judgment imposes an $18 million redress judgment against Monster Loans, bans Monster Loans, Chou, and Cowell from the debt-relief industry, and imposes a total $450,001 civil money penalty against them.

On July 7, 2020, the court approved a stipulated final judgment between the Bureau and Robert Hoose, which resolves the Bureau’s claims against him. The judgment imposes a $7 million redress judgment against Hoose, bans him from the debt-relief industry, and imposes a $1 civil money penalty against him.

On July 10, 2020, the Bureau filed a first amended complaint adding factual allegations regarding certain defendants. On July 30, 2020, the Bureau moved for leave to file a second amended complaint adding claims against certain defendants. The court granted that motion in August 2020, and on August 26, 2020, the Bureau filed a second amended complaint.

On October 19, 2020, the court approved a stipulated final judgment between the Bureau and relief defendants Kenneth Lawson and XO Media, LLC, which resolves the Bureau’s claim against them. The judgment imposes a $200,000 redress judgment against Lawson and XO Media, LLC.

On May 4, 2021, the court entered stipulated final judgments against Lend Tech Loans, Inc. and David Sklar, which resolve the Bureau’s claims against them. The judgment as to Lend Tech Loans requires it to dissolve and cease to exist as a corporate entity, bans it from offering or providing any consumer financial product or service, and imposes a $1 civil money penalty against it, based on its limited ability to pay. The judgment as to Sklar imposes a $7 million redress judgment against him, full payment of which is suspended based upon his limited ability to pay upon his payment of $3,000 to the Bureau; it also bans him from the debt-relief industry and from telemarketing consumer financial products or services and imposes a $1 civil money penalty against him.

On May 7, 2021, the court entered a default judgment in favor of the Bureau and against the following student loan debt relief companies: Docu Prep Center, Inc., d/b/a DocuPrep Center, d/b/a Certified Document Center; Document Preparation Services, LP, d/b/a DocuPrep Center, d/b/a Certified Document Center; Certified Doc Prep, Inc.; Certified Doc Prep Services, LP; Assure Direct Services, Inc.; Assure Direct Services, LP; Direct Document Solutions, Inc.; Direct Document Solutions, LP; Secure Preparation Services, Inc.; and Secure Preparation Services, LP. The default judgment imposes redress judgments against the companies that collectively total $19,699,869 and civil penalties against the companies that collectively total $11,382,136. The default judgment also bans the companies from the debt relief industry.

On May 7, 2021, the court entered a default judgment against Bilal Abdelfattah a/k/a Belal Abdelfattah a/k/a Bill Abdel (“Abdel”) in favor of the Bureau. The judgment imposes a civil penalty of $3,262,244 against Abdel and bans him from the debt-relief industry.

On May 11, 2021, the court entered a stipulated final judgment against Docs Done Right, Inc., Docs Done Right, LP (collectively, “Docs Done Right”), and Eduardo Martinez, which resolves the Bureau’s claims against them. The judgment imposes an $18 million redress judgment against Martinez and Docs Done Right, full payment of which is suspended based on their limited ability to pay upon their payment of the ordered penalty, bans them from the debt-relief industry, and imposes a $125,000 civil money penalty against them.

On May 11, 2021, the court entered a stipulated final judgment against Frank Anthony Sebreros, which resolves the Bureau’s claims against him. The judgment imposes a $3,404,455 redress judgment against Sebreros, full payment of which is suspended based on his limited ability to pay upon his payment of $35,000; it also bans him from the debt relief industry and from telemarketing consumer financial products or services, and imposes a $1 civil money penalty against him.

On August 10, 2021, the district court granted in full the Bureau’s Motion for Summary Judgment against Jawad Nesheiwat, the sole remaining defendant at that time. The court found Nesheiwat was liable for violating FCRA, the TSR advance fee ban, the TSR and CFPA prohibitions on deceptive practices and substantially assisting violations, and §1036(a)(1)(A). The court found the Bureau was entitled to injunctive relief, restitution, and civil money penalties, although it did not determine those amounts in the opinion. On September 23, 2021, the court entered a judgment and order against Nesheiwat imposing a judgment of nearly $20 million in consumer redress, a $20 million civil money penalty, and injunctive relief including permanent bans from the debt-relief and mortgage industries, from using consumer reports for business purposes, and from telemarketing consumer financial products and services. On September 25, 2021, Nesheiwat appealed the judgment against him. On December 27, 2022, the Ninth Circuit affirmed the district court’s grant of summary judgment and award of restitution, civil penalties, and injunctive relief to the Bureau. Defendant Nesheiwat filed a petition for en banc review, which the Ninth Circuit denied on February 23, 2023.

Complaint (Jan. 2020)

PDF of this document (33 pages)

Page 2

COMPLAINT

E. VANESSA ASSAE-BILLE (NY Bar #5165501) (Pro hac vice application pending) E-mail: [email protected] Phone: (202) 435-7688 COLIN REARDON (NY Bar #4945655) (Pro hac vice application pending) E-mail: [email protected] Phone: (202) 435-9668 1700 G Street, NW Washington, D.C. 20552 Fax: (202) 435-5471

LEANNE E. HARTMANN (CA Bar #264787) – Local Counsel E-mail: [email protected] Phone: (415) 844-9787 301 Howard St., Suite 1200 San Francisco, CA 94105 Fax: (415) 844-9788

Attorneys for Plaintiff Bureau of Consumer Financial Protection

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Bureau of Consumer Financial Protection,

Plaintiff,

vs.

Chou Team Realty, LLC f/k/a Chou Team Realty, Inc., d/b/a Monster Loans, d/b/a MonsterLoans; Lend Tech Loans, Inc.; Docu Prep Center, Inc., d/b/a DocuPrep Center, d/b/a Certified Document Center; Document Preparation Services, LP, d/b/a DocuPrep Center, d/b/a Certified Document Center; Certified Doc Prep, Inc.; Certified Doc Prep Services, LP; Assure Direct Services, Inc.; Assure Direct Services, LP; Direct Document Solutions, Inc.; Direct Document Solutions, LP; Secure Preparation Services, Inc.; Secure Preparation Services, LP; Docs Done Right, Inc.; Docs Done Right, LP; Bilal Abdelfattah, a/k/a Belal Abdelfattah, a/k/a Bill Abdel; Robert Hoose; Eduardo “Ed” Martinez; Jawad Nesheiwat; Frank Anthony Sebreros; and David Sklar,

Defendants,

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Case No.:

COMPLAINT Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 1 of 33 Page ID #:1

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COMPLAINT

Thomas “Tom” Chou; and Sean Cowell,

Defendants and Relief Defendants,

Kenneth Lawson; Cre8labs, Inc.; XO Media, LLC; and TDK Enterprises, LLC,

Relief Defendants.

) ) ) ) ) ) ) ) ) ) ) JURISDICTION AND VENUE 1.

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

Venue is proper in this district because Defendants and Relief Defendants are located, reside, or do business in this district. 12 U.S.C. § 5564(f).

INTRODUCTION 3.

The Bureau of Consumer Financial Protection (Bureau) brings this action to address unlawful conduct by several companies and individuals in connection with providing debt-relief services to consumers with student loans. 4.

Between 2015 and 2017, a mortgage company known as Monster Loans unlawfully obtained consumer reports from the consumer-reporting agency Experian. Monster Loans provided the reports to other companies that used the reports to market debt-relief services to consumers with student loans. From August 2017 through at least January 2019, a sham entity known as Lend Tech also unlawfully obtained consumer reports from Experian and provided them to other companies, including companies that used the lists to market student-loan debt-relief services.

Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 2 of 33 Page ID #:2

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COMPLAINT 5.

In direct-mailings and in telemarketing-sales calls, certain of these debt-relief companies represented to consumers that: (1) the consumers would obtain lower interest rates by consolidating their federal student loans, (2) the consumers would improve their credit scores by consolidating their loans, and (3) the United States Department of Education (ED) would become the “new servicer” on their loans. All of this was false. 6.

Additionally, several of these companies unlawfully charged and collected their fees before consumers’ applications for loan consolidations, loan repayment plans, and loan forgiveness plans were approved and before consumers made payments under the altered terms of their student loans. 7.

The Bureau brings this action to secure injunctive relief to stop Defendants’ unlawful conduct, to obtain redress for harmed consumers, to obtain penalties against Defendants for their violations of Federal consumer financial law, and to require Relief Defendants to disgorge profits they received due to those violations.

PLAINTIFF 8.

The Bureau is an independent agency charged with enforcing Federal consumer financial laws. 12 U.S.C. § 5491(a). The Bureau has independent litigating authority, 12 U.S.C. § 5564(a)-(b), including the authority to enforce prohibitions on unfair, deceptive, and abusive acts or practices in the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531, 5536; the Fair Credit Reporting Act, 15 U.S.C. § 1681s; and the Telemarketing Sales Rule (TSR), 16 C.F.R. Part 310, as it applies to persons subject to the CFPA, 15 U.S.C. §§ 6102(c), 6105(d). 9.

The Bureau has authority to bring civil actions against persons violating Federal consumer financial laws and to seek all appropriate legal and equitable relief, including injunctive relief, refund of monies paid, damages, Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 3 of 33 Page ID #:3

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COMPLAINT restitution, disgorgement, and civil money penalties. 12 U.S.C. §§ 5564(a), 5565(a)(2).

DEFENDANTS AND RELIEF DEFENDANTS 10.

Chou Team Realty, Inc. was a California corporation registered on July 18, 2003. Chou Team Realty, Inc. was registered and located at 3 Whatney, Irvine, CA 92618, and later moved to 25391 Commercentre Drive, Suite 200, Lake Forest, CA 92630. In March 2018, Chou Team Realty, Inc. was converted into Defendant Chou Team Realty, LLC. Chou Team Realty, LLC is a California limited-liability company registered and located at 25391 Commercentre Drive, Suite 200, Lake Forest, CA 92630. 11.

Chou Team Realty, LLC is a successor to Chou Team Realty, Inc. 12.

Chou Team Realty, Inc. and Chou Team Realty, LLC (collectively, Monster Loans) have held themselves out as doing business as Monster Loans and MonsterLoans.

13.

Since 2014, Monster Loans has operated as a mortgage lender. It is licensed in at least 30 states, including California. 14.

Defendant Lend Tech Loans, Inc. (Lend Tech) is a California corporation registered on June 15, 2017. Lend Tech has held itself out as doing business at 25391 Commercentre Drive, Suite 100, Lake Forest, CA 92630 and 1851 E. First St. #810, Santa Ana, CA 92705. 15.

Lend Tech is licensed by the California Department of Real Estate and has held itself out as doing business as a mortgage-brokerage company. 16.

Defendant Docu Prep Center, Inc. registered as a California corporation on February 3, 2015, and it has held itself out as doing business at 3 Whatney, Suite 100, Irvine, CA 92618.

17.

Defendant Document Preparation Services, LP registered as a California limited partnership on October 19, 2015, and it has held itself out as Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 4 of 33 Page ID #:4

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COMPLAINT doing business at 3 Whatney, Suite 100, Irvine, CA 92618. Docu Prep Center, Inc. was the general partner of Document Preparation Services, LP (collectively, Docu Prep Center).

18.

Docu Prep Center has held itself out as doing business as DocuPrep Center and Certified Document Center. 19.

Defendant Certified Doc Prep, Inc. registered as a California corporation on October 14, 2015, and it has held itself out as doing business at 1015 E. Imperial Highway, Unit C8, Brea, CA 92821. 20.

Defendant Certified Doc Prep Services, LP registered as a California limited partnership on October 21, 2015, and it has held itself out as doing business at 1015 E. Imperial Highway, Unit C8, Brea, CA 92821. Certified Doc Prep, Inc. was the general partner of Certified Doc Prep Services, LP (collectively, Certified Doc Prep Services). 21.

Defendant Assure Direct Services, Inc. registered as a California corporation on August 22, 2016, and it has held itself out as doing business at 23785 El Toro Road, Suite 467, Lake Forest CA 92630. 22.

Defendant Assure Direct Services, LP registered as a California corporation on August 17, 2016, and it has held itself out as doing business at 5 Oldfield, 2nd Floor, Irvine, CA 92618. Assure Direct Services, Inc. was the general partner of Assure Direct Services, LP (collectively, Assure Direct Services).

23.

Defendant Direct Document Solutions, Inc. registered as a California corporation on January 3, 2017, and it has held itself out as doing business at 23785 El Toro Road, Suite 493, Lake Forest, CA 92630. 24.

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COMPLAINT Oldfield, 2nd Floor, Irvine, CA 92618. From January 2017 to March 2018, Direct Document Solutions, Inc. was the general partner of Direct Document Solutions, LP (collectively, Direct Document Solutions). 25.

Defendant Secure Preparation Services, Inc. registered as a California corporation on January 12, 2017, and it has held itself out as doing business at 2500 E. Imperial Highway, Suite 201-396, Brea, CA 92821. 26.

Defendant Secure Preparation Services LP registered as a California limited partnership on January 12, 2017, and it has held itself out as doing business at 2500 E. Imperial Highway, Suite 201-396, Brea, CA 92821 and 5 Oldfield, 2nd Floor, Irvine, CA 92618. From January 2017 to March 2018, Secure Preparation Services, Inc., was the general partner of Secure Preparation Services, LP (collectively, Secure Preparation Services). 27.

Defendants Docu Prep Center, Certified Doc Prep Services, Assure Direct Services, Direct Document Services, and Secure Preparation Services (collectively, the Student Loan Debt Relief Companies) marketed and sold debt-relief services to consumers with federal student loans. 28.

Defendant Docs Done Right, Inc. registered as a California corporation on October 22, 2015, and it has held itself out as doing business at 895 Dove Street, 3rd Floor, Newport Beach, CA 92660. 29.

Defendant Docs Done Right, LP registered as a California limited partnership on March 8, 2016, and it has held itself out as doing business at 3 Whatney, Suite 100, Irvine, CA 92618. Docs Done Right, Inc. was the general partner of Docs Done Right, LP (collectively, Docs Done Right). 30.

Relief Defendant TDK Enterprises, LLC registered as a California limited-liability company on March 18, 2016, and it has held itself out as doing business at 3 Whatney, Suite 200, Irvine, CA 92618. Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 6 of 33 Page ID #:6

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COMPLAINT 31.

Relief Defendant Cre8labs, Inc. registered as a California corporation on April 1, 2016, and it has held itself out as doing business at 24632 La Plata Drive, Laguna Niguel, CA 92677. 32.

Relief Defendant XO Media, LLC registered as a California limited liability company on March 2, 2010, and it has held itself out as doing business at 26500 W. Agoura Road Suite 102-595, Calabasas, CA 91302. 33.

Defendant and Relief Defendant Thomas “Tom” Chou was Monster Loans’ president and owner between January 2015 and December 2017. Chou exercised substantial managerial responsibility for and control over Monster Loans’ business practices.

34.

Chou owned limited partnership interests in each of the Student Loan Debt Relief Companies. At times, Chou has held those limited partnership interests through Relief Defendant TDK Enterprises, LLC. Chou is the president and sole member of TDK Enterprises, LLC. 35.

Defendant Jawad Nesheiwat was the chief operating officer of Monster Loans between January 2015 and April 2017. Nesheiwat exercised substantial managerial responsibility for and control over Monster Loans’ business practices.

36.

Nesheiwat owned limited partnership interests in each of the Student Loan Debt Relief Companies.

37.

Nesheiwat exercised substantial managerial responsibility for and control over Docu Prep Center’s business practices, including its sales practices, marketing practices, and fees. 38.

Nesheiwat participated in the conduct of the affairs of Certified Doc Prep Services, Assure Direct Services, Direct Document Solutions, and Secure Preparation Services, including their marketing practices. Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 7 of 33 Page ID #:7

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COMPLAINT 39.

Defendant and Relief Defendant Sean Cowell co-founded Monster Loans and was its chief visionary officer between at least January 2015 and February 2017. Cowell exercised managerial responsibility for Monster Loans and participated in the conduct of its affairs. 40.

Cowell registered Lend Tech in June 2017, and he was its sole owner until November 2017.

41.

Cowell owned limited-partnership interests in each of the Student Loan Debt Relief Companies. At times, Cowell has held those limitedpartnership interests through Relief Defendant Cre8labs, Inc. Cowell is Cre8labs, Inc.’s president and owner.

42.

Defendant David Sklar was Docu Prep Center’s chief executive officer. Sklar was the part-owner of Docu Prep Center, Inc. and owned a limited-partnership interest in Document Preparation Services LP. Sklar exercised substantial managerial responsibility for and control over Docu Prep Center’s business practices, including its sales practices, marketing practices, and fees.

43.

Defendant Robert Hoose was Docu Prep Center’s chief operating officer. Hoose was the part-owner of Docu Prep Center, Inc. and owned a limited-partnership interest in Document Preparation Services, LP. Hoose exercised substantial managerial responsibility for and control over Docu Prep Center’s business practices, including its sales practices, marketing practices, and fees.

44.

Defendant Frank Anthony Sebreros was the president of Assure Direct Services. Sebreros owned Assure Direct Services, Inc. and he owned a limited-partnership interest in Assure Direct Services, LP. Sebreros exercised substantial managerial responsibility for and control over Assure Direct Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 8 of 33 Page ID #:8

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COMPLAINT Services’ business practices, including its sales practices, marketing practices, and fees.

45.

Sebreros was identified as a manager of Lend Tech in the company’s application to Experian in June 2017. 46.

Defendant Bilal Abdelfattah a/k/a Belal Abdelfattah a/k/a Bill Abdel (Abdel) was a marketing manager at Monster Loans in 2015 and 2016. 47.

Abdel was a marketing manager at Docu Prep Center and was an employee of Assure Direct Services.

48.

Abdel was identified as a manager of Lend Tech in the company’s application to Experian in June 2017.

49.

Defendant Eduardo “Ed” Martinez is the president of Docs Done Right. Martinez exercised substantial managerial responsibility for and control over Docs Done Right’s business practices, including its assistance in the charging of fees to consumers.

50.

Martinez represented that he was a manager or employee of Lend Tech in communications with Experian in 2017 and 2018. 51.

Relief Defendant Kenneth Lawson owned limited-partnership interests in each of the Student Loan Debt Relief Companies. At times, Lawson has held those interests through XO Media, LLC. Lawson is the manager and owner of 90 percent of XO Media, LLC.

FACTS Monster Loans’ Purchases of Prescreened Lists 52.

Monster Loans and Lend Tech have purchased from Experian prescreened consumer reports (also known as “prescreened lists”) that contained information regarding consumers with student loans, including consumers’ names, addresses, number of student loans, and aggregate student loan balances.

Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 9 of 33 Page ID #:9

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COMPLAINT 53.

In 2015, Monster Loans applied for and received an account with Experian, which enabled it to purchase prescreened lists. 54.

In its application, Monster Loans certified to Experian that it would use prescreened lists to make firm offers of credit for mortgage loans. 55.

During and after the enrollment process, Monster Loans also represented to Experian that it would use prescreened lists to market its mortgage products.

56.

Monster Loans did not disclose to Experian that prescreened lists would be provided to other companies and used to market debt-relief services. 57.

Between at least December 2015 and May 2017, Monster Loans primarily used its account with Experian to obtain prescreened lists for use by other companies that marketed student-loan debt-relief services, including the Student Loan Debt Relief Companies.

58.

In total, Monster Loans purchased prescreened lists containing information about more than 7 million consumers with student loans. 59.

The prescreened lists that Monster Loans purchased were used to market debt-relief services, and not to make firm offers of credit or insurance. 60.

Nesheiwat oversaw Monster Loans’ purchases of prescreened lists from Experian for use by the Student Loan Debt Relief Companies in their direct mailings.

61.

Several other officers and employees of Monster Loans, including Chou, Cowell, and Abdel, were aware of and participated in the company’s efforts to purchase prescreened lists for the Student Loan Debt Relief Companies through the company’s account with Experian. 62.

Sklar and Hoose obtained prescreened lists through Monster Loans’ account with Experian and used the lists to market Docu Prep Center’s student-loan debt-relief services.

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COMPLAINT 63.

In or around May 2017, Monster Loans stopped purchasing prescreened lists for the Student Loan Debt Relief Companies through its account with Experian.

Lend Tech’s Purchases of Prescreened Lists 64.

In June 2017, Cowell registered Lend Tech as a purported mortgage-brokerage company.

65.

In fact, Lend Tech is a sham entity that has only ever been used to obtain prescreened lists from Experian.

66.

Lend Tech’s application to Experian certified that it would use prescreened lists to make firm offers of credit for mortgage loans. 67.

Lend Tech did not disclose to Experian that the prescreened lists would be provided to other companies and used for the purpose of marketing debt-relief services.

68.

Monster Loans helped Lend Tech satisfy Experian’s due-diligence review for new applicants so that Lend Tech could obtain an Experian account. For example, Monster Loans purported to provide Lend Tech office space under a sublease agreement, and also provided an approval letter agreeing to fund the loans that Lend Tech was purportedly going to broker. 69.

During August and September 2017, Lend Tech used its account with Experian to order prescreened lists containing information regarding more than 1.5 million consumers with student loans for the Student Loan Debt Relief Companies.

70.

Cowell, Abdel, Sebreros, and Chou were aware of and participated in Lend Tech’s efforts to purchase prescreened lists for the Student Loan Debt Relief Companies during August and September 2017. 71.

In November 2017, Cowell transferred ownership of Lend Tech to a friend of Martinez named Sergio Loza.

Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 11 of 33 Page ID #:11

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COMPLAINT 72.

At the time of the transfer, Lend Tech had no meaningful assets other than the account with Experian.

73.

Between November 2017 and at least January 2019, Abdel, Sebreros, and Martinez controlled Lend Tech’s Experian account. 74.

During that period, Lend Tech obtained prescreened lists containing information regarding more than 11 million consumers. 75.

Lend Tech continued representing to Experian that it would use the prescreened lists for its own marketing of mortgage loans. 76.

In fact, Lend Tech has never used the prescreened lists to market mortgage loans.

77.

Martinez, Sebreros, and Abdel resold the prescreened lists to numerous other companies, including companies offering student-loan debtrelief services.

78.

Martinez, Sebreros, and Abdel also used the prescreened lists to market student-loan debt-relief services through new companies created during or after September 2017.

79.

The student-loan debt-relief companies that received prescreened lists purchased by Lend Tech between November 2017 and January 2019 did not use the lists to make firm offers of credit or insurance. Student Loan Consolidations, Repayment Programs, and Forgiveness Programs 80.

ED offers several federal student-loan repayment and forgiveness programs. Some programs potentially offer lower monthly loan payments. Some allow consumers to obtain loan forgiveness. 81.

These programs are administered through third-party student-loan servicers that handle the billing and other services on federal student loans. Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 12 of 33 Page ID #:12

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COMPLAINT 82.

To access certain repayment and forgiveness programs, consumers must first consolidate (i.e., combine) multiple federal student loans into one loan. Consolidating results in, among other things, a single monthly payment instead of multiple monthly payments.

83.

Following consolidation or enrollment in a new repayment or forgiveness program, the consumer’s loan continues to be serviced by a thirdparty student-loan servicer.

The Student Loan Debt Relief Companies and Docs Done Right 84.

The Student Loan Debt Relief Companies each offered, in exchange for a fee, to assist consumers with consolidating their federal student loans and with choosing between and enrolling in repayment and forgiveness programs offered by ED. The Student Loan Debt Relief Companies did not themselves offer or extend credit.

85.

The Student Loan Debt Relief Companies primarily marketed their debt-relief services through direct mail.

86.

When consumers called in response to the direct-mail solicitations, sales representatives purported to advise consumers about their eligibility for and the potential benefits of consolidating their federal student loans and enrolling in ED’s repayment and forgiveness programs. 87.

After Docs Done Right was created in late 2015, its employees participated in a portion of the telemarketing sales call regarding consumers’ understanding of the services.

88.

Following enrollment, Docs Done Right handled communications with consumers concerning the debt-relief services, the payment of fees, and consumer complaints. Docs Done Right posed as the relevant Student Loan Debt Relief Company in those communications. Docs Done Right also handled Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 13 of 33 Page ID #:13

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COMPLAINT the preparation and submission of consumers’ applications to consolidate their federal student loans and enroll in ED’s repayment and forgiveness programs. Misrepresentations about Lower Interest Rates 89.

In direct-mail solicitations and in sales calls, the Student Loan Debt Relief Companies represented that consumers could obtain a lower interest rate by consolidating their loans. 90.

When a federal student loan is consolidated, the consolidated loan has a fixed interest rate for the life of the loan. The fixed rate is the weighted average of the interest rates on the consolidated loans, rounded up to the nearest one-eighth of one percent.

91.

As a result, after consolidation, the consumer’s new loan has either the same effective interest rate as the prior loans or a higher rate. 92.

The Student Loan Debt Relief Companies’ representations that consolidation would lead to a lower interest rate were therefore false. 93.

Consumers with federal student loans are generally eligible for an interest rate reduction if they set up automatic monthly payments. 94.

At times between 2015 and 2017, the Student Loan Debt Relief Companies implied that consumers were required to consolidate their loans to be eligible for the interest-rate reduction associated with setting up automatic monthly payments.

95.

But consumers can receive the interest-rate reduction associated with setting up automatic monthly payments regardless of whether they consolidate their loans.

Misrepresentations about Improved Credit Scores 96.

Between 2015 and 2017, the Student Loan Debt Relief Companies represented during sales calls that consolidating federal student loans would improve consumers’ credit scores.

Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 14 of 33 Page ID #:14

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COMPLAINT 97.

In many instances, consolidating is not likely to improve a consumer’s credit score, such as when the consumer is current on their student loan payments.

98.

By presenting themselves as experts on student loans and making representations about credit score changes, the Student Loan Debt Relief Companies implied that the Companies had a reasonable basis to represent that consolidation would increase consumers’ credit scores. 99.

Prior to making such representations, the Student Loan Debt Relief Companies had no reason to believe that consumers’ credit scores would improve following consolidation, and the Companies did not attempt to measure thereafter whether consumers’ credit scores did in fact improve following consolidation.

Misrepresentations that ED Would Become Consumers’ “New Servicer” 100. At times between 2015 and 2017, Docu Prep Center represented to consumers that, after they consolidated their loans, ED would become their “new servicer.”

101. Docu Prep Center also represented that student loan servicers did not act in consumers’ best interests and implied that consumers would not have to interact with third-party student loan servicers after consolidating their loans. 102. In fact, ED does not become the “new servicer” on loans that are consolidated. ED contracts with third-party student-loan servicers that handle federal student loans both before and after the loans are consolidated. Loan consolidation does not enable consumers to avoid interacting with third-party servicers.

Collection of Advance Fees 103. The Student Loan Debt Relief Companies charged consumers a fee that ranged between $699 and $999.

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COMPLAINT 104. The Student Loan Debt Relief Companies charged and received fees before consumers’ applications for loan consolidations, loan repayment plans, and loan forgiveness plans were approved, and before consumers had made the first payments under the altered terms of their student loans. 105. Docs Done Right participated in the charging of fees and received its portion of the fees before consumers’ applications for loan consolidations, loan repayment plans, and loan forgiveness plans were approved, and before consumers had made the first payments under the altered terms of their student loans.

106. Collectively, the Student Loan Debt Relief Companies and Docs Done Right collected more than $15 million in illegal advance fees from thousands of consumers nationwide between 2015 and at least 2017. Role of Individual Defendants in Deceptive Representations and Charging of Advance Fees 107. Nesheiwat, Sklar, and Hoose each participated directly in Docu Prep Center’s making of the representations described in this Complaint or had the authority to control them, and each had knowledge of the representations, was recklessly indifferent to the truth or falsity of the misrepresentations, or was aware of a high probability of fraud along with an intentional avoidance of the truth.

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COMPLAINT the truth or falsity of the misrepresentations, or was aware of a high probability of fraud along with an intentional avoidance of the truth. 110. Sebreros participated directly in the charging of fees by Assure Direct Services or had the authority to control its charging of fees, and had knowledge of Assure Direct Services’ fee-charging practices or was recklessly indifferent to those practices.

111. Martinez participated directly in the charging of fees by the Student Loan Debt Relief Companies and Docs Done Right or had the authority to control the charging of fees, and had knowledge of the Student Loan Debt Relief Companies’ and Docs Done Right’s fee-charging practices or was recklessly indifferent to those practices. LEGAL BACKGROUND FCRA 112. FCRA defines a “consumer report” to include: any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for (A) credit or insurance to be used primarily for personal, family, or household purposes; (B) employment purposes; or (C) any other purpose authorized under section 604 [§ 1681b]. 15 U.S.C. § 1681a(d).

113. Monster Loans and Lend Tech purchased from Experian prescreened lists containing information regarding consumers with student Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 17 of 33 Page ID #:17

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COMPLAINT loans, including consumers’ names, addresses, number of student loans, and aggregate student loan balances.

114. Information such as a consumer’s number of student loans and their aggregate balance bears on, among other things, a consumer’s credit worthiness and credit standing and is used or expected to be used or collected for the purpose of serving as a factor in determining a consumer’s eligibility for credit.

115. The prescreened lists that Monster Loans and Lend Tech purchased from Experian are therefore “consumer reports” under § 603(d) of FCRA. 15 U.S.C. § 1681a(d).

The TSR 116. The TSR is the implementing regulation of the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. §§ 6101-6108.

117. The Bureau is authorized to enforce the Telemarketing Act and the TSR with respect to the offering or provision of a consumer-financial product or service subject to the CFPA. 15 U.S.C. § 6105(d). 118. The TSR defines “debt relief service” as “any program or service represented, directly or by implication, to renegotiate, settle, or in any way alter the terms of payment or other terms of the debt between a person and one or more unsecured creditors or debt collectors, including, but not limited to, a reduction in the balance, interest rate, or fees owed by a person to an unsecured creditor or debt collector.” 16 C.F.R. § 310.2(o). 119. The TSR defines a “seller” as “any person who, in connection with a telemarketing transaction, provides, offers to provide, or arranges for others to provide goods or services to the customer in exchange for consideration.” 16 C.F.R. § 310.2(dd).

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COMPLAINT 120. The TSR defines “telemarketer” as “any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer.” 16 C.F.R. § 310.2(ff).

121. The TSR defines “telemarketing” in relevant part as “a plan, program, or campaign which is conducted to induce the purchase of goods or services . . . by use of one or more telephones and which involves more than one interstate telephone call.” 16 C.F.R. § 310.2(gg). 122. The Student Loan Debt Relief Companies offered services to renegotiate, settle, or alter the terms of payments of consumers’ federal student loans involving the preparation and submission of requests for loan consolidations, loan forgiveness, and loan-repayment plans to consumers’ student-loan servicers.

123. The Student Loan Debt Relief Companies offered and provided these services to consumers nationwide using the telephones and more than one interstate telephone call.

124. The Student Loan Debt Relief Companies offered and provided these services to consumers in exchange for payment of fees in connection with a telemarketing transaction.

125. The Student Loan Debt Relief Companies are each a “telemarketer” or “seller” offering a “debt relief service” under the TSR. 126. Docs Done Right provided services to renegotiate, settle, or alter the terms of payments of consumers’ federal student loans by preparing and submitting requests for loan consolidations, loan forgiveness, and loanrepayment plans to consumers’ student-loan servicers, and by handling communications with consumers concerning the services, payment of fees, and complaints.

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COMPLAINT 127. Docs Done Right is a “seller” offering a “debt relief service” under the TSR.

128. Nesheiwat, Sklar, and Hoose each arranged for Docu Prep Center to provide debt-relief services to consumers in exchange for consideration. Nesheiwat, Sklar, and Hoose are each “sellers” offering a “debt relief service” under the TSR. 16 C.F.R. § 310.2(dd), (o).

129. Sebreros arranged for Assure Direct Services to provide debt-relief services to consumers in exchange for consideration. Sebreros is a “seller” offering a “debt relief service” under the TSR. 16 C.F.R. § 310.2(dd), (o). 130. Martinez arranged for Docs Done Right to provide debt-relief services to consumers in exchange for consideration. Martinez is a “seller” offering a “debt relief service” under the TSR. 16 C.F.R. § 310.2(dd), (o). The CFPA 131. Sections 1031 and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531, 5536(a)(1)(B), prohibit “covered person[s]” from engaging in any “unfair, deceptive, or abusive act or practice.”

132. A representation is deceptive under the CFPA if it is likely to mislead consumers acting reasonably under the circumstances, and the information is material to consumers.

133. The Student Loan Debt Relief Companies are each “covered persons” under the CFPA because they offered or provided consumer-financial products or services, including financial-advisory services such as assisting consumers with debt-management or debt-settlement and modifying the terms of any extension of credit. 12 U.S.C. § 5481(5), (6), (15)(A)(viii). 134. Docs Done Right is a “covered person” because it offered or provided consumer-financial products or services, including financial-advisory services such as assisting consumers with debt-management or debt-settlement Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 20 of 33 Page ID #:20

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COMPLAINT and modifying the terms of any extension of credit. 12 U.S.C. § 5481(5), (6), (15)(A)(viii).

135. Monster Loans is a “covered person” because it offers or provides consumer-financial products or services, including extending credit for mortgage loans. 12 U.S.C. § 5481(5), (6), (15)(A)(i). 136. Monster Loans is a “service provider” because it provided the material service of obtaining and providing prescreened consumer reports for use in marketing to the Student Loan Debt Relief Companies in connection with the Student Loan Debt Relief Companies’ offering of a consumer-financial product or service. 12 U.S.C. § 5481(26).

137. Lend Tech is a “covered person” because it purports to offer or provide consumer-financial products or services, including extending credit by brokering mortgage loans. 12 U.S.C. § 5481(5), (6), (15)(A)(i). 138. Section 1002(25) of the CFPA defines the term “related person” to mean “any director, officer, or employee charged with managerial responsibility for, or controlling shareholder of,” or “any . . . other person . . . who materially participates in the conduct of the affairs of” a non-bank provider of a consumerfinancial product or service. 12 U.S.C. § 5481(25)(C). Section 1002(25) further provides that a “related person” shall be “deemed to mean a covered person for all purposes of any provision of Federal consumer financial law.” 12 U.S.C. § 5481(25)(B).

139. Chou is a “related person” and “covered person” because he was Monster Loans’ president and had managerial responsibility for it. 140. Nesheiwat is a “related person” and “covered person” because he was Monster Loans’ COO and had managerial responsibility for it. Nesheiwat is also a “related person” and “covered person” because he materially participated in the conduct of the Student Loan Debt Relief Companies. Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 21 of 33 Page ID #:21

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COMPLAINT 141. Cowell is a “related person” and “covered person” because he was an officer of Monster Loans and because he materially participated in the conduct of the company’s affairs. Cowell is also a “related person” and “covered person” because he was Lend Tech’s owner and had managerial responsibility for it.

142. Sklar is a “related person” and “covered person” because he was Docu Prep Center’s CEO and had managerial responsibility for it. 143. Hoose is a “related person” and “covered person” because he was Docu Prep Center’s COO and had managerial responsibility for it. 144. Sebreros is a “related person” and “covered person” because he was president of Assure Direct Services and had managerial responsibility for it. He is also a “related person” and “covered person” because he had managerial responsibility for Lend Tech.

145. Abdel is a “related person” and “covered person” because he was a marketing manager of Monster Loans and materially participated in the conduct of its affairs. He is also a “related person” and “covered person” because he was a marketing manager of Docu Prep Center and materially participated in the conduct of its affairs. He is also a “related person” and “covered person” because he was an employee of Assure Direct Services and materially participated in the conduct of its affairs. He is also a “related person” and “covered person” because he had managerial responsibility for Lend Tech. 146. Martinez is a “related person” and “covered person” because he was president of Docs Done Right and had managerial responsibility for it. He is also a “related person” and “covered person” because he had managerial responsibility for Lend Tech.

Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 22 of 33 Page ID #:22

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COMPLAINT COUNT I Violations of FCRA (Against Student Loan Debt Relief Companies, Monster Loans, Lend Tech, Chou, Nesheiwat, Cowell, Abdel, Sebreros, Martinez, Sklar, and Hoose) 147. The allegations in Paragraphs 1 to 146 are incorporated here by reference.

148. FCRA prohibits persons from using or obtaining a consumer report unless the person obtains it for a permissible purpose and the purpose is certified by the prospective user of the report. 15 U.S.C. § 1681b(f). 149. FCRA provides that using or obtaining a prescreened consumer report to make “a firm offer of credit or insurance” is a permissible purpose. 15 U.S.C. § 1681b(c). A “firm offer” is an offer that will be honored (subject to certain exceptions) if the consumer continues to meet the pre-selected criteria used to select them for the offer. 15 U.S.C. § 1681a(l). 150. Using or obtaining prescreened lists to send solicitations marketing debt-relief services is not a permissible purpose under FCRA. 151. Monster Loans’ and Lend Tech’s certifications to Experian did not state that the prescreened lists were being obtained for use by other companies or for the purpose of sending solicitations marketing debt-relief services. 152. The Student Loan Debt Relief Companies, Monster Loans, Lend Tech, Chou, Nesheiwat, Cowell, Abdel, Sebreros, Martinez, Sklar, and Hoose have, directly or indirectly, used or obtained consumer reports without a permissible purpose, and without a certification of the purpose by the prospective user of the report, in violation of FCRA. 15 U.S.C. § 1681b(f). Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 23 of 33 Page ID #:23

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COMPLAINT COUNT II Advance Fees in Violation of the TSR (Against Student Loan Debt Relief Companies, Docs Done Right, Nesheiwat, Sklar, Hoose, Sebreros, and Martinez) 153. The allegations in Paragraphs 1 to 146 are incorporated here by reference.

154. Under the TSR, it is an abusive act or practice for a seller or telemarketer to request or receive payment of any fee or consideration for any debt-relief services unless and until (A) the seller or telemarketer has renegotiated, settled, reduced, or otherwise altered the terms of at least one debt pursuant to a settlement agreement, debt-management plan, or other such valid contractual agreement executed by the customer; and (B) the customer has made at least one payment pursuant to that settlement agreement, debtmanagement plan, or other valid contractual agreement between the customer and the creditor or debt collector. 16 C.F.R. § 310.4(a)(5)(i)(A)-(B). 155. In the course of providing, offering to provide, or arranging for others to provide debt-relief services, the Student Loan Debt Relief Companies, Docs Done Right, Nesheiwat, Sklar, Hoose, Sebreros, and Martinez charged and received fees before consumers’ applications for loan consolidations, loanrepayment plans, and loan-forgiveness plans were approved, and before consumers had made the first payments under the altered terms of their student loans, in violation of the TSR. 16 C.F.R. § 310.4(a)(5)(i)(A)-(B). Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 24 of 33 Page ID #:24

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COMPLAINT COUNT III Misrepresentations in Violation of the TSR – Lower Interest Rates (Against Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros) 156. The allegations in Paragraphs 1 to 146 are incorporated here by reference.

157. It is a deceptive practice under the TSR for a seller or telemarketer to misrepresent any material aspect of a debt-relief service, including the amount of money or the percentage of the debt amount that a consumer may save. 16 C.F.R. § 310.3(a)(2)(x).

158. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros misrepresented, directly or indirectly, expressly or by implication, that:

consolidating would cause consumers to obtain a lower interest rate on their student loans; and b.

consumers were required to consolidate their student loans to obtain an interest-rate deduction.

159. The acts or practices of the Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros, as set forth in Paragraph 158, are deceptive acts or practices that violate the TSR, 16 C.F.R. 310.3(a)(2)(x). COUNT IV Misrepresentations in Violation of the TSR – Improved Credit Scores (Against Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros) 160. The allegations in Paragraphs 1 to 146 are incorporated here by reference.

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COMPLAINT 161. It is a deceptive practice under the TSR for a seller or telemarketer to misrepresent any material aspect of a debt-relief service, including the effect of the service on a consumer’s creditworthiness. 16 C.F.R. § 310.3(a)(2)(x). 162. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros misrepresented, directly or indirectly, expressly or by implication, that consolidating student loans would improve consumers’ credit scores.

163. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros misrepresented, directly or indirectly, expressly or by implication, that they had a reasonable basis for representing that consolidating student loans would improve consumers’ credit scores. 164. The acts or practices of the Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros, as set forth in Paragraphs 162 and 163, are deceptive acts or practices that violate the TSR, 16 C.F.R. § 310.3(a)(2)(x). COUNT V Misrepresentations in Violation of the TSR – New Servicer (Against Docu Prep Center, Nesheiwat, Sklar, and Hoose) 165. The allegations in Paragraphs 1 to 146 are incorporated here by reference.

166. It is a deceptive practice under the TSR for a seller or telemarketer to misrepresent any material aspect of a debt-relief service. 16 C.F.R. § 310.3(a)(2)(x).

167. Docu Prep Center, Nesheiwat, Sklar, and Hoose misrepresented, directly or indirectly, expressly or by implication, that consolidating would result in ED becoming consumers’ “new servicer” and that consolidating would enable consumers to avoid interacting with third-party student-loan servicers. Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 26 of 33 Page ID #:26

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COMPLAINT 168. The acts or practices of Docu Prep Center, Nesheiwat, Sklar, and Hoose, as set forth in Paragraph 167, are deceptive acts or practices that violate the TSR. 16 C.F.R. § 310.3(a)(2)(x).

COUNT VI Substantial Assistance in Violation of the TSR (Against Monster Loans and Nesheiwat) 169. The allegations in Paragraphs 1 to 146 are incorporated here by reference.

170. The TSR prohibits any person from providing substantial assistance or support to any seller or telemarketer when that person knows or consciously avoids knowing that the seller or telemarketer is engaged in any act or practice that constitutes deceptive or abusive conduct under the Rule. 16 C.F.R. § 310.3(b).

171. Monster Loans and Nesheiwat knew, or consciously avoided knowing, the material misrepresentations that the Student Loan Debt Relief Companies made to consumers.

172. Monster Loans and Nesheiwat knew, or consciously avoided knowing, that the Student Loan Debt Relief Companies charged and received fees from consumers before consumers’ applications for loan consolidations, loan-repayment plans, and loan-forgiveness plans were approved, and before consumers had made the first payments under the altered terms of their student loans.

173. Monster Loans and Nesheiwat provided substantial assistance to the Student Loan Debt Relief Companies in their violations of the TSR. 16 C.F.R. § 310.3(b).

Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 27 of 33 Page ID #:27

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COMPLAINT COUNT VII Deception in Violation of the CFPA – Lower Interest Rates (Against Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros) 174. The allegations in Paragraphs 1 to 146 are incorporated here by reference.

175. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros misrepresented, directly or indirectly, expressly or by implication, that:

consolidating would cause consumers to obtain a lower interest rate on their student loans; and b.

consumers were required to consolidate to obtain an interest-rate deduction.

176. These representations were material and likely to mislead consumers acting reasonably under the circumstances. 177. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros have therefore engaged in deceptive acts or practices in violation of §§ 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531, 5536. COUNT VIII Deception in Violation of the CFPA – Improved Credit Scores (Against Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros) 178. The allegations in Paragraphs 1 to 146 are incorporated here by reference.

179. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros misrepresented, directly or indirectly, expressly or by Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 28 of 33 Page ID #:28

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COMPLAINT implication, that consolidating student loans would improve consumers’ credit scores.

180. These representations were material and likely to mislead consumers acting reasonably under the circumstances. 181. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros misrepresented, directly or indirectly, expressly or by implication, that they had a reasonable basis for representing that consolidating student loans would improve consumers’ credit scores. 182. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros have therefore engaged in deceptive acts or practices in violation of §§ 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531, 5536. COUNT IX Deception in Violation of the CFPA – New Servicer (Against Docu Prep Center, Nesheiwat, Sklar, and Hoose) 183. The allegations in Paragraphs 1 to 146 are incorporated here by reference.

184. Docu Prep Center, Nesheiwat, Sklar, and Hoose misrepresented, directly or indirectly, expressly or by implication, that consolidating would result in ED becoming consumers’ “new servicer,” and that consolidating would enable consumers to avoid interacting with third-party student-loan servicers.

185. These representations were material and likely to mislead consumers acting reasonably under the circumstances. 186. Docu Prep Center, Nesheiwat, Sklar, and Hoose have therefore engaged in deceptive acts or practices in violation of §§ 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531, 5536.

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COMPLAINT COUNT X Substantial Assistance in Violation of the CFPA (Against Monster Loans and Nesheiwat) 187. The allegations in Paragraphs 1 to 146 are incorporated here by reference.

188. Section 1036(a)(3) of the CFPA 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 states that “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.” 12 U.S.C. § 5536(a)(3).

189. Monster Loans and Nesheiwat knew, or recklessly avoided knowing, the material misrepresentations that the Student Loan Debt Relief Companies made to consumers.

190. Monster Loans and Nesheiwat provided substantial assistance to the Student Loan Debt Relief Companies in their deceptive acts or practices, in violation of § 1036(a)(3) of the CFPA. 12 U.S.C. § 5563(a)(3). COUNT XI CFPA Violations Based on Violations of FCRA and TSR (Against Student Loan Debt Relief Companies, Monster Loans, Lend Tech, Docs Done Right, Chou, Nesheiwat, Cowell, Abdel, Sebreros, Martinez, Sklar, and Hoose) 191. The allegations in Paragraphs 1 to 146 are incorporated here by reference.

192. FCRA and the Telemarketing Act are “Federal consumer financial laws” under the CFPA. 12 U.S.C. § 5481(12)(F), (14); 15 U.S.C. § 6105(d). Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 30 of 33 Page ID #:30

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COMPLAINT 193. The violations of FCRA committed by the Student Loan Debt Relief Companies, Monster Loans, Lend Tech, Chou, Nesheiwat, Cowell, Abdel, Sebreros, Martinez, Sklar, and Hoose are deemed to be violations of the CFPA. 15 U.S.C. § 1681s(d).

194. Because the Student Loan Debt Relief Companies, Monster Loans, Lend Tech, Chou, Nesheiwat, Cowell, Abdel, Sebreros, Martinez, Sklar, and Hoose are “covered persons” who violated FCRA by, directly or indirectly, using or obtaining consumer reports without a permissible purpose and without a certification of the purpose by the prospective user of the report, they violated § 1036(a)(1)(A) of the CFPA. 12 U.S.C. § 5536(a)(1)(A). 195. The violations of the TSR committed by the Student Loan Debt Relief Companies, Docs Done Right, Nesheiwat, Sklar, Hoose, Sebreros, and Martinez are treated as violations of a rule under § 1031 of the CFPA. 15 U.S.C. § 6102(c).

196. Because the Student Loan Debt Relief Companies, Docs Done Right, Nesheiwat, Sklar, Hoose, Sebreros, and Martinez are “covered persons” who violated the TSR by charging and receiving illegal advance fees from consumers, they violated § 1036(a)(1)(A) of the CFPA. 12 U.S.C. § 5536(a)(1)(A).

197. Because the Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros are “covered persons” who violated the TSR by engaging in deceptive conduct, they violated § 1036(a)(1)(A) of the CFPA. 12 U.S.C. § 5536(a)(1)(A).

198. Because Monster Loans and Nesheiwat are “covered persons” who substantially assisted violations of the TSR, they violated § 1036(a)(1)(A) of the CFPA. 12 U.S.C. § 5536(a)(1)(A).

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COMPLAINT COUNT XII Relief Defendants 199. The allegations in Paragraphs 1 to 146 are incorporated here by reference.

200. Chou, Cowell, Lawson, TDK Enterprises, LLC, Cre8labs, Inc., and XO Media, LLC have received, directly or indirectly, distributions of profits from the Student Loan Debt Relief Companies that are traceable to funds obtained from consumers through the violations of the CFPA and TSR described herein. They have no legitimate claim to such funds and would be unjustly enriched if not required to disgorge the funds or the value of the benefits they received.

DEMAND FOR RELIEF The Bureau requests that the Court:

permanently enjoin Defendants from committing future violations of the FCRA, TSR, and CFPA and enter such other injunctive relief as appropriate;

permanently enjoin Defendants from advertising, marketing, promoting, offering for sale, selling, or providing any form of assistance to any debt-relief service;

grant additional injunctive relief as the Court may deem to be just and proper;

order Monster Loans, the Student Loan Debt Relief Companies, Docs Done Right, Nesheiwat, Sklar, Hoose, Sebreros, and Martinez to pay redress to consumers harmed by their unlawful conduct; e.

award damages and other monetary relief against Defendants; f.

impose civil money penalties against Defendants; g.

order disgorgement of ill-gotten funds against Relief Defendants; Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 32 of 33 Page ID #:32

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COMPLAINT h.

order the rescission or reformation of contracts where necessary to redress injury to consumers; and i.

award the Bureau 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 January 9, 2020 Respectfully Submitted,

/s/ Leanne E. Hartmann

Leanne E. Hartmann

E. Vanessa Assae-Bille (PHV pending) Colin Reardon (PHV pending)

Bureau of Consumer Financial Protection 1700 G Street, NW Washington, D.C. 20552

Attorneys for Plaintiff Bureau of Consumer Financial Protection

Case 8:20-cv-00043 Document 1 Filed 01/09/20 Page 33 of 33 Page ID #:33

Stipulation (May 2020)

PDF of this document (23 pages)

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STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC

COLIN REARDON (NY Bar #4945655) E-mail: [email protected] Phone: (202) 435-9668 E. VANESSA ASSAE-BILLE (NY Bar #5165501) E-mail: [email protected] Phone: (202) 435-7688 1700 G Street, NW Washington, D.C. 20552 Fax: (202) 435-5471

LEANNE E. HARTMANN (CA Bar #264787) – Local Counsel E-mail: [email protected] Phone: (415) 844-9787 301 Howard St., Suite 1200 San Francisco, CA 94105 Fax: (415) 844-9788

Attorneys for Plaintiff Bureau of Consumer Financial Protection

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Bureau of Consumer Financial Protection,

Plaintiff,

vs.

Chou Team Realty, LLC, et al.,

Defendants.

) ) ) ) ) ) ) ) ) ) )

Case No.: 8-20-cv-00043-JVS-ADS

STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC The Bureau of Consumer Financial Protection (Bureau) commenced this civil action on January 9, 2020, to obtain injunctive relief, redress, damages, civil penalties, and disgorgement. The Complaint alleges that, in connection with providing Debt-Relief Services to consumers with student loans, certain entities and individuals violated the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681; the Telemarketing Sales Rule (TSR), 16 C.F.R. Part 310; and the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a)(1)(A).

Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 1 of 23 Page ID #:696

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STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC The Complaint alleges that Defendant Chou Team Realty, LLC, violated FCRA by using or obtaining consumer reports to market student loan Debt- Relief Services, and that the company substantially assisted the Student Loan Debt Relief Companies in violating the CFPA and TSR. The Complaint further alleges that Defendants Thomas Chou and Sean Cowell violated FCRA by using or obtaining consumer reports to market student loan Debt-Relief Services. The Complaint also alleges that Chou and Cowell, as Relief Defendants, and entities they each controlled (Relief Defendants TDK Enterprises, LLC and Cre8labs, Inc., respectively) received distributions of profits traceable to funds obtained through violations of the CFPA and TSR by the Student Loan Debt Relief Companies.1 The Bureau and Chou Team Realty, LLC; Thomas Chou; Sean Cowell; TDK Enterprises, LLC; and Cre8labs, Inc. agree to entry of this Stipulated Final Judgment and Order (Order), without adjudication of any issue of fact or law, to settle and resolve all matters in dispute between these parties arising from the conduct alleged in the Complaint.

THEREFORE, it is ORDERED:

FINDINGS 1.

This Court has jurisdiction over the parties and the subject matter of this action.

Venue is proper in this district under 12 U.S.C. § 5564(f). 3.

The relief provided in this Order is appropriate and available pursuant to sections 1054 and 1055 of the CFPA, 12 U.S.C. §§ 5564, 5565.

1 The Complaint alleges that Chou and Cowell are liable as both defendants and relief defendants. As set forth in the Definitions section below, Chou and Cowell are referred to as “Settling Defendants,” “Individual Defendants,” or “Relief Defendants” as appropriate depending on the context. Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 2 of 23 Page ID #:697

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STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC 4.

Settling Defendants and Relief Defendants neither admit nor deny any allegations in the Complaint, except as specified in this Order. For purposes of this Order, Settling Defendants and Relief Defendants admit the facts necessary to establish the Court’s jurisdiction over them and the subject matter of this action.

Settling Defendants and Relief Defendants waive all rights to seek judicial review or otherwise challenge or contest the validity of this Order and any claim they may have 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 Party agrees to bear its own costs and expenses, including, without limitation, attorneys’ fees.

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

The following definitions apply to this Order: a. “Affected Consumers” includes all consumers who, since January 1, 2015, were charged fees by any of the Student Loan Debt Relief Companies.

b. “Assisting Others” includes, but is not limited to: i. 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;

ii. providing names of, or contributing to the generation of, potential customers;

Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 3 of 23 Page ID #:698

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STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC iii. participating in or providing services related to the offering, sale, or servicing of a product, or the collection of payments for a product;

iv. acting or serving as an owner, officer, director, manager, principal, partner, or limited partner of any entity; v. investing or loaning money;

vi. renting or otherwise providing office space personally or through any entity in which Settling Defendants have a majority interest or otherwise control; and vii. arranging for the provision of office space personally or through any entity in which Settling Defendants have an interest.

c. “Consumer Report” means a “consumer report,” as that term is defined in Section 603(d) of FCRA, 15 U.S.C. § 1681a(d). d. “Consumer Reporting Agency” means a “consumer reporting agency,” as that term is defined in Section 603(f) of FCRA, 15 U.S.C. § 1681a(f).

e. “Corporate Defendant” means Chou Team Realty, LLC f/k/a Chou Team Realty, Inc., d/b/a Monster Loans, d/b/a MonsterLoans, and its successors and assigns. f. “Debt-Relief Service” means any product, service, plan, or program represented, directly or by implication, to renegotiate, settle, or in any way alter the terms of payment or other terms of the debt, including but not limited to a student loan debt, mortgage loan debt, credit card debt, or 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, Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 4 of 23 Page ID #:699

Page 39

STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC interest rate, or fees owed by a person to a creditor or debt collector.

g. “Effective Date” means the date on which the Order is issued. h. “Enforcement Director” means the Assistant Director of the Office of Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

i. “Individual Defendants” means Thomas Jack Chou and Sean Peter Cowell, collectively, or in any combination, and each of them by any other names by which they might be known. j. “Prescreened Consumer Reports” means Consumer Reports relating to consumers furnished by a Consumer Reporting Agency in connection with credit or insurance transactions that are not initiated by the consumers, pursuant to 15 U.S.C. § 1681b(c).

k. “Relief Defendants” means Thomas Jack Chou, Sean Peter Cowell, TDK Enterprises, LLC, and Cre8labs, Inc, individually, collectively, or in any combination. l. “Settling Defendants” means all of the Individual Defendants and the Corporate Defendant, individually, collectively, or in any combination.

m. “Student Loan Debt Relief Companies” means Docu Prep Center, Inc., d/b/a DocuPrep Center, d/b/a Certified Document Center; Document Preparation Services, LP, d/b/a DocuPrep Center, d/b/a Certified Document Center; Certified Doc Prep, Inc.; Certified Doc Prep Services, LP; Assure Direct Services, Inc.; Assure Direct Services, LP; Direct Document Solutions, Inc.; Direct Document Solutions, LP; Secure Preparation Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 5 of 23 Page ID #:700

Page 40

STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC Services, Inc.; Secure Preparation Services, LP, and their successors and assigns, individually, collectively, or in any combination.

n. “Related Consumer Action” means a private action by or on behalf of one or more consumers or an enforcement action by another governmental agency brought against Defendant based on substantially the same facts as described in the Complaint. ORDER CONDUCT RELIEF I.

Permanent Ban on Offering or Providing Debt-Relief Services IT IS ORDERED that:

Settling Defendants, whether acting directly or indirectly, are permanently restrained from:

a. participating in, advertising, marketing, promoting, offering for sale, selling, or providing any Debt-Relief Service; or b. Assisting Others in, or receiving any remuneration or other consideration from, the provision, advertising, marketing, promoting, offering for sale, sale or production of any Debt- Relief Service.

Nothing in this Order shall be read as an exception to this Paragraph. II.

Permanent Ban on Using or Obtaining Prescreened Consumer Reports IT IS ORDERED that:

Settling Defendants, whether acting directly or indirectly, are permanently restrained and enjoined from using, obtaining, offering, providing, selling, or arranging for others to use or obtain Prescreened Consumer Reports Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 6 of 23 Page ID #:701

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STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC for any purpose. Nothing in this Order shall be read as an exception to this Paragraph.

III.

Prohibition on Using or Obtaining Consumer Reports for Any Business Purpose Other Than Mortgage Lending IT IS ORDERED that:

10.

Settling Defendants, and their officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them, who receive actual notice of this Order, whether acting directly or indirectly, are permanently restrained and enjoined from using, obtaining, offering, providing, selling, or arranging for others to use or obtain Consumer Reports for any business purpose other than underwriting or otherwise evaluating mortgage loans. Nothing in this Order shall be read as an exception to this Paragraph.

IV.

Consumer Information IT IS ORDERED that:

11.

Settling Defendants and their officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them, who receive actual notice of this Order, whether acting directly or indirectly, may not:

Page 42

STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC b. disclose, use, or benefit 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 customer’s account (including a credit card, bank account, or other financial account), obtained from or through the activities of the Student Loan Debt Relief Companies.

However, this Order does not prohibit the disclosure of consumer information if lawfully requested by a government agency or required by law, regulation, or court order.

MONETARY PROVISIONS V.

Order to Pay Redress IT IS FURTHER ORDERED that:

12.

A judgment for monetary relief is entered in favor of the Bureau and against Corporate Defendant, in the amount of $18,000,000 for the purpose of providing redress to Affected Consumers; however, full payment of this judgment will be suspended upon satisfaction of the obligations in Paragraphs 13 and 15 through 18 of this Section and Paragraphs 33 through 37 and 39 of Section VIII and subject to Section VI of this Order. a. Of this judgment for monetary relief, Relief Defendants Chou and TDK Enterprises, LLC shall be jointly and severally liable for the amount of $403,750, such amount also being for the purpose of providing redress to Affected Consumers. b. Of this judgment for monetary relief, Relief Defendants Cowell and Cre8labs, Inc. shall be jointly and severally liable for the amount of $406,150, such amount also being for the Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 8 of 23 Page ID #:703

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STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC purpose of providing redress to Affected Consumers; however, payment of this amount will be suspended subject to Paragraphs 16 through 18 of this Section and subject to Section VI of this Order.

13.

Corporate Defendant 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, the following payments in partial satisfaction of the judgment referenced in Paragraph 12 of this Section. Within 10 days of the Effective Date, Corporate Defendant must pay $100,000. Within 40 days of the Effective Date, Corporate Defendant must pay an additional $50,000. Within 70 days of the Effective Date, Corporate Defendant must pay an additional $50,000. 14.

Relief Defendants Chou and TDK Enterprises, LLC 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, the following payments in full satisfaction of the judgment as ordered in Paragraph 12.a of this Section. Within 10 days of the Effective Date, Relief Defendants Chou and TDK Enterprises, LLC must pay $201,875. Within 40 days of the Effective Date, Relief Defendants Chou and TDK Enterprises, LLC must pay an additional $100,938. Within 70 days of the Effective Date, Relief Defendants Chou and TDK Enterprises, LLC must pay an additional $100,937. 15.

With regard to any redress that Corporate Defendant pays under this Section, if Corporate Defendant, directly or indirectly, receives any reimbursement or indemnification from any source, including but not limited to payment made under any insurance policy, or if Corporate Defendant secures a tax deduction or tax credit with regard to any federal, state, or local tax, Corporate Defendant must: (a) immediately notify the Enforcement Director in writing, and (b) within 10 days of receiving the funds or monetary benefit, Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 9 of 23 Page ID #:704

Page 44

STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC Corporate Defendant must transfer to the Bureau the full amount of such funds or monetary benefit (Additional Payment) to the Bureau or to the Bureau’s agent according to the Bureau’s wiring instructions. After the Bureau receives the Additional Payment, the amount of the suspended judgment referenced in Paragraph 12 will be reduced by the amount of the Additional Payment and the Additional Payment will be applied toward satisfaction of the monetary judgment entered in Paragraph 12.

16.

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 Affected 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. 17.

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. Corporate Defendant and Relief Defendants will have no right to challenge any actions that the Bureau or its representatives may take under this Section.

18.

Payment of redress to any Affected Consumer under this Order may not be conditioned on that Affected Consumer waiving any right. VI.

Effect of Misrepresentation or Omission Regarding Financial Condition IT IS FURTHER ORDERED that:

19.

The suspension of the monetary judgment as to Corporate Defendant entered in Section V of this Order is expressly premised on the truthfulness, accuracy, and completeness of Corporate Defendant’s financial Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 10 of 23 Page ID #:705

Page 45

STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC statements and supporting documents submitted to the Bureau, which Corporate Defendant asserts are truthful, accurate, and complete, and which include: a. Financial Statement of Corporate Defendant, including the attachments, executed on July 9, 2019, and submitted to the Bureau on or about July 26, 2019; and b. updated attachment to Financial Statement of Corporate Defendant submitted to the Bureau on or about August 26, 2019.

20.

If upon motion by the Bureau, the Court determines that Corporate Defendant has failed to disclose any material asset, or that its financial statements and supporting documents identified in Paragraph 19 contain any material misrepresentations or omissions, including materially misstating the value of any asset, the Court shall terminate the suspension of the monetary judgment as to Corporate Defendant entered in Section V of this Order and the full judgment of $18,000,000 entered shall be immediately due and payable, less any amounts paid to the Bureau under Section V of this Order. 21.

The suspension of the monetary judgment as to Relief Defendants Cowell and Cre8labs, Inc. entered in Section V of this Order is expressly premised on the truthfulness, accuracy, and completeness of the financial statements and supporting documents Relief Defendant Cowell submitted to the Bureau concerning himself and Cre8labs, Inc., which they assert are truthful, accurate, and complete, and which include: a. Financial Statement of Individual Defendant, including the attachments, executed on November 1, 2019, and submitted to the Bureau on or about November 7, 2019;

b. Attachments to Financial Statement of Individual Defendant submitted to the Bureau on or about January 27, 2020; and Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 11 of 23 Page ID #:706

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STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC c. Letter concerning distributions to Relief Defendants Cowell and Cre8labs, Inc. submitted to the Bureau on or about October 31, 2019.

22.

If upon motion by the Bureau, the Court determines that Relief Defendants Cowell and Cre8labs, Inc. have failed to disclose any material asset, or that the financial statements and supporting documents identified in Paragraph 21 contain any material misrepresentations or omissions, including materially misstating the value of any asset, the Court shall terminate the suspension of the monetary judgment as to Relief Defendants Cowell and Cre8labs, Inc. entered in Section V of this Order and the full judgment of $406,150 entered shall be immediately due and payable. 23.

If the Court terminates the suspension of the monetary judgment under this Section, the Bureau will be entitled to interest on the Order, computed from the date of entry of this Order, at the rate prescribed by 28 U.S.C. § 1961, as amended, on any outstanding amounts not paid; provided, however, that in all other respects this Order shall remain in full force and effect unless otherwise ordered by the Court; and, provided further, that proceedings instituted under this provision would be in addition to, and not in lieu of any other civil or criminal remedies as may be provided by law, including any other proceedings that the Bureau may initiate to enforce this Order. VII.

Order to Pay Civil Money Penalties IT IS FURTHER ORDERED that:

24.

Under section 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged in the Complaint, and taking into account the factors in 12 U.S.C. § 5565(c)(3), Corporate Defendant must pay a civil money penalty of $1.00 to the Bureau. This nominal penalty is based on Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 12 of 23 Page ID #:707

Page 47

STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC Corporate Defendant’s limited ability to pay as attested to in its financial statements identified in Section VI above.

25.

Within 10 days of the Effective Date, Corporate Defendant must pay the civil money penalty in Paragraph 24 by wire transfer to the Bureau or to the Bureau’s agent in compliance with the Bureau’s wiring instructions. 26.

Under section 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged in the Complaint, and taking into account the factors in 12 U.S.C. § 5565(c)(3), Individual Defendant Chou must pay a civil money penalty of $350,000 to the Bureau. 27.

Individual Defendant Chou must make the following payments by wire transfer to the Bureau or the Bureau’s agent, in compliance with the Bureau’s wiring instructions, to satisfy the penalty described in Paragraph 26. Within 10 days of the Effective Date, Individual Defendant Chou must pay $175,000. Within 40 days of the Effective Date, Individual Defendant Chou must pay an additional $87,500. Within 70 days of the Effective Date, Individual Defendant Chou must pay an additional $87,500. 28.

Under section 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged in the Complaint, and taking into account the factors in 12 U.S.C. § 5565(c)(3), and having a limited ability to pay as attested to in Individual Defendant Cowell’s financial statement identified in Section VI above, Individual Defendant Cowell must pay a civil money penalty of $100,000 to the Bureau.

29.

Individual Defendant Cowell must make the following payments by wire transfer to the Bureau or the Bureau’s agent, in compliance with the Bureau’s wiring instructions, to satisfy the penalty described in Paragraph 28. Within 10 days of the Effective Date, Individual Defendant Cowell must pay $50,000. Within 40 days of the Effective Date, Individual Defendant Cowell Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 13 of 23 Page ID #:708

Page 48

STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC must pay an additional $25,000. Within 70 days of the Effective Date, Individual Defendant Cowell must pay an additional $25,000. 30.

The civil money penalties paid under this Order will be deposited in the Civil Penalty Fund of the Bureau, as required by section 1017(d) of the CFPA, 12 U.S.C. § 5497(d).

31.

Settling Defendants must treat the civil money penalties paid under this Order as a penalty paid to the government for all purposes. Regardless of how the Bureau ultimately uses those funds, Settling Defendants may not: a. claim, assert, or apply for a tax deduction, tax credit, or any other tax benefit for any civil money penalty paid under this Consent Order; or b. seek or accept, directly or indirectly, reimbursement or indemnification from any source, including but not limited to payment made under any insurance policy, with regard to any civil money penalty paid under this Order. 32.

Individual Defendants agree that the civil penalties imposed by the Order represent civil penalties owed to the United States Government, are not compensation for actual pecuniary loss, and, thus, as to Individual Defendants, the penalties are not subject to discharge under the Bankruptcy Code under 11 U.S.C. § 523(a)(7).

VIII.

Additional Monetary Provisions 33.

In the event of any default on Settling Defendants or Relief Defendants’ obligations to make payment under this Order, interest, computed under 28 U.S.C. § 1961, as amended, will accrue on any outstanding amounts not paid from the date of default to the date of payment, and will immediately become due and payable.

Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 14 of 23 Page ID #:709

Page 49

STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC 34.

Settling Defendants and Relief Defendants relinquish all dominion, control, title to the funds paid under this Order to the fullest extent permitted by law. No part of the funds may be returned to Settling Defendants or Relief Defendants.

35.

The facts alleged in the Complaint will be taken as true and be given collateral estoppel effect, without further proof, in any proceeding based on the entry of the Order, or in any subsequent civil litigation by, or on behalf of the Bureau, including in a proceeding to enforce its rights to any payment or monetary judgment under this Order, such as a nondischargeability complaint in any bankruptcy case.

36.

The facts alleged in the Complaint establish all elements necessary to sustain an action by the Bureau under to Section 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A). For such purposes, this Order will have collateral estoppel effect against each Settling Defendant, even in such Settling Defendant’s capacity as debtor-in-possession. 37.

Under 31 U.S.C. § 7701, Settling Defendants and Relief Defendants, unless they already have done so, must furnish to the Bureau their taxpayer-identification numbers, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. 38.

Within 30 days of the entry of a final judgment, order, or settlement in a Related Consumer Action, Settling Defendants and Relief Defendants must notify the Enforcement Director of the final judgment, order, or settlement in writing. That notification must indicate the amount of redress, if any, that Settling Defendants and Relief Defendants paid or are required to pay to consumers, and it must describe the consumers or classes of consumers to whom that redress has been or will be paid. To preserve the deterrent effect of the civil money penalty in any Related Consumer Action, Settling Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 15 of 23 Page ID #:710

Page 50

STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC Defendants and Relief Defendants may not argue that any Settling Defendant or Relief Defendant is entitled to, nor may any Settling Defendant or Relief Defendant benefit by, any offset or reduction of any monetary remedies imposed in the Related Consumer Action because of the civil money penalties paid in this action, or because of any payment that the Bureau makes from the Civil Penalty Fund. If the court in any Related Consumer Action offsets or otherwise reduces the amount of compensatory monetary remedies imposed against any Settling Defendant and Relief Defendant based on the civil money penalty paid in this action, or based on any payment that the Bureau makes from the Civil Penalty Fund, such Settling Defendant or Relief Defendant must, within 30 days after entry of a final order granting such offset or reduction, notify the Bureau and pay the amount of the offset or reduction to the U.S. Treasury. Such a payment will not be considered an additional civil money penalty and will not change the amount of the civil money penalty imposed in this action.

39.

Under Section 604(a)(I) of FCRA, 15 U.S.C.§ 168l b(a)(1), any Consumer Reporting Agency may furnish a Consumer Report concerning any Settling Defendant or Relief Defendant to the Bureau, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order.

COMPLIANCE PROVISIONS IX.

Reporting Requirements IT FURTHER ORDERED that:

40.

Settling Defendants must notify the Bureau of any development that may affect compliance obligations arising under this Order, including but not limited to, a dissolution, assignment, sale, merger, or other action that Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 16 of 23 Page ID #:711

Page 51

STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC would result in the emergence of a successor company; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order; the filing of any bankruptcy or insolvency proceeding by or against Settling Defendants; or a change in Settling Defendants’ name or address. Settling Defendants must provide such notice at least 30 days before the development, or as soon as practicable after learning of the development, whichever is sooner.

41.

Within 7 days of the Effective Date, each Settling Defendant must: a. designate at least one telephone number and email, physical, and postal address as points of contact, which the Bureau may use to communicate with Defendant;

b. identify all businesses for which Settling Defendant is the majority owner, or that Settling Defendant directly or indirectly controls, by all of their names, telephone numbers, and electronic, physical, and postal addresses; c. describe the activities of each such business, including the products and services offered, and the means of advertising, marketing, and sales;

d. identify Individual Defendant’s telephone numbers and all electronic, physical, and postal addresses, including all residences; and e. describe in detail Individual Defendant’s involvement in any business for which he performs services in any capacity or which he wholly or partially owns, including his title, role, responsibilities, participation, authority, control, and ownership.

Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 17 of 23 Page ID #:712

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STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC 42.

Settling Defendants must report any change in the information required to be submitted under Paragraph 41 at least 30 days before the change, or as soon as practicable after learning about the change, whichever is sooner. 43.

Within 90 days of the Effective Date, and again one year after the Effective Date, each Settling Defendant must submit to the Enforcement Director an accurate written compliance progress report sworn to under penalty of perjury (“Compliance Report”), which, at a minimum: a. lists each applicable paragraph and subparagraph of this Order and describes in detail the manner and form in which such Settling Defendant has complied with each such paragraph and subparagraph of this Order;

b. describes in detail the manner in which and purposes for which Settling Defendants have used or obtained Consumer Reports; and c. attaches a copy of each Order Acknowledgment obtained under Section X, unless previously submitted to the Bureau. X.

Order Distribution and Acknowledgment IT IS FURTHER ORDERED that, 44.

Within 7 days of the Effective Date, each Settling Defendant must submit to the Enforcement Director an acknowledgment of receipt of this Order, sworn under penalty of perjury.

45.

Within 30 days of the Effective Date, Corporate Defendant and Individual Defendants, for any business for which they are the majority owner or which they directly or indirectly control, must deliver a copy of this Order to each of its owners, board members, officers, LLC members and managers, and general and limited partners, as well as any managers, employees, or other Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 18 of 23 Page ID #:713

Page 53

STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC agents and representatives who have responsibilities related to Consumer Reports.

46.

Corporate Defendant and Individual Defendants, for any business for which they are the majority owner or which they directly or indirectly control, must deliver a copy of this Order to any business entity resulting from any change in structure referred to in Section IX, any future owners, board members, officers, LLC members and managers, and general and limited partners, as well as any managers, employees, or other agents and representatives who will have responsibilities related to Consumer Reports before they assume their responsibilities.

47.

Settling Defendants must secure a signed and dated statement acknowledging receipt of a copy of this Order, ensuring that any electronic signatures comply with the requirements of the E-Sign Act, 15 U.S.C. § 7001 et seq., within 30 days of delivery, from all persons receiving a copy of this Order under this Section.

XI.

Recordkeeping IT IS FURTHER ORDERED that, 48.

Corporate Defendant and Individual Defendants, for any business for which they are the majority owner or which they directly or indirectly control, must create all documents and business records necessary to demonstrate full compliance with each provision of this Order, including all submissions to the Bureau. Settling Defendants must retain these documents for at least 10 years after creation and make them available to the Bureau upon the Bureau’s request.

49.

Corporate Defendant and Individual Defendants, for any business for which they are the majority owner or which they directly or indirectly Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 19 of 23 Page ID #:714

Page 54

STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC control, must maintain, for 10 years from the Effective Date, or 10 years after creation, whichever is longer:

a. all records concerning Consumer Reports used or obtained, including without limitation FCRA certifications, payment records, training materials, internal communications, and communications with consumer reporting agencies, service providers, and consumers;

b. all consumer complaints and refund requests (whether received directly or indirectly, such as through a third party), and any responses to those complaints or requests; c. records showing, for each employee that has used or obtained Consumer Reports, that person’s: name; telephone number; email, physical, and postal address; job title or position; dates of service; and, if applicable, the reason for termination; and d. records showing, for each Consumer Reporting Agency providing Consumer Reports, the name of a point of contact, and that person’s telephone number; email, physical, and postal address; job title or position; and dates of service. Settling Defendants must make these materials available to the Bureau upon the Bureau’s request.

XII.

Notices IT IS FURTHER ORDERED that:

50.

Unless otherwise directed in writing by the Bureau, Settling Defendants and Relief Defendants must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “CFPB v. Chou Team Realty, LLC, et al., Case No. 8:20-cv-00043- Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 20 of 23 Page ID #:715

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STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC JVS-ADS,” and send them by overnight courier or first-class mail to the below address, and contemporaneously by email to [email protected]:

Assistant Director for Enforcement Bureau of Consumer Financial Protection ATTENTION: Office of Enforcement 1700 G Street, N.W.

Washington D.C. 20552 XIII.

Cooperation with the Bureau IT IS FURTHER ORDERED that:

51.

Settling Defendants must cooperate fully to help the Bureau determine the identity and location of, and the amount of injury sustained by, each Affected Consumer. Settling Defendants must provide such information in their agents’ possession or control within 14 days of receiving a written request from the Bureau.

52.

Each Settling Defendant must cooperate fully with the Bureau in this lawsuit, CFPB v. Chou Team Realty, LLC, et al., Case No. 8:20-cv-00043- JVS-ADS (C.D. Cal.), and in any investigation related to or associated with the conduct described in the Complaint. Each Settling Defendant must provide truthful and complete information, evidence, and testimony. Individual Defendants must appear and Corporate Defendant must cause its officers, employees, representatives, or agents to appear for interviews, discovery, hearings, trials, and any other proceedings that the Bureau may reasonably request upon 10 days written notice, or other reasonable notice, at such places and times as the Bureau may designate, without the service of compulsory process.

Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 21 of 23 Page ID #:716

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STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC XIV.

Compliance Monitoring IT IS FURTHER ORDERED that, to monitor Settling Defendants’ compliance with this Order, including the financial representations upon which part of the judgment was suspended as to Corporate Defendant: 53. Within 14 days of receipt of a written request from the Bureau, Settling Defendants must submit additional compliance reports or other requested information, which must be sworn under penalty of perjury; provide testimony; or produce documents.

54.

For purposes of this Section, the Bureau may communicate directly with any Settling Defendant, unless the Settling Defendant retains counsel related to these communications.

55.

Settling Defendants must permit Bureau representatives to interview any employee or other person affiliated with Settling Defendants who has agreed to such an interview. The person interviewed may have counsel present.

56.

Nothing in this Order will limit the Bureau’s lawful use of compulsory process, under 12 C.F.R. § 1080.6.

Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 22 of 23 Page ID #:717

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STIPULATED FINAL JUDGMENT AND ORDER AS TO CHOU TEAM REALTY, LLC; THOMAS CHOU; SEAN COWELL; CRE8LABS, INC.; AND TDK ENTERPRISES, LLC 57.

XV.

Retention of Jurisdiction IT IS FURTHER ORDERED that:

58.

The Court will retain jurisdiction of this matter for the purpose of enforcing this Order.

IT IS SO ORDERED.

DATED this 14th day of May, 2020.

_________________________________

Hon. James V. Selna

Case 8:20-cv-00043-JVS-ADS Document 90 Filed 05/14/20 Page 23 of 23 Page ID #:718

Stipulation (July 2020)

PDF of this document (18 pages)

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STIPULATED FINAL JUDGMENT AND ORDER AS TO ROBERT HOOSE

LEANNE E. HARTMANN (CA Bar #264787) – Local Counsel E-mail: [email protected] Phone: (415) 844-9787 301 Howard St., Suite 1200 San Francisco, CA 94105 Fax: (415) 844-9788

Attorneys for Plaintiff Bureau of Consumer Financial Protection

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Bureau of Consumer Financial Protection,

Plaintiff,

vs.

Chou Team Realty, LLC, et al.,

Defendants.

) ) ) ) ) ) ) ) ) ) )

Case No.: 8-20-cv-00043-JVS-ADS

STIPULATED FINAL JUDGMENT AND ORDER AS TO ROBERT HOOSE The Bureau of Consumer Financial Protection (Bureau) commenced this civil action on January 9, 2020, to obtain injunctive relief, redress, civil penalties, and disgorgement. The Complaint alleges that, in connection with providing Debt-Relief Services to consumers with student loans, certain entities and individuals, including Defendant Robert Hoose, violated the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681; the Telemarketing Sales Rule (TSR), 16 C.F.R. Part 310; and the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a)(1)(A). Case 8:20-cv-00043-JVS-ADS Document 115 Filed 07/07/20 Page 1 of 18 Page ID #:1303

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STIPULATED FINAL JUDGMENT AND ORDER AS TO ROBERT HOOSE The Bureau and Defendant Hoose agree to entry of this Stipulated Final Judgment and Order (Order), without adjudication of any issue of fact or law, to settle and resolve all matters in dispute between these parties. THEREFORE, it is ORDERED:

FINDINGS 1.

This Court has jurisdiction over the parties and the subject matter of this action.

Venue is proper in this district under 12 U.S.C. § 5564(f). 3.

The relief provided in this Order is appropriate and available under sections 1054 and 1055 of the CFPA, 12 U.S.C. §§ 5564, 5565. 4.

Defendant neither admits nor denies any allegations in the Complaint, except as specified in this Order. For purposes of this Order, Defendant admits the facts necessary to establish the Court’s jurisdiction over him and the subject matter of this action. 5.

Defendant waives all rights to seek judicial review or otherwise challenge or contest the validity of this Order and any claim he may have 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 Party agrees to bear its own costs and expenses, including, without limitation, attorneys’ fees. 6.

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

The following definitions apply to this Order: a. “Affected Consumers” includes all consumers who, since January 1, 2015, were charged fees by Docu Prep Center. b. “Assisting Others” includes, but is not limited to: i. formulating or providing, or arranging for the formulation or provision of, any advertising or marketing Case 8:20-cv-00043-JVS-ADS Document 115 Filed 07/07/20 Page 2 of 18 Page ID #:1304

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STIPULATED FINAL JUDGMENT AND ORDER AS TO ROBERT HOOSE 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;

ii. providing names of, or contributing to the generation of, potential customers;

iii. participating in or providing services related to the offering, sale, or servicing of a product, or the collection of payments for a product;

iv. acting or serving as an owner, officer, director, manager, principal, partner, or limited partner of any entity; v. investing or loaning money; and vi. renting or otherwise providing office space. c. “Consumer Report” means a “consumer report,” as that term is defined in Section 603(d) of FCRA, 15 U.S.C. § 1681a(d). d. “Consumer Reporting Agency” means a “consumer reporting agency,” as that term is defined in Section 603(f) of FCRA, 15 U.S.C. § 1681a(f).

e. “Debt-Relief Service” means any product, service, plan, or program represented, directly or by implication, to renegotiate, settle, or in any way alter the terms of payment or other terms of the debt, including but not limited to a student loan debt, mortgage loan debt, credit card debt, or 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.

Case 8:20-cv-00043-JVS-ADS Document 115 Filed 07/07/20 Page 3 of 18 Page ID #:1305

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STIPULATED FINAL JUDGMENT AND ORDER AS TO ROBERT HOOSE f. “Defendant” means Robert B. Hoose, formerly known as Robert Brooks Beauchamp, Jr., and any other name by which he might be known.

g. “Docu Prep Center” means Docu Prep Center, Inc., d/b/a DocuPrep Center, d/b/a Certified Document Center; Document Preparation Services, LP, d/b/a DocuPrep Center, d/b/a Certified Document Center; and their successors and assigns, individually, collectively, or in any combination. h. “Effective Date” means the date on which the Order is issued. i. “Enforcement Director” means the Assistant Director of the Office of Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

j. “Prescreened Consumer Reports” means Consumer Reports relating to consumers furnished by a Consumer Reporting Agency in connection with credit or insurance transactions that are not initiated by the consumers, pursuant to 15 U.S.C. § 1681b(c).

k. “Related Consumer Action” means a private action by or on behalf of one or more consumers or an enforcement action by another governmental agency brought against Defendant based on substantially the same facts as described in the Complaint. l. “Student Loan Debt Relief Companies” means Docu Prep Center, Inc., d/b/a DocuPrep Center, d/b/a Certified Document Center; Document Preparation Services, LP, d/b/a DocuPrep Center, d/b/a Certified Document Center; Certified Doc Prep, Inc.; Certified Doc Prep Services, LP; Assure Direct Services, Inc.; Assure Direct Services, LP; Direct Document Solutions, Case 8:20-cv-00043-JVS-ADS Document 115 Filed 07/07/20 Page 4 of 18 Page ID #:1306

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STIPULATED FINAL JUDGMENT AND ORDER AS TO ROBERT HOOSE Inc.; Direct Document Solutions, LP; Secure Preparation Services, Inc.; Secure Preparation Services, LP, and their successors and assigns, individually, collectively, or in any combination.

ORDER CONDUCT RELIEF I.

Permanent Ban on Offering or Providing Debt-Relief Services IT IS ORDERED that:

Defendant, whether acting directly or indirectly, is permanently restrained from:

This Paragraph does not prohibit Defendant from maintaining a passive ownership interest in TaxTime Relief, Inc. or from receiving income from that passive ownership interest, provided that he has no other involvement in TaxTime Relief, Inc. Nothing else in this Order shall be read as an exception to this Paragraph.

II.

Permanent Ban on Using or Obtaining Prescreened Consumer Reports IT IS ORDERED that:

Defendant, whether acting directly or indirectly, is permanently restrained and enjoined from using, obtaining, offering, providing, selling, or Case 8:20-cv-00043-JVS-ADS Document 115 Filed 07/07/20 Page 5 of 18 Page ID #:1307

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STIPULATED FINAL JUDGMENT AND ORDER AS TO ROBERT HOOSE arranging for others to use or obtain Prescreened Consumer Reports for any purpose. Nothing in this Order shall be read as an exception to this Paragraph. III.

Prohibition on Using or Obtaining Consumer Reports for Any Business Purpose IT IS ORDERED that:

10.

Defendant, and his officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them, who receive actual notice of this Order, whether acting directly or indirectly, are permanently restrained and enjoined from using, obtaining, offering, providing, selling, or arranging for others to use or obtain Consumer Reports for any business purpose other than underwriting or otherwise evaluating mortgage loans. Nothing in this Order shall be read as an exception to this Paragraph.

IV.

Consumer Information IT IS ORDERED that:

11.

Defendant and his officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them, who receive actual notice of this Order, whether acting directly or indirectly, may not:

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STIPULATED FINAL JUDGMENT AND ORDER AS TO ROBERT HOOSE b. disclose, use, or benefit 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 customer’s account (including a credit card, bank account, or other financial account), obtained from or through the activities of the Student Loan Debt Relief Companies.

However, this Order does not prohibit the disclosure of consumer information if lawfully requested by a government agency or required by law, regulation, or court order.

MONETARY PROVISIONS V.

Order to Pay Redress IT IS FURTHER ORDERED that:

12.

A judgment for monetary relief is entered in favor of the Bureau and against Defendant, in the amount of $7,000,000 for the purpose of providing redress to Affected Consumers; however, full payment of this judgment will be suspended upon satisfaction of the obligations in Paragraphs [13 through 17] of this Section and Paragraphs [26 through 30 and 32] of Section VIII [Additional Monetary Provisions] and subject to Section VI [Effect of Misrepresentation or Omission of Financial Condition] of this Order. 13.

Within 10 days of the Effective Date, Defendant 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, $25,000, in partial satisfaction of the judgment referenced in Paragraph [12] of this Section. 14.

With regard to any redress that Defendant pays under this Section, if Defendant, directly or indirectly, receives any reimbursement or Case 8:20-cv-00043-JVS-ADS Document 115 Filed 07/07/20 Page 7 of 18 Page ID #:1309

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STIPULATED FINAL JUDGMENT AND ORDER AS TO ROBERT HOOSE indemnification from any source, including but not limited to payment made under any insurance policy, or if Defendant secures a tax deduction or tax credit with regard to any federal, state, or local tax, Defendant must: (a) immediately notify the Enforcement Director in writing, and (b) within 10 days of receiving the funds or monetary benefit, Defendant must transfer to the Bureau the full amount of such funds or monetary benefit (Additional Payment) to the Bureau or to the Bureau’s agent according to the Bureau’s wiring instructions. After the Bureau receives the Additional Payment, the amount of the suspended judgment referenced in Paragraph [12] will be reduced by the amount of the Additional Payment and the Additional Payment will be applied toward satisfaction of the monetary judgment entered in Paragraph [12].

15.

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. Defendant will have no right to challenge any actions that the Bureau or its representatives may take under this Section. 17.

Payment of redress to any Affected Consumer under this Order may not be conditioned on that Affected Consumer waiving any right. Case 8:20-cv-00043-JVS-ADS Document 115 Filed 07/07/20 Page 8 of 18 Page ID #:1310

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STIPULATED FINAL JUDGMENT AND ORDER AS TO ROBERT HOOSE VI.

Effect of Misrepresentation or Omission Regarding Financial Condition IT IS FURTHER ORDERED that:

18.

The suspension of the monetary judgment entered in Section V [Order to Pay Redress] of this Order is expressly premised on the truthfulness, accuracy, and completeness of Defendant’s financial statements and supporting documents submitted to the Bureau, which Defendant asserts are truthful, accurate, and complete, and which include the Financial Statement of Defendant, including the attachments, executed on March 9, 2020, and submitted to the Bureau on or about March 10, 2020. 19.

If upon motion by the Bureau, the Court determines that Defendant has failed to disclose any material asset, or that his Financial Statement identified in Paragraph [18] contains any material misrepresentations or omissions, including materially misstating the value of any asset, the Court shall terminate the suspension of the monetary judgment entered in Section V [Order to Pay Redress] of this Order and the full judgment of $7,000,000 entered shall be immediately due and payable, less any amounts paid to the Bureau under Section V [Order to Pay Redress] of this Order. 20.

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STIPULATED FINAL JUDGMENT AND ORDER AS TO ROBERT HOOSE VII.

Order to Pay Civil Money Penalties IT IS FURTHER ORDERED that:

21.

Under section 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged against Defendant in the Complaint, and taking into account the factors in 12 U.S.C. § 5565(c)(3), Defendant must pay a civil money penalty of $1.00 to the Bureau. This nominal penalty is based on Defendant’s limited ability to pay as attested to in its financial statements identified in Section VI [Effect of Misrepresentation or Omission Regarding Financial Condition] above.

22.

Within 10 days of the Effective Date, Defendant must pay the civil money penalties in Paragraph [21] by wire transfer to the Bureau or to the Bureau’s agent in compliance with the Bureau’s wiring instructions. 23.

The civil money penalty paid under this Order will be deposited in the Civil Penalty Fund of the Bureau, as required by section 1017(d) of the CFPA, 12 U.S.C. § 5497(d).

24.

Defendant must treat the civil money penalties paid under this Order as a penalty paid to the government for all purposes. Regardless of how the Bureau ultimately uses those funds, Defendant may not: a. claim, assert, or apply for a tax deduction, tax credit, or any other tax benefit for any civil money penalty paid under this Consent Order; or b. seek or accept, directly or indirectly, reimbursement or indemnification from any source, including but not limited to payment made under any insurance policy, with regard to any civil money penalty paid under this Order. Case 8:20-cv-00043-JVS-ADS Document 115 Filed 07/07/20 Page 10 of 18 Page ID #:1312

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STIPULATED FINAL JUDGMENT AND ORDER AS TO ROBERT HOOSE 25.

Defendant agrees that the civil penalty imposed by the Order represents a civil penalty owed to the United States Government, is not compensation for actual pecuniary loss, and, thus that it is not subject to discharge under the Bankruptcy Code under 11 U.S.C. § 523(a)(7). VIII.

Additional Monetary Provisions 26.

In the event of any default on Defendant’s obligations to make payment under this Order, interest, computed under 28 U.S.C. § 1961, as amended, will accrue on any outstanding amounts not paid from the date of default to the date of payment, and will immediately become due and payable. 27.

Defendant relinquishes all dominion, control, title to the funds paid under this Order to the fullest extent permitted by law. No part of the funds may be returned to Defendant.

28.

29.

The facts alleged in the Complaint establish all elements necessary to sustain an action by the Bureau under to Section 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A). For such purposes, this Order will have collateral estoppel effect against Defendant, even in Defendant’s capacity as debtor-in-possession.

30.

Under 31 U.S.C. § 7701, Defendant, unless he already has done so, must furnish to the Bureau his taxpayer-identification numbers, which may be Case 8:20-cv-00043-JVS-ADS Document 115 Filed 07/07/20 Page 11 of 18 Page ID #:1313

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STIPULATED FINAL JUDGMENT AND ORDER AS TO ROBERT HOOSE used for purposes of collecting and reporting on any delinquent amount arising out of this Order.

31.

Within 30 days of the entry of a final judgment, order, or settlement in a Related Consumer Action, Defendant must notify the Enforcement Director of the final judgment, order, or settlement in writing. That notification must indicate the amount of redress, if any, that Defendant paid or is required to pay to consumers, and it must describe the consumers or classes of consumers to whom that redress has been or will be paid. To preserve the deterrent effect of the civil money penalty in any Related Consumer Action, Defendant may not argue that Defendant is entitled to, nor may Defendant benefit by, any offset or reduction of any monetary remedies imposed in the Related Consumer Action because of the civil money penalty paid in this action, or because of any payment that the Bureau makes from the Civil Penalty Fund. If the court in any Related Consumer Action offsets or otherwise reduces the amount of compensatory monetary remedies imposed against Defendant based on the civil money penalty paid in this action, or based on any payment that the Bureau makes from the Civil Penalty Fund, Defendant must, within 30 days after entry of a final order granting such offset or reduction, notify the Bureau and pay the amount of the offset or reduction to the U.S. Treasury. Such a payment will not be considered an additional civil money penalty and will not change the amount of the civil money penalty imposed in this action. 32.

Under Section 604(a)(I) of FCRA, 15 U.S.C.§ 168l b(a)(1), any Consumer Reporting Agency may furnish a Consumer Report concerning Defendant to the Bureau, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. Case 8:20-cv-00043-JVS-ADS Document 115 Filed 07/07/20 Page 12 of 18 Page ID #:1314

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STIPULATED FINAL JUDGMENT AND ORDER AS TO ROBERT HOOSE COMPLIANCE PROVISIONS IX.

Reporting Requirements IT FURTHER ORDERED that:

33.

Defendant must notify the Bureau of any development that may affect compliance obligations arising under this Order, including but not limited to, a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor company; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order; the filing of any bankruptcy or insolvency proceeding by or against Defendant; or a change in Defendant’s name or address. Defendant must provide such notice at least 30 days before the development, or as soon as practicable after learning of the development, whichever is sooner. 34.

Within 7 days of the Effective Date, Defendant must: a. designate at least one telephone number and email, physical, and postal address as points of contact, which the Bureau may use to communicate with Defendant;

b. identify all businesses for which Defendant is the majority owner, or that Defendant directly or indirectly controls, by all of their names, telephone numbers, and electronic, physical, and postal addresses;

c. describe the activities of each such business, including the products and services offered, and the means of advertising, marketing, and sales;

d. identify Defendant’s telephone numbers and all electronic, physical, and postal addresses, including all residences; and Case 8:20-cv-00043-JVS-ADS Document 115 Filed 07/07/20 Page 13 of 18 Page ID #:1315

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STIPULATED FINAL JUDGMENT AND ORDER AS TO ROBERT HOOSE e. describe in detail Defendant’s involvement in any business for which he performs services in any capacity or which he wholly or partially owns, including his title, role, responsibilities, participation, authority, control, and ownership. 35.

Defendant must report any change in the information required to be submitted under Paragraph [34] at least 30 days before the change, or as soon as practicable after learning about the change, whichever is sooner. 36.

Within 90 days of the Effective Date, and again one year after the Effective Date, Defendant must submit to the Enforcement Director an accurate written compliance progress report sworn to under penalty of perjury (“Compliance Report”), which, at a minimum: a. lists each applicable paragraph and subparagraph of this Order and describes in detail the manner and form in which such Defendant has complied with each such paragraph and subparagraph of this Order;

b. describes in detail the manner in which and purposes for which Defendant has used or obtained Consumer Reports; and c. attaches a copy of each Order Acknowledgment obtained under Section X [Order Distribution and Acknowledgment], unless previously submitted to the Bureau. X.

Order Distribution and Acknowledgment IT IS FURTHER ORDERED that, 37.

Within 7 days of the Effective Date, Defendant must submit to the Enforcement Director an acknowledgment of receipt of this Order, sworn under penalty of perjury.

Case 8:20-cv-00043-JVS-ADS Document 115 Filed 07/07/20 Page 14 of 18 Page ID #:1316

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STIPULATED FINAL JUDGMENT AND ORDER AS TO ROBERT HOOSE 38.

Within 30 days of the Effective Date, Defendant, for any business for which he is the majority owner or which he directly or indirectly controls, must deliver a copy of this Order to each of its owners, board members, officers, LLC members and managers, and general and limited partners, as well as any managers, employees, or other agents and representatives who have responsibilities related to Consumer Reports.

39.

Defendant, for any business for which he is the majority owner or which he directly or indirectly controls, must deliver a copy of this Order to any business entity resulting from any change in structure referred to in Section IX [Reporting Requirements], any future owners, board members, officers, LLC members and managers, and general and limited partners, as well as any managers, employees, or other agents and representatives who will have responsibilities related to Consumer Reports before they assume their responsibilities.

40.

Defendant must secure a signed and dated statement acknowledging receipt of a copy of this Order, ensuring that any electronic signatures comply with the requirements of the E-Sign Act, 15 U.S.C. § 7001 et seq., within 30 days of delivery, from all persons receiving a copy of this Order under this Section.

XI.

Recordkeeping IT IS FURTHER ORDERED that, 41.

Defendant, for any business for which he is the majority owner or which he directly or indirectly controls, must create all documents and business records necessary to demonstrate full compliance with each provision of this Order, including all submissions to the Bureau. Defendant must retain these documents for at least 10 years after creation and make them available to the Case 8:20-cv-00043-JVS-ADS Document 115 Filed 07/07/20 Page 15 of 18 Page ID #:1317

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STIPULATED FINAL JUDGMENT AND ORDER AS TO ROBERT HOOSE Bureau upon the Bureau’s request.

42.

Defendant, for any business for which he is the majority owner or which he directly or indirectly controls, must maintain, for 10 years from the Effective Date, or 10 years after creation, whichever is longer: a. all records concerning Consumer Reports used or obtained; and b. all consumer complaints and refund requests (whether received directly or indirectly, such as through a third party), and any responses to those complaints or requests. Defendant must make these materials available to the Bureau upon the Bureau’s request.

XII.

Notices IT IS FURTHER ORDERED that:

43.

Unless otherwise directed in writing by the Bureau, Defendant must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “CFPB v. Chou Team Realty, LLC, et al., Case No. 8:20-cv-00043-JVS-ADS,” and send them by overnight courier or first-class mail to the below address, and contemporaneously by email to [email protected]: Assistant Director for Enforcement Bureau of Consumer Financial Protection ATTENTION: Office of Enforcement 1700 G Street, N.W.

Washington D.C. 20552 Case 8:20-cv-00043-JVS-ADS Document 115 Filed 07/07/20 Page 16 of 18 Page ID #:1318

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STIPULATED FINAL JUDGMENT AND ORDER AS TO ROBERT HOOSE XIII.

Cooperation with the Bureau IT IS FURTHER ORDERED that:

44.

Defendant must cooperate fully to help the Bureau determine the identity and location of, and the amount of injury sustained by, each Affected Consumer. Defendant must provide such information in his agents’ possession or control within 14 days of receiving a written request from the Bureau. 45.

Defendant must cooperate fully with the Bureau in this lawsuit, CFPB v. Chou Team Realty, LLC, et al., Case No. 8:20-cv-00043-JVS-ADS (C.D. Cal.), and in any investigation related to or associated with the conduct described in the Complaint. Defendant must provide truthful and complete information, evidence, and testimony. Defendant must appear for interviews, discovery, hearings, trials, and any other proceedings that the Bureau may reasonably request upon 10 days written notice, or other reasonable notice, at such places and times as the Bureau may designate, without the service of compulsory process.

XIV.

Compliance Monitoring IT IS FURTHER ORDERED that, to monitor Defendant’s compliance with this Order, including the financial representations upon which part of the judgment was suspended:

46. Within 14 days of receipt of a written request from the Bureau, Defendant must submit additional compliance reports or other requested information, which must be sworn under penalty of perjury; provide testimony; or produce documents.

Case 8:20-cv-00043-JVS-ADS Document 115 Filed 07/07/20 Page 17 of 18 Page ID #:1319

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STIPULATED FINAL JUDGMENT AND ORDER AS TO ROBERT HOOSE 47.

For purposes of this Section, the Bureau may communicate directly with the Defendant, unless the Defendant retains counsel related to these communications.

48.

Defendant must permit Bureau representatives to interview any employee or other person affiliated with Defendant who has agreed to such an interview. The person interviewed may have counsel present. 49.

Nothing in this Order will limit the Bureau’s lawful use of compulsory process, under 12 C.F.R. § 1080.6. XV.

Retention of Jurisdiction IT IS FURTHER ORDERED that:

50.

The Court will retain jurisdiction of this matter for the purpose of enforcing this Order.

IT IS SO ORDERED.

DATED this 7th day of July, 2020.

_________________________________

Hon. James V. Selna

Case 8:20-cv-00043-JVS-ADS Document 115 Filed 07/07/20 Page 18 of 18 Page ID #:1320

Amended complaint (July 2020)

PDF of this document (42 pages)

Page 76

FIRST AMENDED COMPLAINT

LEANNE E. HARTMANN (CA Bar #264787) – Local Counsel E-mail: [email protected] Phone: (415) 844-9787 301 Howard St., Suite 1200 San Francisco, CA 94105 Fax: (415) 844-9788

Attorneys for Plaintiff Bureau of Consumer Financial Protection

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Bureau of Consumer Financial Protection,

Plaintiff,

vs.

Defendants,

Thomas “Tom” Chou; and Sean Cowell,

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Case No.: 8:20-cv-00043-JVS-ADS

FIRST AMENDED COMPLAINT Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 1 of 42 Page ID #:1323

Page 77

FIRST AMENDED COMPLAINT

Defendants and Relief Defendants,

Kenneth Lawson; Cre8labs, Inc.; XO Media, LLC; and TDK Enterprises, LLC,

Relief Defendants.

) ) ) ) ) ) ) ) )

JURISDICTION AND VENUE 1.

Venue is proper in this district because Defendants and Relief Defendants are located, reside, or do business in this district. 12 U.S.C. § 5564(f).

INTRODUCTION 3.

1 On May 14, 2020, the Court entered a stipulated final judgment and order against Defendant Chou Team Realty, LLC, Defendants and Relief Defendants Thomas Chou and Sean Cowell, and Relief Defendants TDK Enterprises, LLC and Cre8labs, Inc., which resolved the Bureau’s claims against them. ECF No. 90. On July 7, 2020, the Court entered a stipulated final judgment and order against Defendant Robert Hoose, which resolved the Bureau’s claims against him. ECF No. 115.

Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 2 of 42 Page ID #:1324

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FIRST AMENDED COMPLAINT From August 2017 through at least January 2019, a sham entity known as Lend Tech also unlawfully obtained consumer reports from Experian and provided them to other companies, including companies that used the lists to market student-loan debt-relief services.

PLAINTIFF 8.

The Bureau is an independent agency charged with enforcing Federal consumer financial laws. 12 U.S.C. § 5491(a). The Bureau has independent litigating authority, 12 U.S.C. § 5564(a)-(b), including the authority to enforce prohibitions on unfair, deceptive, and abusive acts or practices in the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531, 5536; the Fair Credit Reporting Act, 15 U.S.C. § 1681s; and the Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 3 of 42 Page ID #:1325

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FIRST AMENDED COMPLAINT Telemarketing Sales Rule (TSR), 16 C.F.R. Part 310, as it applies to persons subject to the CFPA, 15 U.S.C. §§ 6102(c), 6105(d). 9.

The Bureau has authority to bring civil actions against persons violating Federal consumer financial laws and to seek all appropriate legal and equitable relief, including injunctive relief, refund of monies paid, damages, restitution, disgorgement, and civil money penalties. 12 U.S.C. §§ 5564(a), 5565(a)(2).

DEFENDANTS AND RELIEF DEFENDANTS 10.

Chou Team Realty, LLC is a successor to Chou Team Realty, Inc. 12.

Chou Team Realty, Inc. and Chou Team Realty, LLC (collectively, Monster Loans) have held themselves out as doing business as Monster Loans and MonsterLoans.

13.

Since 2014, Monster Loans has operated as a mortgage lender. It is licensed in at least 30 states, including California. 14.

Lend Tech is licensed by the California Department of Real Estate and has held itself out as doing business as a mortgage-brokerage company. Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 4 of 42 Page ID #:1326

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FIRST AMENDED COMPLAINT 16.

Defendant Docu Prep Center, Inc. registered as a California corporation on February 3, 2015, and it has held itself out as doing business at 3 Whatney, Suite 100, Irvine, CA 92618.

17.

Defendant Document Preparation Services, LP registered as a California limited partnership on October 19, 2015, and it has held itself out as doing business at 3 Whatney, Suite 100, Irvine, CA 92618. Docu Prep Center, Inc. was the general partner of Document Preparation Services, LP (collectively, Docu Prep Center).

18.

Docu Prep Center has held itself out as doing business as DocuPrep Center and Certified Document Center. 19.

Defendant Certified Doc Prep, Inc. registered as a California corporation on October 14, 2015, and it has held itself out as doing business at 1015 E. Imperial Highway, Unit C8, Brea, CA 92821. 20.

Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 5 of 42 Page ID #:1327

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FIRST AMENDED COMPLAINT 23.

Defendant Direct Document Solutions, LP registered as a California limited partnership on January 3, 2017, and it has held itself out as doing business at 23785 El Road, Suite 493, Lake Forest, CA 92630 and 5 Oldfield, 2nd Floor, Irvine, CA 92618. From January 2017 to March 2018, Direct Document Solutions, Inc. was the general partner of Direct Document Solutions, LP (collectively, Direct Document Solutions). 25.

Defendant Docs Done Right, Inc. registered as a California corporation on October 22, 2015, and it has held itself out as doing business at 895 Dove Street, 3rd Floor, Newport Beach, CA 92660. 29.

Defendant Docs Done Right, LP registered as a California limited partnership on March 8, 2016, and it has held itself out as doing business at 3 Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 6 of 42 Page ID #:1328

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FIRST AMENDED COMPLAINT Whatney, Suite 100, Irvine, CA 92618. Docs Done Right, Inc. was the general partner of Docs Done Right, LP (collectively, Docs Done Right). 30.

Relief Defendant Cre8labs, Inc. registered as a California corporation on April 1, 2016, and it has held itself out as doing business at 24632 La Plata Drive, Laguna Niguel, CA 92677. 32.

34.

36.

Nesheiwat owned limited partnership interests in each of the Student Loan Debt Relief Companies.

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FIRST AMENDED COMPLAINT 37.

Nesheiwat exercised substantial managerial responsibility for and control over Docu Prep Center’s business practices, including its sales practices, marketing practices, and fees.

38.

Cowell registered Lend Tech in June 2017, and he was its sole owner until November 2017.

41.

42.

43.

Defendant Robert Hoose was Docu Prep Center’s chief operating officer. Hoose was the part-owner of Docu Prep Center, Inc. and owned a limited-partnership interest in Document Preparation Services, LP. Hoose exercised substantial managerial responsibility for and control over Docu Prep Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 8 of 42 Page ID #:1330

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FIRST AMENDED COMPLAINT Center’s business practices, including its sales practices, marketing practices, and fees.

44.

Defendant Frank Anthony Sebreros was the president of Assure Direct Services. Sebreros owned Assure Direct Services, Inc. and he owned a limited-partnership interest in Assure Direct Services, LP. Sebreros exercised substantial managerial responsibility for and control over Assure Direct Services’ business practices, including its sales practices, marketing practices, and fees.

45.

Sebreros was identified as a manager of Lend Tech in the company’s application to Experian in June 2017. 46.

Defendant Bilal Abdelfattah a/k/a Belal Abdelfattah a/k/a Bill Abdel (Abdel) was a marketing manager at Monster Loans in 2015 and 2016. 47.

Abdel was a marketing manager at Docu Prep Center and was an employee of Assure Direct Services.

48.

Abdel was identified as a manager of Lend Tech in the company’s application to Experian in June 2017.

49.

50.

Martinez represented that he was a manager or employee of Lend Tech in communications with Experian in 2017 and 2018. 51.

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FIRST AMENDED COMPLAINT FACTS Monster Loans’ Purchases of Prescreened Lists 52.

53.

In 2015, Monster Loans applied for and received an account with Experian, which enabled it to purchase prescreened lists. 54.

In its application, Monster Loans certified to Experian that it would use prescreened lists to make firm offers of credit for mortgage loans. 55.

During and after the enrollment process, Monster Loans also represented to Experian that it would use prescreened lists to market its mortgage products.

56.

Monster Loans did not disclose to Experian that prescreened lists would be provided to other companies and used to market debt-relief services. 57.

58.

In total, Monster Loans purchased prescreened lists containing information about more than 7 million consumers with student loans. 59.

The prescreened lists that Monster Loans purchased were used to market debt-relief services, and not to make firm offers of credit or insurance. 60.

Nesheiwat oversaw Monster Loans’ purchases of prescreened lists from Experian for use by the Student Loan Debt Relief Companies in their direct mailings.

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FIRST AMENDED COMPLAINT 61.

Sklar and Hoose obtained prescreened lists through Monster Loans’ account with Experian and used the lists to market Docu Prep Center’s student-loan debt-relief services.

63.

In or around May 2017, Monster Loans stopped purchasing prescreened lists for the Student Loan Debt Relief Companies through its account with Experian.

Lend Tech’s Purchases of Prescreened Lists 64.

In June 2017, Cowell registered Lend Tech as a purported mortgage-brokerage company.

65.

In fact, Lend Tech is a sham entity that has only ever been used to obtain prescreened lists from Experian.

66.

Lend Tech’s application to Experian certified that it would use prescreened lists to make firm offers of credit for mortgage loans. 67.

Lend Tech did not disclose to Experian that the prescreened lists would be provided to other companies and used for the purpose of marketing debt-relief services.

68.

During August and September 2017, Lend Tech used its account with Experian to order prescreened lists containing information regarding more Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 11 of 42 Page ID #:1333

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FIRST AMENDED COMPLAINT than 1.5 million consumers with student loans for the Student Loan Debt Relief Companies.

70.

In November 2017, Cowell transferred ownership of Lend Tech to a friend of Martinez named Sergio Loza.

72.

At the time of the transfer, Lend Tech had no meaningful assets other than the account with Experian.

73.

Between November 2017 and at least January 2019, Abdel, Sebreros, and Martinez controlled Lend Tech’s Experian account. 74.

During that period, Lend Tech obtained prescreened lists containing information regarding more than 11 million consumers. 75.

Lend Tech continued representing to Experian that it would use the prescreened lists for its own marketing of mortgage loans. 76.

In fact, Lend Tech has never used the prescreened lists to market mortgage loans.

77.

Martinez, Sebreros, and Abdel resold the prescreened lists to numerous other companies, including companies offering student-loan debtrelief services.

78.

Martinez, Sebreros, and Abdel also used the prescreened lists to market student-loan debt-relief services through new companies created during or after September 2017.

79.

The student-loan debt-relief companies that received prescreened lists purchased by Lend Tech between November 2017 and January 2019 did not use the lists to make firm offers of credit or insurance. Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 12 of 42 Page ID #:1334

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FIRST AMENDED COMPLAINT Student Loan Consolidations, Repayment Programs, and Forgiveness Programs 80.

ED offers several federal student-loan repayment and forgiveness programs. Some programs potentially offer lower monthly loan payments. Some allow consumers to obtain loan forgiveness. 81.

These programs are administered through third-party student-loan servicers that handle the billing and other services on federal student loans. 82.

83.

Following consolidation or enrollment in a new repayment or forgiveness program, the consumer’s loan continues to be serviced by a thirdparty student-loan servicer.

The Student Loan Debt Relief Companies and Docs Done Right 84.

85.

The Student Loan Debt Relief Companies primarily marketed their debt-relief services through direct mail. 86.

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FIRST AMENDED COMPLAINT 87.

After Docs Done Right was created in late 2015, its employees participated in a portion of the telemarketing sales call regarding consumers’ understanding of the services.

88.

Following enrollment, Docs Done Right handled communications with consumers concerning the debt-relief services, the payment of fees, and consumer complaints. Docs Done Right posed as the relevant Student Loan Debt Relief Company in those communications. Docs Done Right also handled the preparation and submission of consumers’ applications to consolidate their federal student loans and enroll in ED’s repayment and forgiveness programs. Misrepresentations about Lower Interest Rates 89.

In direct-mail solicitations and in sales calls, the Student Loan Debt Relief Companies represented that consumers could obtain a lower interest rate by consolidating their loans. 90.

91.

As a result, after consolidation, the consumer’s new loan has either the same effective interest rate as the prior loans or a higher rate. 92.

The Student Loan Debt Relief Companies’ representations that consolidation would lead to a lower interest rate were therefore false. 93.

Consumers with federal student loans are generally eligible for an interest rate reduction if they set up automatic monthly payments. 94.

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FIRST AMENDED COMPLAINT 95.

But consumers can receive the interest-rate reduction associated with setting up automatic monthly payments regardless of whether they consolidate their loans.

Misrepresentations about Improved Credit Scores 96.

Between 2015 and 2017, the Student Loan Debt Relief Companies represented during sales calls that consolidating federal student loans would improve consumers’ credit scores.

97.

In many instances, consolidating is not likely to improve a consumer’s credit score, such as when the consumer is current on their student loan payments.

98.

101. Docu Prep Center also represented that student loan servicers did not act in consumers’ best interests and implied that consumers would not have to interact with third-party student loan servicers after consolidating their loans. Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 15 of 42 Page ID #:1337

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FIRST AMENDED COMPLAINT 102. In fact, ED does not become the “new servicer” on loans that are consolidated. ED contracts with third-party student-loan servicers that handle federal student loans both before and after the loans are consolidated. Loan consolidation does not enable consumers to avoid interacting with third-party servicers.

Collection of Advance Fees 103. The Student Loan Debt Relief Companies charged consumers a fee that ranged between $699 and $999.

104. The Student Loan Debt Relief Companies charged and received fees before consumers’ applications for loan consolidations, loan repayment plans, and loan forgiveness plans were approved, and before consumers had made the first payments under the altered terms of their student loans. 105. Docs Done Right participated in the charging of fees and received its portion of the fees before consumers’ applications for loan consolidations, loan repayment plans, and loan forgiveness plans were approved, and before consumers had made the first payments under the altered terms of their student loans.

106. Collectively, the Student Loan Debt Relief Companies and Docs Done Right collected more than $15 million in illegal advance fees from thousands of consumers nationwide between 2015 and at least 2017. Role of Individual Defendants in Deceptive Representations and Charging of Advance Fees 107. Nesheiwat, Sklar, and Hoose each participated directly in Docu Prep Center’s making of the representations described in this Complaint or had the authority to control them, and each had knowledge of the representations, was recklessly indifferent to the truth or falsity of the misrepresentations, or Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 16 of 42 Page ID #:1338

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FIRST AMENDED COMPLAINT was aware of a high probability of fraud along with an intentional avoidance of the truth.

108. Nesheiwat, Sklar, and Hoose each participated directly in the charging of fees by Docu Prep Center or had the authority to control its charging of fees, and each had knowledge of Docu Prep Center’s fee-charging practices or was recklessly indifferent to those practices. 109. Sebreros participated directly in Assure Direct Services’ making of the representations described in this Complaint or had the authority to control them, and had knowledge of the representations, was recklessly indifferent to the truth or falsity of the misrepresentations, or was aware of a high probability of fraud along with an intentional avoidance of the truth. 110. Sebreros participated directly in the charging of fees by Assure Direct Services or had the authority to control its charging of fees, and had knowledge of Assure Direct Services’ fee-charging practices or was recklessly indifferent to those practices.

Relief Defendants Lawson and XO Media, LLC 112. In 2010, the Federal Trade Commission (FTC) amended the TSR to add specific provisions to curb deceptive and abusive practices associated with debt relief services. 75 Fed. Reg. 48458. Among other things, the amendments prohibited debt relief providers who sold their services through telemarketing from collecting advance fees. 16 C.F.R. § 310.4(a)(5). Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 17 of 42 Page ID #:1339

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FIRST AMENDED COMPLAINT 113. In 2010, the FTC put out a guide for businesses offering “debt relief services” regarding the TSR amendments, which highlighted that “It’s illegal to charge upfront fees… [and] You can’t misrepresent your services.” See Debt Relief Services & the Telemarketing Sales Rule: A Guide for Businesses, FTC, Aug. 2010, available at https://www.ftc.gov/tipsadvice/business-center/guidance/debt-relief-services-telemarketing-sales-ruleguide-business.

114. Lawson, through XO Media, LLC, made a capital contribution to Docu Prep Center at or around the time the company was created in February 2015.

115. Prior to and around the time Lawson and XO Media, LLC initially made a capital contribution Docu Prep Center in February 2015, Lawson received information from Chou about the nature of Docu Prep Center’s business, which involved selling student loan debt relief services through direct mail and telemarketing sales calls.

116. Prior to Lawson and XO Media, LLC’s contribution, companies offering student loan debt relief services had received extensive press coverage for “scamming” consumers by engaging in deceptive marketing and charging unlawful advance fees.

117. For example, CNBC reported in July 2014 that “[s]cammers” were operating “phony student loan ‘debt relief’ companies that promise to help—for a price” and that law enforcement was “cracking down” on illegal conduct by such companies. Student Debt ‘Relief’ Scams Offering Nothing but Distress, CNBC, July 29, 2014, https://www.cnbc.com/2014/07/28/student-loan-crisisstudent-debt-relief-is-not-always-relieving.html; see also Robert Farrington, Beware: Student Loan Scams Victimizing Students and Graduates, Forbes, June Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 18 of 42 Page ID #:1340

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FIRST AMENDED COMPLAINT 10, 2014, https://www.forbes.com/sites/robertfarrington/2014/06/10/bewarestudent-loan-scams-victimizing-students-and-graduates/#16876dec5160. 118. News outlets also reported in December 2014 on two lawsuits the Bureau filed against student loan debt relief businesses that allegedly deceived consumers and charged unlawful advance fees, including one business based in Orange County. See, e.g., Imran Ghori and Steve Greenhut, U.S. Agency Claims OC Company Running Student Debt-Relief Scam, Orange County Register, Dec. 15, 2014, https://www.ocregister.com/2014/12/15/us-agencyclaims-oc-company-running-student-debt-relief-scam/; Students Tricked into High Fees by Debt Relief Companies, American Banker, Dec. 11, 2014, https://www.americanbanker.com/news/students-tricked-into-high-fees-bydebt-relief-companies; Erin E. Arvedlund, Investing in You: Beware Offers of Student Debt ‘Help’, The Philadelphia Inquirer, Dec. 28, 2014, https://www.inquirer.com/philly/education/20141228_Investing_in_You__Bew are_offers_of_student_debt__help_.html.

119. Prior to Lawson and XO Media, LLC’s capital contribution to Docu Prep Center in February 2015, there was thus readily available information that legal prohibitions on deceptive acts or practices and the TSR’s advance fee prohibition could apply to student loan debt relief companies like Docu Prep Center. There was also readily available information indicating that failure to comply with such laws was pervasive in the student loan debt relief industry.

120. Prior to making their capital contribution in February 2015, Lawson and XO Media, LLC did not conduct any due diligence concerning whether Docu Prep Center would comply with applicable laws. 121. In 2015 and 2016 and prior to the creation of the other four Student Loan Debt Relief Companies, there were continued public reports about illegal Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 19 of 42 Page ID #:1341

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FIRST AMENDED COMPLAINT conduct by student loan debt relief companies. See, e.g., Adolfo Guzman- Lopez, California Attorney General Warns of Student Loan Scams, 89.3KPCC, Aug. 21, 2015, https://www.scpr.org/news/2015/08/21/53909/californiaattorney-general-warns-of-student-loan; Ann Carrns, Fraudulent Student Debt Relief Firm Shut Down by Consumer Bureau, The New York Times, Apr. 1, 2016, https://www.nytimes.com/2016/04/02/your-money/fraudulent-studentdebt-relief-firm-shut-down-by-consumer-bureau.html. 122. Lawson and XO Media, LLC also did not conduct any due diligence concerning whether the other four Student Loan Debt Relief Companies would comply with applicable laws prior to receiving limited partnership interests in those companies between October 2015 and January 2017.

123. Given the numerous public reports about student loan debt relief companies “scamming” consumers, charging unlawful advance fees, and engaging in deceptive conduct, Lawson and XO Media, LLC’s ongoing failure to conduct any due diligence of the Student Loan Debt Relief Companies was reckless and indicative of a lack of good faith. 124. After making their initial capital contribution in Docu Prep Center in February 2015, Lawson and XO Media, LLC received detailed updates from Sklar, Hoose, and others about Docu Prep Center’s operations, sales, marketing, and growth through periodic meetings and emails. 125. In a May 18, 2015 email copying Lawson regarding Docu Prep Center’s operations, Chou asked Sklar if Sklar had “any additional information about the potential ban on advance fees that might extend the time frame that we get payment.” Chou also asked whether a delay in receiving fees would “slow[] growth” towards Docu Prep Center’s goal of making 1,000 sales per month, which some involved with Docu Prep Center planned to celebrate with a Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 20 of 42 Page ID #:1342

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FIRST AMENDED COMPLAINT trip to Las Vegas. Chou stated that he was concerned about slowing the company’s growth “because I really want to go to Vegas. :-)” 126. Following this May 18, 2015 email, Docu Prep Center did not take any steps to comply with the TSR’s ban on charging advance fees for debt relief services.

127. On the contrary, as Sklar reported in an email to Lawson and others on June 8, 2015, Docu Prep Center arranged with a payment processor to begin receiving consumers’ fees through ACH transactions within only three to five business days, with the result that the company would not have to wait 30 to 60 days before receiving consumers’ fees. Sklar’s email also stated that Docu Prep Center was working to obtain a credit card merchant account so that it could “process credit cards very quickly.”

128. On July 1, 2015, Sklar emailed Lawson and others to report that Docu Prep Center was now receiving its customers’ fees “7 to 9 days after the client has made their ACH payment, which is much improved over the 45 day turn time [sic] we were initially anticipating.” This meant that Docu Prep Center charged and received fees before consumers’ applications for loan consolidations, loan repayment plans, and loan forgiveness plans were approved and before consumers had made the first payment under the altered terms of their student loans.

129. By July 2015, prior to receiving any distributions from Docu Prep Center, Lawson and XO Media, LLC therefore knew or should have known that Docu Prep Center was charging unlawful advance fees for debt relief services in violation of the TSR.

130. Lawson, through XO Media, LLC, made a capital contribution to Certified Doc Prep Services at or around the time the company was created in October 2015.

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FIRST AMENDED COMPLAINT 131. Lawson, through XO Media, LLC, made a capital contribution to Assure Direct Services at or around the time the company was created in August 2016.

132. Lawson and XO Media, LLC knew, at the time they made capital contributions, that Certified Doc Prep Services and Assure Direct Services’ business models and practices were based on Docu Prep Center’s. For example, in an email Lawson received in October 2015, Certified Doc Prep Services was referred to as a “second location” of Docu Prep Center. 133. Lawson and XO Media, LLC therefore knew or should have known when they made capital contributions that Certified Docu Prep Services and Assure Direct Services would charge unlawful advance fees for debt relief services in violation of the TSR, just as Docu Prep Center was already doing. 134. On April 8, 2016, Sklar sent an email to Lawson and others indicating that Docu Prep Center was purchasing and using consumer reports obtained from Experian to market its debt relief services. 135. Lawson and XO Media, LLC knew or should have known at the time they made capital contributions to Assure Direct Services in August 2016 that it too would use consumer reports obtained from Experian to market its debt relief services.

136. In October 2016, Lawson received an email stating that the use of Monster Loans’ Experian account to buy prescreened lists for the Student Loan Debt Relief Companies was generating frequent complaints and threats of lawsuits from consumers. Thus, by that time, Lawson and XO Media, LLC knew or should have known that the Student Loan Debt Relief Companies’ use of Experian consumer reports violated FCRA.

137. Lawson and XO Media, LLC did not make any capital contributions to Direct Document Solutions or Secure Preparation Services Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 22 of 42 Page ID #:1344

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FIRST AMENDED COMPLAINT when those companies were formed in January 2017. Lawson and XO Media, LLC nonetheless received limited partnership interests in those two companies. In 2017 and 2018, XO Media, LLC received distributions of purported profits from Direct Document Solutions and Secure Preparation Services. 138. Direct Document Solutions and Secure Preparation Services’ initial operations were funded with loans from certain of the earlier Student Loan Debt Relief Companies. Those loans consisted of funds that certain of the earlier Student Loan Debt Relief Companies had unlawfully taken from consumers through the violations described in this Complaint. 139. Lawson and XO Media, LLC knew or should have known at the time that they received limited partnership interests in Direct Document Solutions and Secure Preparation Services in January 2017 that those companies would also violate FCRA and the TSR, since those companies’ business models and practices were based on the earlier companies’ business models and practices.

140. Lawson supported efforts to continue obtaining Experian consumer reports to market debt relief services even after he knew that doing so might violate FCRA. For example, in or around May 2017, Lawson participated in a meeting with Nesheiwat, Chou, and other limited partners regarding the possibility of setting up a new mortgage company to obtain a new Experian account to buy consumer reports for the Student Loan Debt Relief Companies. In an email to Chou on May 11, 2017, Nesheiwat noted that at the meeting “Ken” (i.e., Kenneth Lawson) had recommended that the company be located “far enough away” to keep it separate from the existing businesses but be set up so that “we can still have the access.”

141. Mikael van Loon was a close associate of Lawson’s, and owned 10% of XO Media, LLC beginning in around mid-2016. During 2016 and Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 23 of 42 Page ID #:1345

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FIRST AMENDED COMPLAINT 2017, van Loon frequently acted as a representative of Lawson, XO Media, LLC, and other limited partners in dealings with the Student Loan Debt Relief Companies. Van Loon was also Monster Loans’ CFO beginning in August 2016 and then its CEO beginning in December 2016. 142. Like Lawson, van Loon knew or should have known about the Student Loan Debt Relief Companies’ violations of the TSR by July 2015 and of FCRA by October 2016 based on information he received through meetings with the managers of the Student Loan Debt Relief Companies and emails he received regarding the companies. For example, Van Loon also received the emails to Lawson referenced in Paragraphs 125, 127, 128, and 136. 143. In addition, emails that van Loon received in May 2016 indicate that he was aware of other red flags about the Student Loan Debt Relief Companies. The emails state that federal regulators were taking enforcement actions against similar student debt-relief companies for charging unlawful fees and engaging in deceptive advertising. In one of the emails, Hoose also mentions that Docu Prep Center had “gotten … past” past banks’ due diligence requirements for merchant accounts. Docu Prep Center did that by presenting information to banks that was not consistent with its actual business practices. 144. Between October 2015 and November 2018, XO Media, LLC received at least $585,000 in distributions of purported profits from the Student Loan Debt Relief Companies.

145. Between October 2015 and November 2018, the Student Loan Debt Relief Companies were committing or had committed the violations described in this Complaint, resulting in potential liabilities for, among other things, damages, consumer restitution or other monetary relief, and civil money penalties that were greater than the assets of those companies. Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 24 of 42 Page ID #:1346

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FIRST AMENDED COMPLAINT 146. When the Student Loan Debt Relief Companies distributed purported profits to XO Media, LLC, Lawson and XO Media, LLC knew or should have known that the Student Loan Debt Relief Companies did not have assets equal to or exceeding those potential liabilities. 147. Lawson and XO Media, LLC continued receiving distributions from the Student Loan Debt Relief Companies even after those companies shut down in September 2017 in response to the Bureau’s issuance of Civil Investigative Demands seeking information regarding potential FCRA, TSR, and CFPA violations by the Student Loan Debt Relief Companies. 148. XO Media, LLC passed at least $277,000 of the distributions from the Student Loan Debt Relief Companies on to Lawson. 149. Lawson and XO Media, LLC commingled the distributions from the Student Loan Debt Relief Companies with their other assets. 150. Under the limited partnership agreements that governed Certified Doc Prep Services, Assure Direct Services, Direct Document Solutions, and Secure Preparation Services, their limited partners, including XO Media, LLC, owned interests in the partnerships as entities. Under those agreements, the assets of Certified Doc Prep Services, Assure Direct Services, Direct Document Solutions, and Secure Preparation Services were owned by the partnerships as entities, and not by their limited partners. 151. Under the limited partnership agreements that governed Certified Doc Prep Services, Assure Direct Services, Direct Document Solutions, and Secure Preparation Services, limited partners, including XO Media, LLC, were not guaranteed any distributions of purported profits, including any return of capital contributions.

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FIRST AMENDED COMPLAINT LEGAL BACKGROUND FCRA 152. FCRA defines a “consumer report” to include: any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for (A) credit or insurance to be used primarily for personal, family, or household purposes; (B) employment purposes; or (C) any other purpose authorized under section 604 [§ 1681b]. 15 U.S.C. § 1681a(d).

153. Monster Loans and Lend Tech purchased from Experian prescreened lists containing information regarding consumers with student loans, including consumers’ names, addresses, number of student loans, and aggregate student loan balances.

154. Information such as a consumer’s number of student loans and their aggregate balance bears on, among other things, a consumer’s credit worthiness and credit standing and is used or expected to be used or collected for the purpose of serving as a factor in determining a consumer’s eligibility for credit.

155. The prescreened lists that Monster Loans and Lend Tech purchased from Experian are therefore “consumer reports” under § 603(d) of FCRA. 15 U.S.C. § 1681a(d).

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FIRST AMENDED COMPLAINT The TSR 156. The TSR is the implementing regulation of the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. §§ 6101-6108.

157. The Bureau is authorized to enforce the Telemarketing Act and the TSR with respect to the offering or provision of a consumer-financial product or service subject to the CFPA. 15 U.S.C. § 6105(d). 158. The TSR defines “debt relief service” as “any program or service represented, directly or by implication, to renegotiate, settle, or in any way alter the terms of payment or other terms of the debt between a person and one or more unsecured creditors or debt collectors, including, but not limited to, a reduction in the balance, interest rate, or fees owed by a person to an unsecured creditor or debt collector.” 16 C.F.R. § 310.2(o). 159. The TSR defines a “seller” as “any person who, in connection with a telemarketing transaction, provides, offers to provide, or arranges for others to provide goods or services to the customer in exchange for consideration.” 16 C.F.R. § 310.2(dd).

160. The TSR defines “telemarketer” as “any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer.” 16 C.F.R. § 310.2(ff).

161. The TSR defines “telemarketing” in relevant part as “a plan, program, or campaign which is conducted to induce the purchase of goods or services . . . by use of one or more telephones and which involves more than one interstate telephone call.” 16 C.F.R. § 310.2(gg). 162. The Student Loan Debt Relief Companies offered services to renegotiate, settle, or alter the terms of payments of consumers’ federal student loans involving the preparation and submission of requests for loan Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 27 of 42 Page ID #:1349

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FIRST AMENDED COMPLAINT consolidations, loan forgiveness, and loan-repayment plans to consumers’ student-loan servicers.

163. The Student Loan Debt Relief Companies offered and provided these services to consumers nationwide using the telephones and more than one interstate telephone call.

164. The Student Loan Debt Relief Companies offered and provided these services to consumers in exchange for payment of fees in connection with a telemarketing transaction.

165. The Student Loan Debt Relief Companies are each a “telemarketer” or “seller” offering a “debt relief service” under the TSR. 166. Docs Done Right provided services to renegotiate, settle, or alter the terms of payments of consumers’ federal student loans by preparing and submitting requests for loan consolidations, loan forgiveness, and loanrepayment plans to consumers’ student-loan servicers, and by handling communications with consumers concerning the services, payment of fees, and complaints.

167. Docs Done Right is a “seller” offering a “debt relief service” under the TSR.

168. Nesheiwat, Sklar, and Hoose each arranged for Docu Prep Center to provide debt-relief services to consumers in exchange for consideration. Nesheiwat, Sklar, and Hoose are each “sellers” offering a “debt relief service” under the TSR. 16 C.F.R. § 310.2(dd), (o).

169. Sebreros arranged for Assure Direct Services to provide debt-relief services to consumers in exchange for consideration. Sebreros is a “seller” offering a “debt relief service” under the TSR. 16 C.F.R. § 310.2(dd), (o). Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 28 of 42 Page ID #:1350

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FIRST AMENDED COMPLAINT 170. Martinez arranged for Docs Done Right to provide debt-relief services to consumers in exchange for consideration. Martinez is a “seller” offering a “debt relief service” under the TSR. 16 C.F.R. § 310.2(dd), (o). The CFPA 171. Sections 1031 and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531, 5536(a)(1)(B), prohibit “covered person[s]” from engaging in any “unfair, deceptive, or abusive act or practice.”

172. A representation is deceptive under the CFPA if it is likely to mislead consumers acting reasonably under the circumstances, and the information is material to consumers.

173. The Student Loan Debt Relief Companies are each “covered persons” under the CFPA because they offered or provided consumer-financial products or services, including financial-advisory services such as assisting consumers with debt-management or debt-settlement and modifying the terms of any extension of credit. 12 U.S.C. § 5481(5), (6), (15)(A)(viii). 174. Docs Done Right is a “covered person” because it offered or provided consumer-financial products or services, including financial-advisory services such as assisting consumers with debt-management or debt-settlement and modifying the terms of any extension of credit. 12 U.S.C. § 5481(5), (6), (15)(A)(viii).

175. Monster Loans is a “covered person” because it offers or provides consumer-financial products or services, including extending credit for mortgage loans. 12 U.S.C. § 5481(5), (6), (15)(A)(i). 176. Monster Loans is a “service provider” because it provided the material service of obtaining and providing prescreened consumer reports for use in marketing to the Student Loan Debt Relief Companies in connection with Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 29 of 42 Page ID #:1351

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FIRST AMENDED COMPLAINT the Student Loan Debt Relief Companies’ offering of a consumer-financial product or service. 12 U.S.C. § 5481(26).

177. Lend Tech is a “covered person” because it purports to offer or provide consumer-financial products or services, including extending credit by brokering mortgage loans. 12 U.S.C. § 5481(5), (6), (15)(A)(i). 178. Section 1002(25) of the CFPA defines the term “related person” to mean “any director, officer, or employee charged with managerial responsibility for, or controlling shareholder of,” or “any . . . other person . . . who materially participates in the conduct of the affairs of” a non-bank provider of a consumerfinancial product or service. 12 U.S.C. § 5481(25)(C). Section 1002(25) further provides that a “related person” shall be “deemed to mean a covered person for all purposes of any provision of Federal consumer financial law.” 12 U.S.C. § 5481(25)(B).

179. Chou is a “related person” and “covered person” because he was Monster Loans’ president and had managerial responsibility for it. 180. Nesheiwat is a “related person” and “covered person” because he was Monster Loans’ COO and had managerial responsibility for it. Nesheiwat is also a “related person” and “covered person” because he materially participated in the conduct of the Student Loan Debt Relief Companies. 181. Cowell is a “related person” and “covered person” because he was an officer of Monster Loans and because he materially participated in the conduct of the company’s affairs. Cowell is also a “related person” and “covered person” because he was Lend Tech’s owner and had managerial responsibility for it.

182. Sklar is a “related person” and “covered person” because he was Docu Prep Center’s CEO and had managerial responsibility for it. Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 30 of 42 Page ID #:1352

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FIRST AMENDED COMPLAINT 183. Hoose is a “related person” and “covered person” because he was Docu Prep Center’s COO and had managerial responsibility for it. 184. Sebreros is a “related person” and “covered person” because he was president of Assure Direct Services and had managerial responsibility for it. He is also a “related person” and “covered person” because he had managerial responsibility for Lend Tech.

185. Abdel is a “related person” and “covered person” because he was a marketing manager of Monster Loans and materially participated in the conduct of its affairs. He is also a “related person” and “covered person” because he was a marketing manager of Docu Prep Center and materially participated in the conduct of its affairs. He is also a “related person” and “covered person” because he was an employee of Assure Direct Services and materially participated in the conduct of its affairs. He is also a “related person” and “covered person” because he had managerial responsibility for Lend Tech. 186. Martinez is a “related person” and “covered person” because he was president of Docs Done Right and had managerial responsibility for it. He is also a “related person” and “covered person” because he had managerial responsibility for Lend Tech.

COUNT I Violations of FCRA (Against Student Loan Debt Relief Companies, Monster Loans, Lend Tech, Chou, Nesheiwat, Cowell, Abdel, Sebreros, Martinez, Sklar, and Hoose) 187. The allegations in Paragraphs 1 to 186 are incorporated here by reference.

188. FCRA prohibits persons from using or obtaining a consumer report unless the person obtains it for a permissible purpose and the purpose is certified by the prospective user of the report. 15 U.S.C. § 1681b(f). Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 31 of 42 Page ID #:1353

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FIRST AMENDED COMPLAINT 189. FCRA provides that using or obtaining a prescreened consumer report to make “a firm offer of credit or insurance” is a permissible purpose. 15 U.S.C. § 1681b(c). A “firm offer” is an offer that will be honored (subject to certain exceptions) if the consumer continues to meet the pre-selected criteria used to select them for the offer. 15 U.S.C. § 1681a(l). 190. Using or obtaining prescreened lists to send solicitations marketing debt-relief services is not a permissible purpose under FCRA. 191. Monster Loans’ and Lend Tech’s certifications to Experian did not state that the prescreened lists were being obtained for use by other companies or for the purpose of sending solicitations marketing debt-relief services. 192. The Student Loan Debt Relief Companies, Monster Loans, Lend Tech, Chou, Nesheiwat, Cowell, Abdel, Sebreros, Martinez, Sklar, and Hoose have, directly or indirectly, used or obtained consumer reports without a permissible purpose, and without a certification of the purpose by the prospective user of the report, in violation of FCRA. 15 U.S.C. § 1681b(f). COUNT II Advance Fees in Violation of the TSR (Against Student Loan Debt Relief Companies, Docs Done Right, Nesheiwat, Sklar, Hoose, Sebreros, and Martinez) 193. The allegations in Paragraphs 1 to 186 are incorporated here by reference.

194. Under the TSR, it is an abusive act or practice for a seller or telemarketer to request or receive payment of any fee or consideration for any debt-relief services unless and until (A) the seller or telemarketer has renegotiated, settled, reduced, or otherwise altered the terms of at least one debt pursuant to a settlement agreement, debt-management plan, or other such valid contractual agreement executed by the customer; and (B) the customer has Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 32 of 42 Page ID #:1354

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FIRST AMENDED COMPLAINT made at least one payment pursuant to that settlement agreement, debtmanagement plan, or other valid contractual agreement between the customer and the creditor or debt collector. 16 C.F.R. § 310.4(a)(5)(i)(A)-(B). 195. In the course of providing, offering to provide, or arranging for others to provide debt-relief services, the Student Loan Debt Relief Companies, Docs Done Right, Nesheiwat, Sklar, Hoose, Sebreros, and Martinez charged and received fees before consumers’ applications for loan consolidations, loanrepayment plans, and loan-forgiveness plans were approved, and before consumers had made the first payments under the altered terms of their student loans, in violation of the TSR. 16 C.F.R. § 310.4(a)(5)(i)(A)-(B). COUNT III Misrepresentations in Violation of the TSR – Lower Interest Rates (Against Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros) 196. The allegations in Paragraphs 1 to 186 are incorporated here by reference.

197. It is a deceptive practice under the TSR for a seller or telemarketer to misrepresent any material aspect of a debt-relief service, including the amount of money or the percentage of the debt amount that a consumer may save. 16 C.F.R. § 310.3(a)(2)(x).

198. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros misrepresented, directly or indirectly, expressly or by implication, that:

consolidating would cause consumers to obtain a lower interest rate on their student loans; and b.

consumers were required to consolidate their student loans to obtain an interest-rate deduction.

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FIRST AMENDED COMPLAINT 199. The acts or practices of the Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros, as set forth in Paragraph 158, are deceptive acts or practices that violate the TSR, 16 C.F.R. 310.3(a)(2)(x). COUNT IV Misrepresentations in Violation of the TSR – Improved Credit Scores (Against Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros) 200. The allegations in Paragraphs 1 to 186 are incorporated here by reference.

201. It is a deceptive practice under the TSR for a seller or telemarketer to misrepresent any material aspect of a debt-relief service, including the effect of the service on a consumer’s creditworthiness. 16 C.F.R. § 310.3(a)(2)(x). 202. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros misrepresented, directly or indirectly, expressly or by implication, that consolidating student loans would improve consumers’ credit scores.

203. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros misrepresented, directly or indirectly, expressly or by implication, that they had a reasonable basis for representing that consolidating student loans would improve consumers’ credit scores. 204. The acts or practices of the Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros, as set forth in Paragraphs 162 and 163, are deceptive acts or practices that violate the TSR, 16 C.F.R. § 310.3(a)(2)(x). Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 34 of 42 Page ID #:1356

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FIRST AMENDED COMPLAINT COUNT V Misrepresentations in Violation of the TSR – New Servicer (Against Docu Prep Center, Nesheiwat, Sklar, and Hoose) 205. The allegations in Paragraphs 1 to 186 are incorporated here by reference.

206. It is a deceptive practice under the TSR for a seller or telemarketer to misrepresent any material aspect of a debt-relief service. 16 C.F.R. § 310.3(a)(2)(x).

207. Docu Prep Center, Nesheiwat, Sklar, and Hoose misrepresented, directly or indirectly, expressly or by implication, that consolidating would result in ED becoming consumers’ “new servicer” and that consolidating would enable consumers to avoid interacting with third-party student-loan servicers. 208. The acts or practices of Docu Prep Center, Nesheiwat, Sklar, and Hoose, as set forth in Paragraph 167, are deceptive acts or practices that violate the TSR. 16 C.F.R. § 310.3(a)(2)(x).

COUNT VI Substantial Assistance in Violation of the TSR (Against Monster Loans and Nesheiwat) 209. The allegations in Paragraphs 1 to 186 are incorporated here by reference.

210. The TSR prohibits any person from providing substantial assistance or support to any seller or telemarketer when that person knows or consciously avoids knowing that the seller or telemarketer is engaged in any act or practice that constitutes deceptive or abusive conduct under the Rule. 16 C.F.R. § 310.3(b).

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FIRST AMENDED COMPLAINT 211. Monster Loans and Nesheiwat knew, or consciously avoided knowing, the material misrepresentations that the Student Loan Debt Relief Companies made to consumers.

212. Monster Loans and Nesheiwat knew, or consciously avoided knowing, that the Student Loan Debt Relief Companies charged and received fees from consumers before consumers’ applications for loan consolidations, loan-repayment plans, and loan-forgiveness plans were approved, and before consumers had made the first payments under the altered terms of their student loans.

213. Monster Loans and Nesheiwat provided substantial assistance to the Student Loan Debt Relief Companies in their violations of the TSR. 16 C.F.R. § 310.3(b).

COUNT VII Deception in Violation of the CFPA – Lower Interest Rates (Against Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros) 214. The allegations in Paragraphs 1 to 186 are incorporated here by reference.

215. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros misrepresented, directly or indirectly, expressly or by implication, that:

consolidating would cause consumers to obtain a lower interest rate on their student loans; and b.

consumers were required to consolidate to obtain an interest-rate deduction.

216. These representations were material and likely to mislead consumers acting reasonably under the circumstances. Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 36 of 42 Page ID #:1358

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FIRST AMENDED COMPLAINT 217. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros have therefore engaged in deceptive acts or practices in violation of §§ 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531, 5536. COUNT VIII Deception in Violation of the CFPA – Improved Credit Scores (Against Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros) 218. The allegations in Paragraphs 1 to 186 are incorporated here by reference.

219. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros misrepresented, directly or indirectly, expressly or by implication, that consolidating student loans would improve consumers’ credit scores.

220. These representations were material and likely to mislead consumers acting reasonably under the circumstances. 221. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros misrepresented, directly or indirectly, expressly or by implication, that they had a reasonable basis for representing that consolidating student loans would improve consumers’ credit scores. 222. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros have therefore engaged in deceptive acts or practices in violation of §§ 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531, 5536. COUNT IX Deception in Violation of the CFPA – New Servicer (Against Docu Prep Center, Nesheiwat, Sklar, and Hoose) 223. The allegations in Paragraphs 1 to 186 are incorporated here by reference.

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FIRST AMENDED COMPLAINT 224. Docu Prep Center, Nesheiwat, Sklar, and Hoose misrepresented, directly or indirectly, expressly or by implication, that consolidating would result in ED becoming consumers’ “new servicer,” and that consolidating would enable consumers to avoid interacting with third-party student-loan servicers.

225. These representations were material and likely to mislead consumers acting reasonably under the circumstances. 226. Docu Prep Center, Nesheiwat, Sklar, and Hoose have therefore engaged in deceptive acts or practices in violation of §§ 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531, 5536.

COUNT X Substantial Assistance in Violation of the CFPA (Against Monster Loans and Nesheiwat) 227. The allegations in Paragraphs 1 to 186 are incorporated here by reference.

228. Section 1036(a)(3) of the CFPA 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 states that “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.” 12 U.S.C. § 5536(a)(3).

229. Monster Loans and Nesheiwat knew, or recklessly avoided knowing, the material misrepresentations that the Student Loan Debt Relief Companies made to consumers.

230. Monster Loans and Nesheiwat provided substantial assistance to the Student Loan Debt Relief Companies in their deceptive acts or practices, in violation of § 1036(a)(3) of the CFPA. 12 U.S.C. § 5563(a)(3). Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 38 of 42 Page ID #:1360

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FIRST AMENDED COMPLAINT COUNT XI CFPA Violations Based on Violations of FCRA and TSR (Against Student Loan Debt Relief Companies, Monster Loans, Lend Tech, Docs Done Right, Chou, Nesheiwat, Cowell, Abdel, Sebreros, Martinez, Sklar, and Hoose) 231. The allegations in Paragraphs 1 to 186 are incorporated here by reference.

232. FCRA and the Telemarketing Act are “Federal consumer financial laws” under the CFPA. 12 U.S.C. § 5481(12)(F), (14); 15 U.S.C. § 6105(d). 233. The violations of FCRA committed by the Student Loan Debt Relief Companies, Monster Loans, Lend Tech, Chou, Nesheiwat, Cowell, Abdel, Sebreros, Martinez, Sklar, and Hoose are deemed to be violations of the CFPA. 15 U.S.C. § 1681s(d).

234. Because the Student Loan Debt Relief Companies, Monster Loans, Lend Tech, Chou, Nesheiwat, Cowell, Abdel, Sebreros, Martinez, Sklar, and Hoose are “covered persons” who violated FCRA by, directly or indirectly, using or obtaining consumer reports without a permissible purpose and without a certification of the purpose by the prospective user of the report, they violated § 1036(a)(1)(A) of the CFPA. 12 U.S.C. § 5536(a)(1)(A). 235. The violations of the TSR committed by the Student Loan Debt Relief Companies, Docs Done Right, Nesheiwat, Sklar, Hoose, Sebreros, and Martinez are treated as violations of a rule under § 1031 of the CFPA. 15 U.S.C. § 6102(c).

236. Because the Student Loan Debt Relief Companies, Docs Done Right, Nesheiwat, Sklar, Hoose, Sebreros, and Martinez are “covered persons” who violated the TSR by charging and receiving illegal advance fees from Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 39 of 42 Page ID #:1361

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FIRST AMENDED COMPLAINT consumers, they violated § 1036(a)(1)(A) of the CFPA. 12 U.S.C. § 5536(a)(1)(A).

237. Because the Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros are “covered persons” who violated the TSR by engaging in deceptive conduct, they violated § 1036(a)(1)(A) of the CFPA. 12 U.S.C. § 5536(a)(1)(A).

238. Because Monster Loans and Nesheiwat are “covered persons” who substantially assisted violations of the TSR, they violated § 1036(a)(1)(A) of the CFPA. 12 U.S.C. § 5536(a)(1)(A).

COUNT XII Relief Defendants 239. The allegations in Paragraphs 1 to 186 are incorporated here by reference.

240. Chou, Cowell, Lawson, TDK Enterprises, LLC, Cre8labs, Inc., and XO Media, LLC have received, directly or indirectly, distributions from the Student Loan Debt Relief Companies.

241. All of those distributions are traceable to funds obtained from consumers through one or more of the violations of the CFPA, TSR, and FCRA described herein.

242. As limited partners, Lawson and XO Media, LLC had only an equity interest in the Student Loan Debt Relief Companies. They therefore lack a legitimate claim to distributions from the Student Loan Debt Relief Companies traceable to the violations described herein. 243. Lawson and XO Media, LLC also lack a legitimate claim to the distributions from the Student Loan Debt Relief Companies to the extent that, at the time of each of the distributions, those companies’ liabilities exceeded their available assets such that the companies had no assets or “profits” that could Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 40 of 42 Page ID #:1362

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FIRST AMENDED COMPLAINT legitimately be distributed to their limited partners, including to Lawson and XO Media, LLC, under California law. Cal. Corp. Code § 15905.08(b)(2). 244. Lawson and XO Media, LLC also lack a legitimate claim to distributions from the Student Loan Debt Relief Companies because they did not invest in those companies in good faith or receive distributions from those companies in good faith.

245. Lawson and XO Media, LLC also lack a legitimate claim to the distributions from Direct Document Solutions and Secure Preparation Services because they made no capital contributions to those companies. The distributions from those companies to Lawson and XO Media, LLC were gratuitous transfers.

246. Lawson and XO Media, LLC would be unjustly enriched if not required to disgorge the funds distributed to them or the value of the benefits they received.

DEMAND FOR RELIEF The Bureau requests that the Court:

permanently enjoin Defendants from committing future violations of the FCRA, TSR, and CFPA and enter such other injunctive relief as appropriate;

permanently enjoin Defendants from advertising, marketing, promoting, offering for sale, selling, or providing any form of assistance to any debt-relief service;

grant additional injunctive relief as the Court may deem to be just and proper;

order Monster Loans, the Student Loan Debt Relief Companies, Docs Done Right, Nesheiwat, Sklar, Hoose, Sebreros, and Martinez to pay redress to consumers harmed by their unlawful conduct; Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 41 of 42 Page ID #:1363

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FIRST AMENDED COMPLAINT e.

award damages and other monetary relief against Defendants; f.

impose civil money penalties against Defendants; g.

order disgorgement of ill-gotten funds against Relief Defendants so that those funds can be returned to consumers; h.

order the rescission or reformation of contracts where necessary to redress injury to consumers; and i.

award the Bureau 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 10, 2020

Respectfully Submitted,

/s/ Colin Reardon

Colin Reardon

E. Vanessa Assae-Bille Leanne E. Hartmann Bureau of Consumer Financial Protection 1700 G Street, NW Washington, D.C. 20552

Attorneys for Plaintiff Bureau of Consumer Financial Protection

Case 8:20-cv-00043-JVS-ADS Document 117 Filed 07/10/20 Page 42 of 42 Page ID #:1364

Amended complaint (Aug. 2020)

PDF of this document (44 pages)

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SECOND AMENDED COMPLAINT

LEANNE E. HARTMANN (CA Bar #264787) – Local Counsel E-mail: [email protected] Phone: (415) 844-9787 301 Howard St., Suite 1200 San Francisco, CA 94105 Fax: (415) 844-9788

Attorneys for Plaintiff Bureau of Consumer Financial Protection

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Bureau of Consumer Financial Protection,

Plaintiff,

vs.

Defendants,

Thomas “Tom” Chou; and Sean Cowell,

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Case No.: 8:20-cv-00043-JVS-ADS

SECOND AMENDED COMPLAINT Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 1 of 44 Page ID #:1755

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SECOND AMENDED COMPLAINT

Defendants and Relief Defendants,

Kenneth Lawson; Cre8labs, Inc.; XO Media, LLC; and TDK Enterprises, LLC,

Relief Defendants.

) ) ) ) ) ) ) ) )

JURISDICTION AND VENUE 1.

Venue is proper in this district because Defendants and Relief Defendants are located, reside, or do business in this district. 12 U.S.C. § 5564(f).

INTRODUCTION 3.

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SECOND AMENDED COMPLAINT From August 2017 through at least January 2019, a sham entity known as Lend Tech also unlawfully obtained consumer reports from Experian and provided them to other companies, including companies that used the lists to market student-loan debt-relief services.

PLAINTIFF 8.

The Bureau is an independent agency charged with enforcing Federal consumer financial laws. 12 U.S.C. § 5491(a). The Bureau has independent litigating authority, 12 U.S.C. § 5564(a)-(b), including the authority to enforce prohibitions on unfair, deceptive, and abusive acts or practices in the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531, 5536; the Fair Credit Reporting Act, 15 U.S.C. § 1681s; and the Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 3 of 44 Page ID #:1757

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SECOND AMENDED COMPLAINT Telemarketing Sales Rule (TSR), 16 C.F.R. Part 310, as it applies to persons subject to the CFPA, 15 U.S.C. §§ 6102(c), 6105(d). 9.

The Bureau has authority to bring civil actions against persons violating Federal consumer financial laws and to seek all appropriate legal and equitable relief, including injunctive relief, refund of monies paid, damages, restitution, disgorgement, and civil money penalties. 12 U.S.C. §§ 5564(a), 5565(a)(2).

DEFENDANTS AND RELIEF DEFENDANTS 10.

Chou Team Realty, LLC is a successor to Chou Team Realty, Inc. 12.

Chou Team Realty, Inc. and Chou Team Realty, LLC (collectively, Monster Loans) have held themselves out as doing business as Monster Loans and MonsterLoans.

13.

Since 2014, Monster Loans has operated as a mortgage lender. It is licensed in at least 30 states, including California. 14.

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SECOND AMENDED COMPLAINT 16.

Defendant Docu Prep Center, Inc. registered as a California corporation on February 3, 2015, and it has held itself out as doing business at 3 Whatney, Suite 100, Irvine, CA 92618.

17.

18.

Docu Prep Center has held itself out as doing business as DocuPrep Center and Certified Document Center. 19.

Defendant Certified Doc Prep, Inc. registered as a California corporation on October 14, 2015, and it has held itself out as doing business at 1015 E. Imperial Highway, Unit C8, Brea, CA 92821. 20.

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SECOND AMENDED COMPLAINT 23.

Defendant Docs Done Right, Inc. registered as a California corporation on October 22, 2015, and it has held itself out as doing business at 895 Dove Street, 3rd Floor, Newport Beach, CA 92660. 29.

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SECOND AMENDED COMPLAINT Whatney, Suite 100, Irvine, CA 92618. Docs Done Right, Inc. was the general partner of Docs Done Right, LP (collectively, Docs Done Right). 30.

Relief Defendant Cre8labs, Inc. registered as a California corporation on April 1, 2016, and it has held itself out as doing business at 24632 La Plata Drive, Laguna Niguel, CA 92677. 32.

34.

36.

Nesheiwat owned limited partnership interests in each of the Student Loan Debt Relief Companies.

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SECOND AMENDED COMPLAINT 37.

Nesheiwat exercised substantial managerial responsibility for and control over Docu Prep Center’s business practices, including its sales practices, marketing practices, and fees.

38.

Cowell registered Lend Tech in June 2017, and he was its sole owner until November 2017.

41.

42.

43.

Defendant Robert Hoose was Docu Prep Center’s chief operating officer. Hoose was the part-owner of Docu Prep Center, Inc. and owned a limited-partnership interest in Document Preparation Services, LP. Hoose exercised substantial managerial responsibility for and control over Docu Prep Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 8 of 44 Page ID #:1762

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SECOND AMENDED COMPLAINT Center’s business practices, including its sales practices, marketing practices, and fees.

44.

Defendant Frank Anthony Sebreros was the president of Assure Direct Services. Sebreros owned Assure Direct Services, Inc. and he owned a limited-partnership interest in Assure Direct Services, LP. Sebreros exercised substantial managerial responsibility for and control over Assure Direct Services’ business practices, including its sales practices, marketing practices, and fees.

45.

Sebreros was identified as a manager of Lend Tech in the company’s application to Experian in June 2017. 46.

Defendant Bilal Abdelfattah a/k/a Belal Abdelfattah a/k/a Bill Abdel (Abdel) was a marketing manager at Monster Loans in 2015 and 2016. 47.

Abdel was a marketing manager at Docu Prep Center and was an employee of Assure Direct Services.

48.

Abdel was identified as a manager of Lend Tech in the company’s application to Experian in June 2017.

49.

50.

Martinez represented that he was a manager or employee of Lend Tech in communications with Experian in 2017 and 2018. 51.

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SECOND AMENDED COMPLAINT FACTS Monster Loans’ Purchases of Prescreened Lists 52.

53.

In 2015, Monster Loans applied for and received an account with Experian, which enabled it to purchase prescreened lists. 54.

In its application, Monster Loans certified to Experian that it would use prescreened lists to make firm offers of credit for mortgage loans. 55.

During and after the enrollment process, Monster Loans also represented to Experian that it would use prescreened lists to market its mortgage products.

56.

Monster Loans did not disclose to Experian that prescreened lists would be provided to other companies and used to market debt-relief services. 57.

58.

In total, Monster Loans purchased prescreened lists containing information about more than 7 million consumers with student loans. 59.

The prescreened lists that Monster Loans purchased were used to market debt-relief services, and not to make firm offers of credit or insurance. 60.

Nesheiwat oversaw Monster Loans’ purchases of prescreened lists from Experian for use by the Student Loan Debt Relief Companies in their direct mailings.

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SECOND AMENDED COMPLAINT 61.

Sklar and Hoose obtained prescreened lists through Monster Loans’ account with Experian and used the lists to market Docu Prep Center’s student-loan debt-relief services.

63.

In or around May 2017, Monster Loans stopped purchasing prescreened lists for the Student Loan Debt Relief Companies through its account with Experian.

Lend Tech’s Purchases of Prescreened Lists 64.

In June 2017, Cowell registered Lend Tech as a purported mortgage-brokerage company.

65.

In fact, Lend Tech is a sham entity that has only ever been used to obtain prescreened lists from Experian.

66.

Lend Tech’s application to Experian certified that it would use prescreened lists to make firm offers of credit for mortgage loans. 67.

Lend Tech did not disclose to Experian that the prescreened lists would be provided to other companies and used for the purpose of marketing debt-relief services.

68.

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SECOND AMENDED COMPLAINT than 1.5 million consumers with student loans for the Student Loan Debt Relief Companies.

70.

In November 2017, Cowell transferred ownership of Lend Tech to a friend of Martinez named Sergio Loza.

72.

At the time of the transfer, Lend Tech had no meaningful assets other than the account with Experian.

73.

Between November 2017 and at least January 2019, Abdel, Sebreros, and Martinez controlled Lend Tech’s Experian account. 74.

During that period, Lend Tech obtained prescreened lists containing information regarding more than 11 million consumers. 75.

Lend Tech continued representing to Experian that it would use the prescreened lists for its own marketing of mortgage loans. 76.

In fact, Lend Tech has never used the prescreened lists to market mortgage loans.

77.

Martinez, Sebreros, and Abdel resold the prescreened lists to numerous other companies, including companies offering student-loan debtrelief services.

78.

Martinez, Sebreros, and Abdel also used the prescreened lists to market student-loan debt-relief services through new companies created during or after September 2017.

79.

The student-loan debt-relief companies that received prescreened lists purchased by Lend Tech between November 2017 and January 2019 did not use the lists to make firm offers of credit or insurance. Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 12 of 44 Page ID #:1766

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SECOND AMENDED COMPLAINT Student Loan Consolidations, Repayment Programs, and Forgiveness Programs 80.

ED offers several federal student-loan repayment and forgiveness programs. Some programs potentially offer lower monthly loan payments. Some allow consumers to obtain loan forgiveness. 81.

These programs are administered through third-party student-loan servicers that handle the billing and other services on federal student loans. 82.

83.

Following consolidation or enrollment in a new repayment or forgiveness program, the consumer’s loan continues to be serviced by a thirdparty student-loan servicer.

The Student Loan Debt Relief Companies and Docs Done Right 84.

85.

The Student Loan Debt Relief Companies primarily marketed their debt-relief services through direct mail. 86.

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SECOND AMENDED COMPLAINT 87.

After Docs Done Right was created in late 2015, Martinez arranged for Docs Done Right to assist the Student Loan Debt Relief Companies. Docs Done Right played a “back-end” role for the Student Loan Debt Relief Companies. In that role, Docs Done Right provided the actual services that the Student Loan Debt Relief Companies marketed and sold, and helped ensure that the Student Loan Debt Relief Companies received the fees they charged. Under this arrangement, Docs Done Right received a portion of each consumer’s fee.

88.

As part of its responsibilities, Docs Done Right’s employees participated in a portion of each telemarketing sales call regarding consumers’ understanding of the services.

89.

Following enrollment, Docs Done Right handled all communications with consumers concerning the debt-relief services and the payment of fees. Docs Done Right posed as the relevant Student Loan Debt Relief Company in those communications. Docs Done Right also handled the preparation and submission of consumers’ applications to consolidate their federal student loans and enroll in ED’s repayment and forgiveness programs. 90.

Docs Done Right also participated in responding to consumer complaints about the Student Loan Debt Relief Companies’ services, including consumer complaints regarding deceptive or misleading statements made by the Student Loan Debt Relief Companies during sales calls. 91.

Docs Done Right also handled refund requests by consumers who complained about the Student Loan Debt Relief Companies’ conduct, including complaints about deceptive or misleading statements made by the Student Loan Debt Relief Companies during sales calls.

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SECOND AMENDED COMPLAINT Misrepresentations about Lower Interest Rates 92.

In direct-mail solicitations and in sales calls, the Student Loan Debt Relief Companies represented that consumers could obtain a lower interest rate by consolidating their loans. 93.

94.

As a result, after consolidation, the consumer’s new loan has either the same effective interest rate as the prior loans or a higher rate. 95.

The Student Loan Debt Relief Companies’ representations that consolidation would lead to a lower interest rate were therefore false. 96.

Consumers with federal student loans are generally eligible for an interest rate reduction if they set up automatic monthly payments. 97.

98.

But consumers can receive the interest-rate reduction associated with setting up automatic monthly payments regardless of whether they consolidate their loans.

Misrepresentations about Improved Credit Scores 99.

Between 2015 and 2017, the Student Loan Debt Relief Companies represented during sales calls that consolidating federal student loans would improve consumers’ credit scores.

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SECOND AMENDED COMPLAINT 100. In many instances, consolidating is not likely to improve a consumer’s credit score, such as when the consumer is current on their student loan payments.

101. By presenting themselves as experts on student loans and making representations about credit score changes, the Student Loan Debt Relief Companies implied that the Companies had a reasonable basis to represent that consolidation would increase consumers’ credit scores. 102. Prior to making such representations, the Student Loan Debt Relief Companies had no reason to believe that consumers’ credit scores would improve following consolidation, and the Companies did not attempt to measure thereafter whether consumers’ credit scores did in fact improve following consolidation.

Misrepresentations that ED Would Become Consumers’ “New Servicer” 103. At times between 2015 and 2017, Docu Prep Center represented to consumers that, after they consolidated their loans, ED would become their “new servicer.”

104. Docu Prep Center also represented that student loan servicers did not act in consumers’ best interests and implied that consumers would not have to interact with third-party student loan servicers after consolidating their loans. 105. In fact, ED does not become the “new servicer” on loans that are consolidated. ED contracts with third-party student-loan servicers that handle federal student loans both before and after the loans are consolidated. Loan consolidation does not enable consumers to avoid interacting with third-party servicers.

Collection of Advance Fees 106. The Student Loan Debt Relief Companies charged consumers a fee that ranged between $699 and $999.

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SECOND AMENDED COMPLAINT 107. The Student Loan Debt Relief Companies charged and received fees before consumers’ applications for loan consolidations, loan repayment plans, and loan forgiveness plans were approved, and before consumers had made the first payments under the altered terms of their student loans. 108. Docs Done Right participated in the charging of fees and received its portion of the fees before consumers’ applications for loan consolidations, loan repayment plans, and loan forgiveness plans were approved, and before consumers had made the first payments under the altered terms of their student loans.

109. Docs Done Right arranged for the Student Loan Debt Relief Companies to obtain access to payment processing services for ACH transactions and coordinated the collection and disbursement of consumers’ ACH payments.

110. For consumers who paid by credit card, Docs Done Right monitored whether consumers made their payments and then followed up with consumers whose payments did not go through.

111. Collectively, the Student Loan Debt Relief Companies and Docs Done Right collected more than $15 million in illegal advance fees from thousands of consumers nationwide between 2015 and at least 2017. Role of Individual Defendants in Deceptive Representations and Charging of Advance Fees 112. Nesheiwat, Sklar, and Hoose each participated directly in Docu Prep Center’s making of the representations described in this Complaint or had the authority to control them, and each had knowledge of the representations, was recklessly indifferent to the truth or falsity of the misrepresentations, or was aware of a high probability of fraud along with an intentional avoidance of the truth.

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SECOND AMENDED COMPLAINT 113. Nesheiwat, Sklar, and Hoose each participated directly in the charging of fees by Docu Prep Center or had the authority to control its charging of fees, and each had knowledge of Docu Prep Center’s fee-charging practices or was recklessly indifferent to those practices. 114. Sebreros participated directly in Assure Direct Services’ making of the representations described in this Complaint or had the authority to control them, and had knowledge of the representations, was recklessly indifferent to the truth or falsity of the misrepresentations, or was aware of a high probability of fraud along with an intentional avoidance of the truth. 115. Sebreros participated directly in the charging of fees by Assure Direct Services or had the authority to control its charging of fees, and had knowledge of Assure Direct Services’ fee-charging practices or was recklessly indifferent to those practices.

116. Martinez participated directly in the charging of fees by the Student Loan Debt Relief Companies and Docs Done Right or had the authority to control the charging of fees, and had knowledge of the Student Loan Debt Relief Companies’ and Docs Done Right’s fee-charging practices or was recklessly indifferent to those practices.

117. As part of his involvement in the charging of fees, Martinez arranged for the Student Loan Debt Relief Companies and Docs Done Right to obtain access to ACH payment processing services and oversaw the collection and disbursement of consumer payments made by ACH. 118. When Martinez arranged for Docs Done Right to assist the Student Loan Debt Relief Companies in late 2015, he knew that the TSR prohibited charging advance fees for debt relief services. 119. While overseeing Docs Done Right’s assistance to the Student Loan Debt Relief Companies from late 2015 to 2017, Martinez knew that the Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 18 of 44 Page ID #:1772

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SECOND AMENDED COMPLAINT Student Loan Debt Relief Companies were receiving their fees before consumers’ applications for loan consolidations, loan repayment plans, and loan forgiveness plans were approved, and before consumers had made the first payments under the altered terms of their student loans. 120. During that period, Martinez knew that the Student Loan Debt Relief Companies sold their services during telemarketing sales calls and that their sales representatives offered to assist consumers with consolidating their federal student loans and with enrolling in loan repayment plans and loan forgiveness plans.

121. Martinez participated in, controlled, and had knowledge of Docs Done Right’s handling of consumer complaints and requests for refunds arising from statements made by the Student Loan Debt Relief Companies during sales calls.

Relief Defendants Lawson and XO Media, LLC 122. In 2010, the Federal Trade Commission (FTC) amended the TSR to add specific provisions to curb deceptive and abusive practices associated with debt relief services. 75 Fed. Reg. 48458. Among other things, the amendments prohibited debt relief providers who sold their services through telemarketing from collecting advance fees. 16 C.F.R. § 310.4(a)(5). 123. In 2010, the FTC put out a guide for businesses offering “debt relief services” regarding the TSR amendments, which highlighted that “It’s illegal to charge upfront fees… [and] You can’t misrepresent your services.” See Debt Relief Services & the Telemarketing Sales Rule: A Guide for Businesses, FTC, Aug. 2010, available at https://www.ftc.gov/tipsadvice/business-center/guidance/debt-relief-services-telemarketing-sales-ruleguide-business.

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SECOND AMENDED COMPLAINT 124. Lawson, through XO Media, LLC, made a capital contribution to Docu Prep Center at or around the time the company was created in February 2015.

125. Prior to and around the time Lawson and XO Media, LLC initially made a capital contribution Docu Prep Center in February 2015, Lawson received information from Chou about the nature of Docu Prep Center’s business, which involved selling student loan debt relief services through direct mail and telemarketing sales calls.

126. Prior to Lawson and XO Media, LLC’s contribution, companies offering student loan debt relief services had received extensive press coverage for “scamming” consumers by engaging in deceptive marketing and charging unlawful advance fees.

127. For example, CNBC reported in July 2014 that “[s]cammers” were operating “phony student loan ‘debt relief’ companies that promise to help—for a price” and that law enforcement was “cracking down” on illegal conduct by such companies. Student Debt ‘Relief’ Scams Offering Nothing but Distress, CNBC, July 29, 2014, https://www.cnbc.com/2014/07/28/student-loan-crisisstudent-debt-relief-is-not-always-relieving.html; see also Robert Farrington, Beware: Student Loan Scams Victimizing Students and Graduates, Forbes, June 10, 2014, https://www.forbes.com/sites/robertfarrington/2014/06/10/bewarestudent-loan-scams-victimizing-students-and-graduates/#16876dec5160. 128. News outlets also reported in December 2014 on two lawsuits the Bureau filed against student loan debt relief businesses that allegedly deceived consumers and charged unlawful advance fees, including one business based in Orange County. See, e.g., Imran Ghori and Steve Greenhut, U.S. Agency Claims OC Company Running Student Debt-Relief Scam, Orange County Register, Dec. 15, 2014, https://www.ocregister.com/2014/12/15/us-agency- Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 20 of 44 Page ID #:1774

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SECOND AMENDED COMPLAINT claims-oc-company-running-student-debt-relief-scam/; Students Tricked into High Fees by Debt Relief Companies, American Banker, Dec. 11, 2014, https://www.americanbanker.com/news/students-tricked-into-high-fees-bydebt-relief-companies; Erin E. Arvedlund, Investing in You: Beware Offers of Student Debt ‘Help’, The Philadelphia Inquirer, Dec. 28, 2014, https://www.inquirer.com/philly/education/20141228_Investing_in_You__Bew are_offers_of_student_debt__help_.html.

129. Prior to Lawson and XO Media, LLC’s capital contribution to Docu Prep Center in February 2015, there was thus readily available information that legal prohibitions on deceptive acts or practices and the TSR’s advance fee prohibition could apply to student loan debt relief companies like Docu Prep Center. There was also readily available information indicating that failure to comply with such laws was pervasive in the student loan debt relief industry.

130. Prior to making their capital contribution in February 2015, Lawson and XO Media, LLC did not conduct any due diligence concerning whether Docu Prep Center would comply with applicable laws. 131. In 2015 and 2016 and prior to the creation of the other four Student Loan Debt Relief Companies, there were continued public reports about illegal conduct by student loan debt relief companies. See, e.g., Adolfo Guzman- Lopez, California Attorney General Warns of Student Loan Scams, 89.3KPCC, Aug. 21, 2015, https://www.scpr.org/news/2015/08/21/53909/californiaattorney-general-warns-of-student-loan; Ann Carrns, Fraudulent Student Debt Relief Firm Shut Down by Consumer Bureau, The New York Times, Apr. 1, 2016, https://www.nytimes.com/2016/04/02/your-money/fraudulent-studentdebt-relief-firm-shut-down-by-consumer-bureau.html. Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 21 of 44 Page ID #:1775

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SECOND AMENDED COMPLAINT 132. Lawson and XO Media, LLC also did not conduct any due diligence concerning whether the other four Student Loan Debt Relief Companies would comply with applicable laws prior to receiving limited partnership interests in those companies between October 2015 and January 2017.

133. Given the numerous public reports about student loan debt relief companies “scamming” consumers, charging unlawful advance fees, and engaging in deceptive conduct, Lawson and XO Media, LLC’s ongoing failure to conduct any due diligence of the Student Loan Debt Relief Companies was reckless and indicative of a lack of good faith. 134. After making their initial capital contribution in Docu Prep Center in February 2015, Lawson and XO Media, LLC received detailed updates from Sklar, Hoose, and others about Docu Prep Center’s operations, sales, marketing, and growth through periodic meetings and emails. 135. In a May 18, 2015 email copying Lawson regarding Docu Prep Center’s operations, Chou asked Sklar if Sklar had “any additional information about the potential ban on advance fees that might extend the time frame that we get payment.” Chou also asked whether a delay in receiving fees would “slow[] growth” towards Docu Prep Center’s goal of making 1,000 sales per month, which some involved with Docu Prep Center planned to celebrate with a trip to Las Vegas. Chou stated that he was concerned about slowing the company’s growth “because I really want to go to Vegas. :-)” 136. Following this May 18, 2015 email, Docu Prep Center did not take any steps to comply with the TSR’s ban on charging advance fees for debt relief services.

137. On the contrary, as Sklar reported in an email to Lawson and others on June 8, 2015, Docu Prep Center arranged with a payment processor to Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 22 of 44 Page ID #:1776

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SECOND AMENDED COMPLAINT begin receiving consumers’ fees through ACH transactions within only three to five business days, with the result that the company would not have to wait 30 to 60 days before receiving consumers’ fees. Sklar’s email also stated that Docu Prep Center was working to obtain a credit card merchant account so that it could “process credit cards very quickly.”

138. On July 1, 2015, Sklar emailed Lawson and others to report that Docu Prep Center was now receiving its customers’ fees “7 to 9 days after the client has made their ACH payment, which is much improved over the 45 day turn time [sic] we were initially anticipating.” This meant that Docu Prep Center charged and received fees before consumers’ applications for loan consolidations, loan repayment plans, and loan forgiveness plans were approved and before consumers had made the first payment under the altered terms of their student loans.

139. By July 2015, prior to receiving any distributions from Docu Prep Center, Lawson and XO Media, LLC therefore knew or should have known that Docu Prep Center was charging unlawful advance fees for debt relief services in violation of the TSR.

140. Lawson, through XO Media, LLC, made a capital contribution to Certified Doc Prep Services at or around the time the company was created in October 2015.

141. Lawson, through XO Media, LLC, made a capital contribution to Assure Direct Services at or around the time the company was created in August 2016.

142. Lawson and XO Media, LLC knew, at the time they made capital contributions, that Certified Doc Prep Services and Assure Direct Services’ business models and practices were based on Docu Prep Center’s. For Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 23 of 44 Page ID #:1777

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SECOND AMENDED COMPLAINT example, in an email Lawson received in October 2015, Certified Doc Prep Services was referred to as a “second location” of Docu Prep Center. 143. Lawson and XO Media, LLC therefore knew or should have known when they made capital contributions that Certified Docu Prep Services and Assure Direct Services would charge unlawful advance fees for debt relief services in violation of the TSR, just as Docu Prep Center was already doing. 144. On April 8, 2016, Sklar sent an email to Lawson and others indicating that Docu Prep Center was purchasing and using consumer reports obtained from Experian to market its debt relief services. 145. Lawson and XO Media, LLC knew or should have known at the time they made capital contributions to Assure Direct Services in August 2016 that it too would use consumer reports obtained from Experian to market its debt relief services.

146. In October 2016, Lawson received an email stating that the use of Monster Loans’ Experian account to buy prescreened lists for the Student Loan Debt Relief Companies was generating frequent complaints and threats of lawsuits from consumers. Thus, by that time, Lawson and XO Media, LLC knew or should have known that the Student Loan Debt Relief Companies’ use of Experian consumer reports violated FCRA.

147. Lawson and XO Media, LLC did not make any capital contributions to Direct Document Solutions or Secure Preparation Services when those companies were formed in January 2017. Lawson and XO Media, LLC nonetheless received limited partnership interests in those two companies. In 2017 and 2018, XO Media, LLC received distributions of purported profits from Direct Document Solutions and Secure Preparation Services. 148. Direct Document Solutions and Secure Preparation Services’ initial operations were funded with loans from certain of the earlier Student Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 24 of 44 Page ID #:1778

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SECOND AMENDED COMPLAINT Loan Debt Relief Companies. Those loans consisted of funds that certain of the earlier Student Loan Debt Relief Companies had unlawfully taken from consumers through the violations described in this Complaint. 149. Lawson and XO Media, LLC knew or should have known at the time that they received limited partnership interests in Direct Document Solutions and Secure Preparation Services in January 2017 that those companies would also violate FCRA and the TSR, since those companies’ business models and practices were based on the earlier companies’ business models and practices.

150. Lawson supported efforts to continue obtaining Experian consumer reports to market debt relief services even after he knew that doing so might violate FCRA. For example, in or around May 2017, Lawson participated in a meeting with Nesheiwat, Chou, and other limited partners regarding the possibility of setting up a new mortgage company to obtain a new Experian account to buy consumer reports for the Student Loan Debt Relief Companies. In an email to Chou on May 11, 2017, Nesheiwat noted that at the meeting “Ken” (i.e., Kenneth Lawson) had recommended that the company be located “far enough away” to keep it separate from the existing businesses but be set up so that “we can still have the access.”

151. Mikael van Loon was a close associate of Lawson’s, and owned 10% of XO Media, LLC beginning in around mid-2016. During 2016 and 2017, van Loon frequently acted as a representative of Lawson, XO Media, LLC, and other limited partners in dealings with the Student Loan Debt Relief Companies. Van Loon was also Monster Loans’ CFO beginning in August 2016 and then its CEO beginning in December 2016. 152. Like Lawson, van Loon knew or should have known about the Student Loan Debt Relief Companies’ violations of the TSR by July 2015 and Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 25 of 44 Page ID #:1779

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SECOND AMENDED COMPLAINT of FCRA by October 2016 based on information he received through meetings with the managers of the Student Loan Debt Relief Companies and emails he received regarding the companies. For example, Van Loon also received the emails to Lawson referenced in Paragraphs 125, 127, 128, and 136. 153. In addition, emails that van Loon received in May 2016 indicate that he was aware of other red flags about the Student Loan Debt Relief Companies. The emails state that federal regulators were taking enforcement actions against similar student debt-relief companies for charging unlawful fees and engaging in deceptive advertising. In one of the emails, Hoose also mentions that Docu Prep Center had “gotten … past” past banks’ due diligence requirements for merchant accounts. Docu Prep Center did that by presenting information to banks that was not consistent with its actual business practices. 154. Between October 2015 and November 2018, XO Media, LLC received at least $585,000 in distributions of purported profits from the Student Loan Debt Relief Companies.

155. Between October 2015 and November 2018, the Student Loan Debt Relief Companies were committing or had committed the violations described in this Complaint, resulting in potential liabilities for, among other things, damages, consumer restitution or other monetary relief, and civil money penalties that were greater than the assets of those companies. 156. When the Student Loan Debt Relief Companies distributed purported profits to XO Media, LLC, Lawson and XO Media, LLC knew or should have known that the Student Loan Debt Relief Companies did not have assets equal to or exceeding those potential liabilities. 157. Lawson and XO Media, LLC continued receiving distributions from the Student Loan Debt Relief Companies even after those companies shut down in September 2017 in response to the Bureau’s issuance of Civil Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 26 of 44 Page ID #:1780

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SECOND AMENDED COMPLAINT Investigative Demands seeking information regarding potential FCRA, TSR, and CFPA violations by the Student Loan Debt Relief Companies. 158. XO Media, LLC passed at least $277,000 of the distributions from the Student Loan Debt Relief Companies on to Lawson. 159. Lawson and XO Media, LLC commingled the distributions from the Student Loan Debt Relief Companies with their other assets. 160. Under the limited partnership agreements that governed Certified Doc Prep Services, Assure Direct Services, Direct Document Solutions, and Secure Preparation Services, their limited partners, including XO Media, LLC, owned interests in the partnerships as entities. Under those agreements, the assets of Certified Doc Prep Services, Assure Direct Services, Direct Document Solutions, and Secure Preparation Services were owned by the partnerships as entities, and not by their limited partners. 161. Under the limited partnership agreements that governed Certified Doc Prep Services, Assure Direct Services, Direct Document Solutions, and Secure Preparation Services, limited partners, including XO Media, LLC, were not guaranteed any distributions of purported profits, including any return of capital contributions.

LEGAL BACKGROUND FCRA 162. FCRA defines a “consumer report” to include: any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 27 of 44 Page ID #:1781

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SECOND AMENDED COMPLAINT the consumer’s eligibility for (A) credit or insurance to be used primarily for personal, family, or household purposes; (B) employment purposes; or (C) any other purpose authorized under section 604 [§ 1681b].

15 U.S.C. § 1681a(d).

163. Monster Loans and Lend Tech purchased from Experian prescreened lists containing information regarding consumers with student loans, including consumers’ names, addresses, number of student loans, and aggregate student loan balances.

164. Information such as a consumer’s number of student loans and their aggregate balance bears on, among other things, a consumer’s credit worthiness and credit standing and is used or expected to be used or collected for the purpose of serving as a factor in determining a consumer’s eligibility for credit.

165. The prescreened lists that Monster Loans and Lend Tech purchased from Experian are therefore “consumer reports” under § 603(d) of FCRA. 15 U.S.C. § 1681a(d).

The TSR 166. The TSR is the implementing regulation of the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. §§ 6101-6108.

167. The Bureau is authorized to enforce the Telemarketing Act and the TSR with respect to the offering or provision of a consumer-financial product or service subject to the CFPA. 15 U.S.C. § 6105(d). 168. The TSR defines “debt relief service” as “any program or service represented, directly or by implication, to renegotiate, settle, or in any way alter the terms of payment or other terms of the debt between a person and one or Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 28 of 44 Page ID #:1782

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SECOND AMENDED COMPLAINT more unsecured creditors or debt collectors, including, but not limited to, a reduction in the balance, interest rate, or fees owed by a person to an unsecured creditor or debt collector.” 16 C.F.R. § 310.2(o). 169. The TSR defines a “seller” as “any person who, in connection with a telemarketing transaction, provides, offers to provide, or arranges for others to provide goods or services to the customer in exchange for consideration.” 16 C.F.R. § 310.2(dd).

170. The TSR defines “telemarketer” as “any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer.” 16 C.F.R. § 310.2(ff).

171. The TSR defines “telemarketing” in relevant part as “a plan, program, or campaign which is conducted to induce the purchase of goods or services . . . by use of one or more telephones and which involves more than one interstate telephone call.” 16 C.F.R. § 310.2(gg). 172. The Student Loan Debt Relief Companies offered services to renegotiate, settle, or alter the terms of payments of consumers’ federal student loans involving the preparation and submission of requests for loan consolidations, loan forgiveness, and loan-repayment plans to consumers’ student-loan servicers.

173. The Student Loan Debt Relief Companies offered and provided these services to consumers nationwide using the telephones and more than one interstate telephone call.

174. The Student Loan Debt Relief Companies offered and provided these services to consumers in exchange for payment of fees in connection with a telemarketing transaction.

175. The Student Loan Debt Relief Companies are each a “telemarketer” or “seller” offering a “debt relief service” under the TSR. Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 29 of 44 Page ID #:1783

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SECOND AMENDED COMPLAINT 176. Docs Done Right provided services to renegotiate, settle, or alter the terms of payments of consumers’ federal student loans by preparing and submitting requests for loan consolidations, loan forgiveness, and loanrepayment plans to consumers’ student-loan servicers, and by handling communications with consumers concerning the services, payment of fees, and complaints.

177. Docs Done Right is a “seller” offering a “debt relief service” under the TSR.

178. Nesheiwat, Sklar, and Hoose each arranged for Docu Prep Center to provide debt-relief services to consumers in exchange for consideration. Nesheiwat, Sklar, and Hoose are each “sellers” offering a “debt relief service” under the TSR. 16 C.F.R. § 310.2(dd), (o).

179. Sebreros arranged for Assure Direct Services to provide debt-relief services to consumers in exchange for consideration. Sebreros is a “seller” offering a “debt relief service” under the TSR. 16 C.F.R. § 310.2(dd), (o). 180. Martinez arranged for Docs Done Right to provide debt-relief services to consumers in exchange for consideration. Martinez is a “seller” offering a “debt relief service” under the TSR. 16 C.F.R. § 310.2(dd), (o). The CFPA 181. Sections 1031 and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531, 5536(a)(1)(B), prohibit “covered person[s]” from engaging in any “unfair, deceptive, or abusive act or practice.”

182. A representation is deceptive under the CFPA if it is likely to mislead consumers acting reasonably under the circumstances, and the information is material to consumers.

183. The Student Loan Debt Relief Companies are each “covered persons” under the CFPA because they offered or provided consumer-financial Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 30 of 44 Page ID #:1784

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SECOND AMENDED COMPLAINT products or services, including financial-advisory services such as assisting consumers with debt-management or debt-settlement and modifying the terms of any extension of credit. 12 U.S.C. § 5481(5), (6), (15)(A)(viii). 184. Docs Done Right is a “covered person” because it offered or provided consumer-financial products or services, including financial-advisory services such as assisting consumers with debt-management or debt-settlement and modifying the terms of any extension of credit. 12 U.S.C. § 5481(5), (6), (15)(A)(viii).

185. Monster Loans is a “covered person” because it offers or provides consumer-financial products or services, including extending credit for mortgage loans. 12 U.S.C. § 5481(5), (6), (15)(A)(i). 186. Monster Loans is a “service provider” because it provided the material service of obtaining and providing prescreened consumer reports for use in marketing to the Student Loan Debt Relief Companies in connection with the Student Loan Debt Relief Companies’ offering of a consumer-financial product or service. 12 U.S.C. § 5481(26).

187. Lend Tech is a “covered person” because it purports to offer or provide consumer-financial products or services, including extending credit by brokering mortgage loans. 12 U.S.C. § 5481(5), (6), (15)(A)(i). 188. Section 1002(25) of the CFPA defines the term “related person” to mean “any director, officer, or employee charged with managerial responsibility for, or controlling shareholder of,” or “any . . . other person . . . who materially participates in the conduct of the affairs of” a non-bank provider of a consumerfinancial product or service. 12 U.S.C. § 5481(25)(C). Section 1002(25) further provides that a “related person” shall be “deemed to mean a covered person for all purposes of any provision of Federal consumer financial law.” 12 U.S.C. § 5481(25)(B).

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SECOND AMENDED COMPLAINT 189. Chou is a “related person” and “covered person” because he was Monster Loans’ president and had managerial responsibility for it. 190. Nesheiwat is a “related person” and “covered person” because he was Monster Loans’ COO and had managerial responsibility for it. Nesheiwat is also a “related person” and “covered person” because he materially participated in the conduct of the Student Loan Debt Relief Companies. 191. Cowell is a “related person” and “covered person” because he was an officer of Monster Loans and because he materially participated in the conduct of the company’s affairs. Cowell is also a “related person” and “covered person” because he was Lend Tech’s owner and had managerial responsibility for it.

192. Sklar is a “related person” and “covered person” because he was Docu Prep Center’s CEO and had managerial responsibility for it. 193. Hoose is a “related person” and “covered person” because he was Docu Prep Center’s COO and had managerial responsibility for it. 194. Sebreros is a “related person” and “covered person” because he was president of Assure Direct Services and had managerial responsibility for it. He is also a “related person” and “covered person” because he had managerial responsibility for Lend Tech.

195. Abdel is a “related person” and “covered person” because he was a marketing manager of Monster Loans and materially participated in the conduct of its affairs. He is also a “related person” and “covered person” because he was a marketing manager of Docu Prep Center and materially participated in the conduct of its affairs. He is also a “related person” and “covered person” because he was an employee of Assure Direct Services and materially participated in the conduct of its affairs. He is also a “related person” and “covered person” because he had managerial responsibility for Lend Tech. Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 32 of 44 Page ID #:1786

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SECOND AMENDED COMPLAINT 196. Martinez is a “related person” and “covered person” because he was president of Docs Done Right and had managerial responsibility for it. He is also a “related person” and “covered person” because he had managerial responsibility for Lend Tech.

COUNT I Violations of FCRA (Against Student Loan Debt Relief Companies, Monster Loans, Lend Tech, Chou, Nesheiwat, Cowell, Abdel, Sebreros, Martinez, Sklar, and Hoose) 197. The allegations in Paragraphs 1 to 196 are incorporated here by reference.

198. FCRA prohibits persons from using or obtaining a consumer report unless the person obtains it for a permissible purpose and the purpose is certified by the prospective user of the report. 15 U.S.C. § 1681b(f). 199. FCRA provides that using or obtaining a prescreened consumer report to make “a firm offer of credit or insurance” is a permissible purpose. 15 U.S.C. § 1681b(c). A “firm offer” is an offer that will be honored (subject to certain exceptions) if the consumer continues to meet the pre-selected criteria used to select them for the offer. 15 U.S.C. § 1681a(l). 200. Using or obtaining prescreened lists to send solicitations marketing debt-relief services is not a permissible purpose under FCRA. 201. Monster Loans’ and Lend Tech’s certifications to Experian did not state that the prescreened lists were being obtained for use by other companies or for the purpose of sending solicitations marketing debt-relief services. 202. The Student Loan Debt Relief Companies, Monster Loans, Lend Tech, Chou, Nesheiwat, Cowell, Abdel, Sebreros, Martinez, Sklar, and Hoose have, directly or indirectly, used or obtained consumer reports without a Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 33 of 44 Page ID #:1787

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SECOND AMENDED COMPLAINT permissible purpose, and without a certification of the purpose by the prospective user of the report, in violation of FCRA. 15 U.S.C. § 1681b(f). COUNT II Advance Fees in Violation of the TSR (Against Student Loan Debt Relief Companies, Docs Done Right, Nesheiwat, Sklar, Hoose, Sebreros, and Martinez) 203. The allegations in Paragraphs 1 to 196 are incorporated here by reference.

204. Under the TSR, it is an abusive act or practice for a seller or telemarketer to request or receive payment of any fee or consideration for any debt-relief services unless and until (A) the seller or telemarketer has renegotiated, settled, reduced, or otherwise altered the terms of at least one debt pursuant to a settlement agreement, debt-management plan, or other such valid contractual agreement executed by the customer; and (B) the customer has made at least one payment pursuant to that settlement agreement, debtmanagement plan, or other valid contractual agreement between the customer and the creditor or debt collector. 16 C.F.R. § 310.4(a)(5)(i)(A)-(B). 205. In the course of providing, offering to provide, or arranging for others to provide debt-relief services, the Student Loan Debt Relief Companies, Docs Done Right, Nesheiwat, Sklar, Hoose, Sebreros, and Martinez charged and received fees before consumers’ applications for loan consolidations, loanrepayment plans, and loan-forgiveness plans were approved, and before consumers had made the first payments under the altered terms of their student loans, in violation of the TSR. 16 C.F.R. § 310.4(a)(5)(i)(A)-(B). Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 34 of 44 Page ID #:1788

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SECOND AMENDED COMPLAINT COUNT III Misrepresentations in Violation of the TSR – Lower Interest Rates (Against Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros) 206. The allegations in Paragraphs 1 to 196 are incorporated here by reference.

207. It is a deceptive practice under the TSR for a seller or telemarketer to misrepresent any material aspect of a debt-relief service, including the amount of money or the percentage of the debt amount that a consumer may save. 16 C.F.R. § 310.3(a)(2)(x).

208. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros misrepresented, directly or indirectly, expressly or by implication, that:

consolidating would cause consumers to obtain a lower interest rate on their student loans; and b.

consumers were required to consolidate their student loans to obtain an interest-rate deduction.

209. The acts or practices of the Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros, as set forth in Paragraph 158, are deceptive acts or practices that violate the TSR, 16 C.F.R. 310.3(a)(2)(x). COUNT IV Misrepresentations in Violation of the TSR – Improved Credit Scores (Against Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros) 210. The allegations in Paragraphs 1 to 196 are incorporated here by reference.

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SECOND AMENDED COMPLAINT 211. It is a deceptive practice under the TSR for a seller or telemarketer to misrepresent any material aspect of a debt-relief service, including the effect of the service on a consumer’s creditworthiness. 16 C.F.R. § 310.3(a)(2)(x). 212. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros misrepresented, directly or indirectly, expressly or by implication, that consolidating student loans would improve consumers’ credit scores.

213. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros misrepresented, directly or indirectly, expressly or by implication, that they had a reasonable basis for representing that consolidating student loans would improve consumers’ credit scores. 214. The acts or practices of the Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros, as set forth in Paragraphs 162 and 163, are deceptive acts or practices that violate the TSR, 16 C.F.R. § 310.3(a)(2)(x). COUNT V Misrepresentations in Violation of the TSR – New Servicer (Against Docu Prep Center, Nesheiwat, Sklar, and Hoose) 215. The allegations in Paragraphs 1 to 196 are incorporated here by reference.

216. It is a deceptive practice under the TSR for a seller or telemarketer to misrepresent any material aspect of a debt-relief service. 16 C.F.R. § 310.3(a)(2)(x).

217. Docu Prep Center, Nesheiwat, Sklar, and Hoose misrepresented, directly or indirectly, expressly or by implication, that consolidating would result in ED becoming consumers’ “new servicer” and that consolidating would enable consumers to avoid interacting with third-party student-loan servicers. Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 36 of 44 Page ID #:1790

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SECOND AMENDED COMPLAINT 218. The acts or practices of Docu Prep Center, Nesheiwat, Sklar, and Hoose, as set forth in Paragraph 167, are deceptive acts or practices that violate the TSR. 16 C.F.R. § 310.3(a)(2)(x).

COUNT VI Substantial Assistance in Violation of the TSR (Against Monster Loans, Docs Done Right, Nesheiwat, and Martinez) 219. The allegations in Paragraphs 1 to 196 are incorporated here by reference.

220. The TSR prohibits any person from providing substantial assistance or support to any seller or telemarketer when that person knows or consciously avoids knowing that the seller or telemarketer is engaged in any act or practice that constitutes deceptive or abusive conduct under the Rule. 16 C.F.R. § 310.3(b).

221. Monster Loans, Docs Done Right, Nesheiwat, and Martinez knew, or consciously avoided knowing, the material misrepresentations that the Student Loan Debt Relief Companies made to consumers. 222. Monster Loans, Docs Done Right, Nesheiwat, and Martinez knew, or consciously avoided knowing, that the Student Loan Debt Relief Companies charged and received fees from consumers before consumers’ applications for loan consolidations, loan-repayment plans, and loan-forgiveness plans were approved, and before consumers had made the first payments under the altered terms of their student loans.

223. Monster Loans, Docs Done Right, Nesheiwat, and Martinez provided substantial assistance to the Student Loan Debt Relief Companies in their violations of the TSR. 16 C.F.R. § 310.3(b). Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 37 of 44 Page ID #:1791

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SECOND AMENDED COMPLAINT COUNT VII Deception in Violation of the CFPA – Lower Interest Rates (Against Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros) 224. The allegations in Paragraphs 1 to 196 are incorporated here by reference.

225. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros misrepresented, directly or indirectly, expressly or by implication, that:

consolidating would cause consumers to obtain a lower interest rate on their student loans; and b.

consumers were required to consolidate to obtain an interest-rate deduction.

226. These representations were material and likely to mislead consumers acting reasonably under the circumstances. 227. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros have therefore engaged in deceptive acts or practices in violation of §§ 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531, 5536. COUNT VIII Deception in Violation of the CFPA – Improved Credit Scores (Against Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros) 228. The allegations in Paragraphs 1 to 196 are incorporated here by reference.

229. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros misrepresented, directly or indirectly, expressly or by Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 38 of 44 Page ID #:1792

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SECOND AMENDED COMPLAINT implication, that consolidating student loans would improve consumers’ credit scores.

230. These representations were material and likely to mislead consumers acting reasonably under the circumstances. 231. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros misrepresented, directly or indirectly, expressly or by implication, that they had a reasonable basis for representing that consolidating student loans would improve consumers’ credit scores. 232. The Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros have therefore engaged in deceptive acts or practices in violation of §§ 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531, 5536. COUNT IX Deception in Violation of the CFPA – New Servicer (Against Docu Prep Center, Nesheiwat, Sklar, and Hoose) 233. The allegations in Paragraphs 1 to 196 are incorporated here by reference.

234. Docu Prep Center, Nesheiwat, Sklar, and Hoose misrepresented, directly or indirectly, expressly or by implication, that consolidating would result in ED becoming consumers’ “new servicer,” and that consolidating would enable consumers to avoid interacting with third-party student-loan servicers.

235. These representations were material and likely to mislead consumers acting reasonably under the circumstances. 236. Docu Prep Center, Nesheiwat, Sklar, and Hoose have therefore engaged in deceptive acts or practices in violation of §§ 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531, 5536.

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SECOND AMENDED COMPLAINT COUNT X Substantial Assistance in Violation of the CFPA (Against Monster Loans, Docs Done Right, Nesheiwat, and Martinez) 237. The allegations in Paragraphs 1 to 196 are incorporated here by reference.

238. Section 1036(a)(3) of the CFPA 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 states that “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.” 12 U.S.C. § 5536(a)(3).

239. Monster Loans, Docs Done Right, Nesheiwat, and Martinez knew, or recklessly avoided knowing, the material misrepresentations that the Student Loan Debt Relief Companies made to consumers. 240. Monster Loans, Docs Done Right, Nesheiwat, and Martinez provided substantial assistance to the Student Loan Debt Relief Companies in their deceptive acts or practices, in violation of § 1036(a)(3) of the CFPA. 12 U.S.C. § 5563(a)(3).

COUNT XI CFPA Violations Based on Violations of FCRA and TSR (Against Student Loan Debt Relief Companies, Monster Loans, Lend Tech, Docs Done Right, Chou, Nesheiwat, Cowell, Abdel, Sebreros, Martinez, Sklar, and Hoose) 241. The allegations in Paragraphs 1 to 196 are incorporated here by reference.

242. FCRA and the Telemarketing Act are “Federal consumer financial laws” under the CFPA. 12 U.S.C. § 5481(12)(F), (14); 15 U.S.C. § 6105(d). Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 40 of 44 Page ID #:1794

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SECOND AMENDED COMPLAINT 243. The violations of FCRA committed by the Student Loan Debt Relief Companies, Monster Loans, Lend Tech, Chou, Nesheiwat, Cowell, Abdel, Sebreros, Martinez, Sklar, and Hoose are deemed to be violations of the CFPA. 15 U.S.C. § 1681s(d).

244. Because the Student Loan Debt Relief Companies, Monster Loans, Lend Tech, Chou, Nesheiwat, Cowell, Abdel, Sebreros, Martinez, Sklar, and Hoose are “covered persons” who violated FCRA by, directly or indirectly, using or obtaining consumer reports without a permissible purpose and without a certification of the purpose by the prospective user of the report, they violated § 1036(a)(1)(A) of the CFPA. 12 U.S.C. § 5536(a)(1)(A). 245. The violations of the TSR committed by the Student Loan Debt Relief Companies, Docs Done Right, Nesheiwat, Sklar, Hoose, Sebreros, and Martinez are treated as violations of a rule under § 1031 of the CFPA. 15 U.S.C. § 6102(c).

246. Because the Student Loan Debt Relief Companies, Docs Done Right, Nesheiwat, Sklar, Hoose, Sebreros, and Martinez are “covered persons” who violated the TSR by charging and receiving illegal advance fees from consumers, they violated § 1036(a)(1)(A) of the CFPA. 12 U.S.C. § 5536(a)(1)(A).

247. Because the Student Loan Debt Relief Companies, Nesheiwat, Sklar, Hoose, and Sebreros are “covered persons” who violated the TSR by engaging in deceptive conduct, they violated § 1036(a)(1)(A) of the CFPA. 12 U.S.C. § 5536(a)(1)(A).

248. Because Monster Loans, Docs Done Right, Nesheiwat, and Martinez are “covered persons” who substantially assisted violations of the TSR, they violated § 1036(a)(1)(A) of the CFPA. 12 U.S.C. § 5536(a)(1)(A). Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 41 of 44 Page ID #:1795

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SECOND AMENDED COMPLAINT COUNT XII Relief Defendants 249. The allegations in Paragraphs 1 to 196 are incorporated here by reference.

250. Chou, Cowell, Lawson, TDK Enterprises, LLC, Cre8labs, Inc., and XO Media, LLC have received, directly or indirectly, distributions from the Student Loan Debt Relief Companies.

251. All of those distributions are traceable to funds obtained from consumers through one or more of the violations of the CFPA, TSR, and FCRA described herein.

252. As limited partners, Lawson and XO Media, LLC had only an equity interest in the Student Loan Debt Relief Companies. They therefore lack a legitimate claim to distributions from the Student Loan Debt Relief Companies traceable to the violations described herein. 253. Lawson and XO Media, LLC also lack a legitimate claim to the distributions from the Student Loan Debt Relief Companies to the extent that, at the time of each of the distributions, those companies’ liabilities exceeded their available assets such that the companies had no assets or “profits” that could legitimately be distributed to their limited partners, including to Lawson and XO Media, LLC, under California law. Cal. Corp. Code § 15905.08(b)(2). 254. Lawson and XO Media, LLC also lack a legitimate claim to distributions from the Student Loan Debt Relief Companies because they did not invest in those companies in good faith or receive distributions from those companies in good faith.

255. Lawson and XO Media, LLC also lack a legitimate claim to the distributions from Direct Document Solutions and Secure Preparation Services because they made no capital contributions to those companies. The Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 42 of 44 Page ID #:1796

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SECOND AMENDED COMPLAINT distributions from those companies to Lawson and XO Media, LLC were gratuitous transfers.

256. Lawson and XO Media, LLC would be unjustly enriched if not required to disgorge the funds distributed to them or the value of the benefits they received.

DEMAND FOR RELIEF The Bureau requests that the Court:

permanently enjoin Defendants from committing future violations of the FCRA, TSR, and CFPA and enter such other injunctive relief as appropriate;

permanently enjoin Defendants from advertising, marketing, promoting, offering for sale, selling, or providing any form of assistance to any debt-relief service;

grant additional injunctive relief as the Court may deem to be just and proper;

order Monster Loans, the Student Loan Debt Relief Companies, Docs Done Right, Nesheiwat, Sklar, Hoose, Sebreros, and Martinez to pay redress to consumers harmed by their unlawful conduct; e.

award damages and other monetary relief against Defendants; f.

impose civil money penalties against Defendants; g.

order disgorgement of ill-gotten funds against Relief Defendants so that those funds can be returned to consumers; h.

order the rescission or reformation of contracts where necessary to redress injury to consumers; and i.

award the Bureau the costs of bringing this action, as well as such other and additional relief as the Court may determine to be just and proper.

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SECOND AMENDED COMPLAINT Dated August 26, 2020 Respectfully Submitted,

Thomas G. Ward

Enforcement Director

Deborah Morris

Deputy Enforcement Director

Michael G. Salemi

Assistant Litigation Deputy

/s/ Colin Reardon

Colin Reardon

E. Vanessa Assae-Bille Leanne E. Hartmann Bureau of Consumer Financial Protection 1700 G Street, NW Washington, D.C. 20552

Attorneys for Plaintiff Bureau of Consumer Financial Protection

Case 8:20-cv-00043-JVS-ADS Document 141 Filed 08/26/20 Page 44 of 44 Page ID #:1798

Stipulation (Oct. 2020)

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[PROPOSED] STIPULATED FINAL JUDGMENT AND ORDER AS TO KENNETH LAWSON AND XO MEDIA, LLC COLIN REARDON (NY Bar #4945655) E-mail: [email protected] Phone: (202) 435-9668 E. VANESSA ASSAE-BILLE (NY Bar #5165501) E-mail: [email protected] Phone: (202) 435-7688 1700 G Street, NW Washington, D.C. 20552 Fax: (202) 435-5471 LEANNE E. HARTMANN (CA Bar #264787) – Local Counsel E-mail: [email protected] Phone: (415) 844-9787 301 Howard St., Suite 1200 San Francisco, CA 94105 Fax: (415) 844-9788 Attorneys for Plaintiff Bureau of Consumer Financial Protection UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA Bureau of Consumer Financial Protection, Plaintiff, vs.

Chou Team Realty, LLC, et al., Defendants.

) ) ) ) ) ) ) ) ) ) ) Case No.: 8-20-cv-00043-SB-ADS [PROPOSED] STIPULATED FINAL JUDGMENT AND ORDER AS TO KENNETH LAWSON AND XO MEDIA, LLC The Bureau of Consumer Financial Protection (Bureau) commenced this civil action on January 9, 2020, to obtain injunctive relief, redress, damages, civil penalties, and disgorgement. The Second Amended Complaint alleges that, in connection with providing debt-relief services to consumers with student loans, certain entities and individuals violated the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681; the Telemarketing Sales Rule (TSR), 16 C.F.R. Part 310; and the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a)(1)(A). The Second Amended Complaint also alleges that xxxxxxxxxxx Case 8:20-cv-00043-SB-ADS Document 162 Filed 10/19/20 Page 1 of 7 Page ID #:2091 VPC October 19, 2020

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[PROPOSED] STIPULATED FINAL JUDGMENT AND ORDER AS TO KENNETH LAWSON AND XO MEDIA, LLC Relief Defendants Kenneth Lawson and XO Media, LLC received distributions of profits traceable to funds obtained through violations of the FCRA, the CFPA, and the TSR by the Student Loan Debt Relief Companies. The Bureau and Relief Defendants Lawson and XO Media, LLC agree to entry of this Stipulated Final Judgment and Order (Order), without adjudication of any issue of fact or law, to settle and resolve all matters in dispute between these parties arising from the conduct alleged in the Second Amended Complaint.

THEREFORE, it is ORDERED:

FINDINGS 1.

This Court has jurisdiction over the parties and the subject matter of this action.

Venue is proper in this district under 12 U.S.C. § 5564(f). 3.

The relief provided in this Order is appropriate and available pursuant to sections 1054 and 1055 of the CFPA, 12 U.S.C. §§ 5564, 5565. 4.

Relief Defendants neither admit nor deny any allegations in the Second Amended Complaint, except as specified in this Order. For purposes of this Order, Relief Defendants admit the facts necessary to establish the Court’s jurisdiction over them and the subject matter of this action. 5.

Relief Defendants waive all rights to seek judicial review or otherwise challenge or contest the validity of this Order and any claim they may have 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 party agrees to bear its own costs and expenses, including, without limitation, attorneys’ fees. 6.

Entry of this Order is in the public interest. Case 8:20-cv-00043-SB-ADS Document 162 Filed 10/19/20 Page 2 of 7 Page ID #:2092

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[PROPOSED] STIPULATED FINAL JUDGMENT AND ORDER AS TO KENNETH LAWSON AND XO MEDIA, LLC DEFINITIONS 7.

The following definitions apply to this Order: a. “Affected Consumers” includes all consumers who, since January 1, 2015, were charged fees by any of the Student Loan Debt Relief Companies.

b. “Corporate Relief Defendant” means XO Media, LLC, and its successors and assigns.

c. “Effective Date” means the date on which the Order is entered. d. “Enforcement Director” means the Assistant Director of the Office of Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

e. “Individual Relief Defendant” means Kenneth Lawson, and any other name by which he might be known. f. “Relief Defendants” means the Individual Relief Defendant and the Corporate Relief Defendant, individually, collectively, or in any combination.

g. “Student Loan Debt Relief Companies” means Docu Prep Center, Inc., d/b/a DocuPrep Center, d/b/a Certified Document Center; Document Preparation Services, LP, d/b/a DocuPrep Center, d/b/a Certified Document Center; Certified Doc Prep, Inc.; Certified Doc Prep Services, LP; Assure Direct Services, Inc.; Assure Direct Services, LP; Direct Document Solutions, Inc.; Direct Document Solutions, LP; Secure Preparation Services, Inc.; Secure Preparation Services, LP, and their successors and assigns, individually, collectively, or in any combination.

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[PROPOSED] STIPULATED FINAL JUDGMENT AND ORDER AS TO KENNETH LAWSON AND XO MEDIA, LLC ORDER MONETARY PROVISION I.

Order to Pay Redress IT IS FURTHER ORDERED that:

A judgment for monetary relief is entered in favor of the Bureau and against Relief Defendants, jointly and severally, in the amount of $200,000, such amount being for the purpose of providing redress to Affected Consumers. 9.

Within 10 days of the Effective Date, Relief Defendants 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, $200,000, in full satisfaction of the judgment as ordered in Paragraph 8 of this Section 10.

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 money will not revert to Relief Defendants. Relief Defendants will have no right to challenge any actions that the Bureau or its representatives may take under this Section.

12.

Payment of redress to any Affected Consumer under this Order may not be conditioned on that Affected Consumer waiving any right. 13.

In the event of any default on Relief Defendants’ obligations to make payment under this Order, interest, computed under 28 U.S.C. § 1961, as Case 8:20-cv-00043-SB-ADS Document 162 Filed 10/19/20 Page 4 of 7 Page ID #:2094

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[PROPOSED] STIPULATED FINAL JUDGMENT AND ORDER AS TO KENNETH LAWSON AND XO MEDIA, LLC amended, will accrue on any outstanding amounts not paid from the date of default to the date of payment, and will immediately become due and payable. 14.

Relief Defendants relinquish all dominion, control, title to the funds paid under this Order to the fullest extent permitted by law. No part of the funds may be returned to Relief Defendants.

15.

The facts alleged in the Second Amended Complaint will be taken as true and be given collateral estoppel effect, without further proof, in any proceeding based on the entry of the Order, or in any subsequent civil litigation by, or on behalf of the Bureau, including in a proceeding to enforce its rights to any payment or monetary judgment under this Order, such as a nondischargeability complaint in any bankruptcy case. 16.

The facts alleged in the Second Amended Complaint establish all elements necessary to sustain an action by the Bureau under Section 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A). For such purposes, this Order will have collateral estoppel effect against each Relief Defendant, even in such Relief Defendant’s capacity as debtor-in-possession. 17.

Under 31 U.S.C. § 7701, Relief Defendants, unless they already have done so, must furnish to the Bureau their taxpayer-identification numbers, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order.

18.

Under Section 604(a)(1) of FCRA, 15 U.S.C.§ 1681b(a)(1), any Consumer Reporting Agency may furnish a Consumer Report concerning any Relief Defendant to the Bureau, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. Case 8:20-cv-00043-SB-ADS Document 162 Filed 10/19/20 Page 5 of 7 Page ID #:2095

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[PROPOSED] STIPULATED FINAL JUDGMENT AND ORDER AS TO KENNETH LAWSON AND XO MEDIA, LLC COMPLIANCE PROVISIONS II.

Notices IT IS FURTHER ORDERED that:

19.

Unless otherwise directed in writing by the Bureau, Relief Defendants must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “CFPB v. Chou Team Realty, LLC, et al., Case No. 8:20-cv-00043-JVS-ADS,” and send them by overnight courier or first-class mail to the below address, and contemporaneously by email to [email protected]: Assistant Director for Enforcement Bureau of Consumer Financial Protection ATTENTION: Office of Enforcement 1700 G Street, N.W.

Washington D.C. 20552 III.

Retention of Jurisdiction IT IS FURTHER ORDERED that:

20.

The Court will retain jurisdiction of this matter for the purpose of enforcing this Order.

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Cas@ 8:20-cv-00043-SB-ADS Document 162 Filed 10/19/20 Page 7 of7 Page ID #:2097

IT IS SO ORDERED.

Oct.

DATED this !9thgay of , 2020.

nA & Ww NO Re

Hon. Stanley Blumenfeld, Jr.

oo won D

[PROPOSED] STIPULATED FINAL JUDGMENT AND ORDER AS TO KENNETH LAWSON AND XO MEDIA, LLC

Judgment (May 2021)

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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Bureau of Consumer Financial Protection, Plaintiff, vs.

Chou Team Realty, LLC, et al., Defendants.

) ) ) ) ) ) ) ) ) ) ) Case No.: 8-20-cv-00043-SB-ADS DEFAULT JUDGMENT AND ORDER AGAINST BILAL ABDELFATTAH A/K/A BELAL ABDELFATTAH A/K/A BILL ABDEL Plaintiff Bureau of Consumer Financial Protection (“Bureau”) commenced this civil action on January 9, 2020. As relevant here, the Bureau alleged claims under Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681, and the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531(a), 5536(a)(1)(A), against Defendant Bilal Abdelfattah a/k/a Belal Abdelfattah a/k/a Bill Abdel (“Abdel” or “Defendant”). ECF No. 1. On January 22, 2020, the Bureau served the original Complaint and a Request to Waive Service of Summons on Abdel by delivering copies to his attorney. Through his attorney, Abdel returned the Waiver of Service, which the Bureau filed on January 30, 2020. ECF No. 15. However, thereafter, Abdel did not answer, move to dismiss, or otherwise appear either through counsel or pro se.

On April 9, 2020, the Bureau filed an application for the Clerk to enter Case 8:20-cv-00043-SB-ADS Document 184 Filed 05/07/21 Page 1 of 12 Page ID #:2415 VPC May 7, 2021

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default against Abdel. ECF No. 68. The Clerk entered default against Abdel on April 10, 2020. As of the date of this Order, Abdel has not answered, appeared, or otherwise defended this action.

The Bureau filed its First Amended Complaint (“FAC”) on July 10, 2020, and then filed the Second Amended Complaint (“SAC”) on August 26, 2020. ECF Nos. 117, 141. Those pleadings asserted the same claims against Abdel as the original Complaint.

The Bureau filed its Notice of Application and Application for Entry of Default Judgment and Order Against Abdel pursuant to Fed. R. Civ. P. 55(b)(2) and Local Rules 55-1 and 55-2. The Court, having considered the Bureau’s Application, supporting declarations, and the entire record in this matter, granted the Application in part, as described in the Court’s Order on Applications for Default Judgment. ECF No. 177. The Court finds good cause to grant the following relief against Abdel.

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED as follows: FINDINGS 1.

After the clerk’s entry of default against a party under Rule 55(a), a court in its discretion may enter a default judgment against that party. Fed. R. Civ. P. 55(b); see Const. Laborers Trust Funds for S. Cal. Admin. v. Cal. Co. v. Anzalone Masonry, Inc., 316 F. Supp. 3d 1192, 1198 (C.D. Cal. 2018). Once default is entered, the complaint’s factual allegations regarding liability are taken as true, while allegations regarding the amount of damages must be proven. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–18 (9th Cir. 1987); Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977) (citing Pope v. United States, 323 U.S. 1 (1944)). Further, here, the money judgment is based on a mathematical calculation based on a statutory penalty regime. Accordingly, default judgment may be entered without a hearing. Cf. Davis v. Fendler, 650 F.2d 1154, 1161 (9th Cir. 1981) (no hearing necessary to award Case 8:20-cv-00043-SB-ADS Document 184 Filed 05/07/21 Page 2 of 12 Page ID #:2416

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default money judgment where the amount is based on definite figures). 2.

This is an action instituted by the Bureau against Abdel under FCRA, 15 U.S.C. § 1681b(f), and the CFPA, 12 U.S.C. §§ 5531, 5536(a), based on violations of FCRA. With respect to Abdel, the SAC seeks permanent injunctive relief and civil money penalties. The Bureau has the authority to seek this relief. 12 U.S.C. § 5565.

This Court has subject-matter jurisdiction over this action because it was brought under federal consumer financial law, 12 U.S.C. § 5565(a)(1), presents a federal question, 28 U.S.C. § 1331, and the plaintiff is an agency of the United States, 28 U.S.C. § 1345. Venue is proper in this district because Abdel is located, resides, or does business in this district. 12 U.S.C. § 5564(f). 4.

Abdel waived formal service of process and, thus, has been properly served.

Abdel failed to answer or otherwise defend this action. 6.

The Clerk of Court properly entered default against Abdel on April 10, 2020.

Because Abdel was in default, and because the FAC and the SAC asserted the same claims against him as the original Complaint, the Bureau was not required to serve the FAC and the SAC on Abdel. See Fed. R. Civ. P. 5(a)(2).

Abdel, an individual, is not a minor, incompetent person, or current member of the military service.

The SAC states claims upon which relief can be granted. 10.

Because of Abdel’s default, the allegations in the SAC are taken as true as against him.

11.

The seven factors set forth in Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986), weigh in favor of a judgment of default against Abdel. 12.

Because the money judgment here is capable of ascertainment Case 8:20-cv-00043-SB-ADS Document 184 Filed 05/07/21 Page 3 of 12 Page ID #:2417

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from definite figures contained in the documentary evidence and affidavits submitted by the Bureau, the Court need not hold a hearing prior to entering default judgment. Davis, 650 F.2d at 1161. 13.

Judgment is entered against Abdel in favor of the Bureau, on Counts I and XI.

14.

The SAC seeks (1) a permanent injunction to prevent future violations of FCRA and the CFPA; and (2) a civil money penalty. This Court is empowered to order these forms of relief under Section 1055 of the CFPA, 12 U.S.C. § 5565. Moreover, it is within this Court’s discretion to enter injunctive and monetary relief at this stage, without holding an evidentiary hearing. Davis, 650 F.2d at 1161.

15.

The Bureau is entitled to an Order imposing a permanent injunction and requiring Abdel to pay a civil money penalty in the amount of $3,262,244 under the CFPA.

16.

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.

17.

Entry of this Order is in the public interest. DEFINITIONS 18.

The following definitions apply to this Order: a. “Assisting Others” includes, but is not limited to: i.

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;

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ii.

providing names of, or contributing to the generation of, potential customers;

iii.

participating in or providing services related to the offering, sale, or servicing of a product, or the collection of payments for a product; and iv.

acting or serving as an owner, officer, director, manager, or principal of any entity.

b. “Bureau” means the Bureau of Consumer Financial Protection. c. “Consumer Report” means a “consumer report,” as that term is defined in Section 603(d) of FCRA, 15 U.S.C. § 1681a(d). d. “Consumer Reporting Agency” means a “consumer reporting agency,” as that term is defined in Section 603(f) of FCRA, 15 U.S.C. § 1681a(f).

f. “Defendant” or “Abdel” means Bilal Abdelfattah, also known as Belal Abdelfattah and as Bill Abdel, and any other names by which he may be known.

g. “Effective Date” means the date on which the Order is entered. Case 8:20-cv-00043-SB-ADS Document 184 Filed 05/07/21 Page 5 of 12 Page ID #:2419

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h. “Enforcement Director” means the Assistant Director of the Office of Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

i. “Prescreened Consumer Reports” means Consumer Reports relating to consumers furnished by a Consumer Reporting Agency in connection with credit or insurance transactions that are not initiated by the consumers, pursuant to 15 U.S.C. § 1681b(c).

j. “Related Consumer Action” means a private action by or on behalf of one or more consumers or an enforcement action by another governmental agency brought against Abdel based on substantially the same facts as described in the Amended Complaint.

k. “Student Loan Debt Relief Companies” means Docu Prep Center, Inc., d/b/a DocuPrep Center, d/b/a Certified Document Center; Document Preparation Services, LP, d/b/a DocuPrep Center, d/b/a Certified Document Center; Certified Doc Prep, Inc.; Certified Doc Prep Services, LP; Assure Direct Services, Inc.; Assure Direct Services, LP; Direct Document Solutions, Inc.; Direct Document Solutions, LP; Secure Preparation Services, Inc.; Secure Preparation Services, LP, and their successors and assigns, individually, collectively, or in any combination.

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ORDER I.

Permanent Ban on Offering or Providing Debt-Relief Services IT IS ORDERED that:

19.

Defendant, whether acting directly or indirectly, is permanently restrained from:

Nothing in this Order shall be read as an exception to this Paragraph. II.

Permanent Ban on Using or Obtaining Prescreened Consumer Reports IT IS ORDERED that:

20.

Defendant, whether acting directly or indirectly, is permanently restrained and enjoined from using, obtaining, offering, providing, selling, or arranging for others to use or obtain Prescreened Consumer Reports for any purpose. Nothing in this Order shall be read as an exception to this Paragraph. III.

Prohibition on Using or Obtaining Consumer Reports for Any Business Purpose IT IS ORDERED that:

21.

Defendant, and his officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them, who receive actual notice of this Order, whether acting directly or indirectly, are permanently restrained and enjoined from using, obtaining, offering, Case 8:20-cv-00043-SB-ADS Document 184 Filed 05/07/21 Page 7 of 12 Page ID #:2421

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providing, selling, or arranging for others to use or obtain Consumer Reports for any business purpose. Nothing in this Order shall be read as an exception to this Paragraph.

IV.

Consumer Information IT IS ORDERED that:

22.

a. disclose, use, or benefit from consumer information, including the name, address, or any information about the consumer’s student loans, contained in or derived from Prescreened Consumer Reports obtained for use in marketing Debt-Relief Services; or b. disclose, use, or benefit 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 customer’s account (including a credit card, bank account, or other financial account), obtained from or through the activities of the Student Loan Debt Relief Companies. However, consumer information may be disclosed if lawfully requested by a government agency or required by law, regulation, or court order. MONETARY PROVISIONS V.

Order to Pay Civil Money Penalty to Plaintiff It is FURTHER ORDERED that:

23.

Under sections 1042(a) 1055(c) of the CFPA, 12 U.S.C. §§ 5552(a) and 5565(c), by reason of the violations of law alleged in the SAC Case 8:20-cv-00043-SB-ADS Document 184 Filed 05/07/21 Page 8 of 12 Page ID #:2422

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and taking into account the factors in 12 U.S.C. § 5565(c)(3), Defendant must pay a civil money penalty of $3,262,244 to the Bureau. 24.

The civil money penalty 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 Defendant. 25.

The civil money penalty paid under this Order will be deposited in the Civil Penalty Fund of the Bureau as required by section 1017(d) of the CFPA, 12 U.S.C. § 5497(d).

VI.

Additional Monetary Provisions It is FURTHER ORDERED that:

26.

Defendant must relinquish all dominion, control, and title to the funds transferred or paid under this Order to the fullest extent permitted by law and no part of the funds may be returned to Defendant. 28.

The facts alleged in the SAC will be taken as true and given collateral estoppel effect, without further proof, in any proceeding based on the entry of the Order, or in any subsequent civil litigation by or on behalf of the Bureau, including in a proceeding to enforce their rights to any payment or monetary judgment under this Order, such as a non-dischargeability complaint in any bankruptcy case.

29.

The facts alleged in the SAC establish all elements necessary to sustain an action by the Bureau under section 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A), and for such purposes this Order will have collateral estoppel effect against Defendant, even in such Defendant’s capacity Case 8:20-cv-00043-SB-ADS Document 184 Filed 05/07/21 Page 9 of 12 Page ID #:2423

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as debtor-in-possession.

30.

The civil penalty imposed by the Order represents a civil penalty owed to the United States Government, is not compensation for actual pecuniary loss, and, thus, is not subject to discharge under the Bankruptcy Code under 11 U.S.C. § 523(a)(7).

31.

Under 31 U.S.C. § 7701, Defendant, unless he has already done so, must furnish to the Bureau any taxpayer-identification numbers associated with him, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order.

32.

Within thirty days of the entry of a final judgment, order, or settlement in a Related Consumer Action, Defendant must notify the Enforcement Director of the final judgment, order, or settlement in writing. That notification must indicate the amount of redress, if any, that Defendant paid or is required to pay to consumers and describe the consumers or classes of consumers to whom that redress has been or will be paid. To preserve the deterrent effect of the civil money penalty in any Related Consumer Action, Defendant may not argue that he is entitled to, nor may Defendant benefit by, any offset or reduction of any monetary remedies imposed in the Related Consumer Action because of the civil money penalty paid in this action or because of any payment that the Bureau makes from the Civil Penalty Fund. If the court in any Related Consumer Action offsets or otherwise reduces the amount of compensatory monetary remedies imposed against Defendant based on the civil money penalty paid in this action or based on any payment that the Bureau makes from the Civil Penalty Fund, Defendant must, within thirty days after entry of a final order granting such offset or reduction, notify the Bureau and pay the amount of the offset or reduction to the U.S. Treasury. Such a payment will not be considered an additional civil money penalty and will not change the amount of the civil money penalty imposed in this action. Case 8:20-cv-00043-SB-ADS Document 184 Filed 05/07/21 Page 10 of 12 Page ID #:2424

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33.

Defendant must treat all civil money penalties paid under this Order as a penalty paid to the government for all purposes. Regardless of how such funds are used, Defendant may not:

c. claim, assert, or apply for a tax deduction, tax credit, or any other tax benefit for any civil money penalty paid under this Order; or d. seek or accept, directly or indirectly, reimbursement or indemnification from any source, including but not limited to payment made under any insurance policy, with regard to any civil money penalty paid under this Order.

34.

Upon written request of a representative of the Bureau, any consumer reporting agency must furnish consumer reports to the Bureau concerning [any] Individual Defendant under Section 604(a)(1) of the Fair Credit Reporting Act, 15 U.S.C.§ 168l b(a)(1), which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. VII.

COMPLIANCE MONITORING IT IS FURTHER ORDERED, that to monitor Defendant’s compliance with this Order:

a. Within 14 days of receipt of a written request from the Bureau, Defendant must submit compliance reports or other requested information, which must be sworn to under penalty of perjury; provide sworn testimony; or produce documents.

b. For purposes of this Section, the Bureau may communicate directly with Defendant, unless Defendant retains counsel related to these communications.

c. Defendant must permit Bureau representatives to interview any employee or other person affiliated with him who has agreed to such an interview. The person interviewed may have counsel present. Case 8:20-cv-00043-SB-ADS Document 184 Filed 05/07/21 Page 11 of 12 Page ID #:2425

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d. Nothing in this Order will limit the Bureau’s lawful use of civil investigative demands under 12 C.F.R. § 1080.6 or other compulsory process.

VIII.

Retention of Jurisdiction It is FURTHER ORDERED that:

35.

The Court will retain jurisdiction of this matter for the purpose of enforcing this Order.

It is SO ORDERED, this 7th day of May, 2021.

_______________________________

The Honorable Stanley Blumenfeld, Jr.

United States District Judge

Case 8:20-cv-00043-SB-ADS Document 184 Filed 05/07/21 Page 12 of 12 Page ID #:2426

Stipulation (May 2021)

PDF of this document (19 pages)

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STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Bureau of Consumer Financial Protection, Plaintiff, vs.

Chou Team Realty, LLC, et al., Defendants.

) ) ) ) ) ) ) ) ) ) ) Case No.: 8-20-cv-00043-SB-ADS STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR The Bureau of Consumer Financial Protection (Bureau) commenced this civil action on January 9, 2020, to obtain injunctive relief, redress, civil penalties, and disgorgement. The Complaint alleges that, in connection with providing Debt-Relief Services to consumers with student loans, certain entities and individuals, including Defendant David Sklar, violated the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681; the Telemarketing Sales Rule (TSR), 16 C.F.R. Part 310; and the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a)(1)(A).

The Bureau and Defendant Sklar agree to entry of this Stipulated Final Judgment and Order (Order), without adjudication of any issue of fact or law, to settle and resolve all matters in dispute between these parties. Case 8:20-cv-00043-SB-ADS Document 181 Filed 05/04/21 Page 1 of 19 Page ID #:2346 VPC May 4, 2021

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STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR THEREFORE, it is ORDERED:

FINDINGS 1.

This Court has jurisdiction over the parties and the subject matter of this action.

Venue is proper in this district under 12 U.S.C. § 5564(f). 3.

The relief provided in this Order is appropriate and available under sections 1054 and 1055 of the CFPA, 12 U.S.C. §§ 5564, 5565. 4.

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

The following definitions apply to this Order: a. “Affected Consumers” includes all consumers who, since January 1, 2015, were charged fees by Docu Prep Center. b. “Assisting Others” includes, but is not limited to: i. 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 Case 8:20-cv-00043-SB-ADS Document 181 Filed 05/04/21 Page 2 of 19 Page ID #:2347

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STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR Internet website, email, or other electronic communication;

ii. providing names of, or contributing to the generation of, potential customers;

iii. participating in or providing services related to the offering, sale, or servicing of a product, or the collection of payments for a product;

iv. acting or serving as an owner, officer, director, manager, principal, partner, or limited partner of any entity; v. investing or loaning money; and vi. renting or otherwise providing office space. c. “Consumer Financial Product or Service” is synonymous in meaning and equal in scope to the definition of the term in the CFPA, 12 U.S.C. § 5481(5), and, subject to applicable restrictions contained in the CFPA, includes but is not limited to:

i. 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); ii. providing financial advisory services to consumers on individual consumer financial matters or relating to proprietary financial products or services, including providing credit counseling to any consumer or providing services to assist a consumer with debt management or debt settlement, modifying the terms of any extension of credit, or avoiding foreclosure; and Case 8:20-cv-00043-SB-ADS Document 181 Filed 05/04/21 Page 3 of 19 Page ID #:2348

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STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR iii. engaging in deposit-taking activities, transmitting or exchanging funds, or otherwise acting as a custodian of funds or any financial instrument for use by or on behalf of a consumer.

d. “Consumer Report” means a “consumer report,” as that term is defined in Section 603(d) of FCRA, 15 U.S.C. § 1681a(d). e. “Consumer Reporting Agency” means a “consumer reporting agency,” as that term is defined in Section 603(f) of FCRA, 15 U.S.C. § 1681a(f).

f. “Debt-Relief Service” means any product, service, plan, or program represented, directly or by implication, to renegotiate, settle, or in any way alter the terms of payment or other terms of the debt, including but not limited to a student loan debt, mortgage loan debt, credit card debt, or 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.

g. “Defendant” means David Sklar, and any other name by which he might be known.

h. “Docu Prep Center” means Docu Prep Center, Inc., d/b/a DocuPrep Center, d/b/a Certified Document Center; Document Preparation Services, LP, d/b/a DocuPrep Center, d/b/a Certified Document Center; and their successors and assigns, individually, collectively, or in any combination. i. “Effective Date” means the date on which the Order is issued. Case 8:20-cv-00043-SB-ADS Document 181 Filed 05/04/21 Page 4 of 19 Page ID #:2349

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STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR j. “Enforcement Director” means the Assistant Director of the Office of Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

k. “Prescreened Consumer Reports” means Consumer Reports relating to consumers furnished by a Consumer Reporting Agency in connection with credit or insurance transactions that are not initiated by the consumers, pursuant to 15 U.S.C. § 1681b(c).

l. “Related Consumer Action” means a private action by or on behalf of one or more consumers or an enforcement action by another governmental agency brought against Defendant based on substantially the same facts as described in the Complaint. m. “Student Loan Debt Relief Companies” means Docu Prep Center, Inc., d/b/a DocuPrep Center, d/b/a Certified Document Center; Document Preparation Services, LP, d/b/a DocuPrep Center, d/b/a Certified Document Center; Certified Doc Prep, Inc.; Certified Doc Prep Services, LP; Assure Direct Services, Inc.; Assure Direct Services, LP; Direct Document Solutions, Inc.; Direct Document Solutions, LP; Secure Preparation Services, Inc.; Secure Preparation Services, LP, and their successors and assigns, individually, collectively, or in any combination.

n. “Telemarketing” means a plan, program, or campaign which is conducted to induce the purchase of goods or services or a charitable contribution, by use of one or more telephones and which involves more than one interstate phone call. Case 8:20-cv-00043-SB-ADS Document 181 Filed 05/04/21 Page 5 of 19 Page ID #:2350

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STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR ORDER CONDUCT RELIEF I.

Permanent Ban on Offering or Providing Debt-Relief Services IT IS ORDERED that:

Defendant, whether acting directly or indirectly, is permanently restrained and enjoined from:

Nothing in this Order shall be read as an exception to this Paragraph. II.

Permanent Ban on Telemarketing Consumer Financial Products or Services 9.

Defendant, whether acting directly or indirectly, is permanently restrained and enjoined from participating in Telemarketing or Assisting Others engaged in Telemarketing any Consumer Financial Product or Service. Nothing in this Order shall be read as an exception to this Paragraph. III.

Permanent Ban on Using or Obtaining Prescreened Consumer Reports IT IS ORDERED that:

10.

Defendant, whether acting directly or indirectly, is permanently restrained and enjoined from using, obtaining, offering, providing, selling, or Case 8:20-cv-00043-SB-ADS Document 181 Filed 05/04/21 Page 6 of 19 Page ID #:2351

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STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR arranging for others to use or obtain Prescreened Consumer Reports for any purpose. Nothing in this Order shall be read as an exception to this Paragraph. IV.

Prohibition on Using or Obtaining Consumer Reports for Any Business Purpose IT IS ORDERED that:

11.

Defendant, and his officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them, who receive actual notice of this Order, whether acting directly or indirectly, are permanently restrained and enjoined from using, obtaining, offering, providing, selling, or arranging for others to use or obtain Consumer Reports for any business purpose. Nothing in this Order shall be read as an exception to this Paragraph.

Consumer Information IT IS ORDERED that:

12.

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STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR 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), obtained from or through the activities of the Student Loan Debt Relief Companies.

However, this Order does not prohibit the disclosure of consumer information if lawfully requested by a government agency or required by law, regulation, or court order.

MONETARY PROVISIONS VI.

Order to Pay Redress IT IS FURTHER ORDERED that:

13.

A judgment for monetary relief is entered in favor of the Bureau and against Defendant, in the amount of $7,000,000 for the purpose of providing redress to Affected Consumers; however, full payment of this judgment will be suspended upon satisfaction of the obligations in Paragraphs 14 through 18 of this Section and Paragraphs 27 through 31 and 33 of Section IX and subject to Section VII of this Order. 14.

Within 10 days of the Effective Date, Defendant 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, $3,000.00, in partial satisfaction of the judgment referenced in Paragraph 13 of this Section. 15.

With regard to any redress that Defendant pays under this Section, if Defendant, directly or indirectly, receives any reimbursement or indemnification from any source, including but not limited to payment made under any insurance policy, or if Defendant secures a tax deduction or tax credit with regard to any federal, state, or local tax, Defendant must: (a) immediately Case 8:20-cv-00043-SB-ADS Document 181 Filed 05/04/21 Page 8 of 19 Page ID #:2353

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STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR notify the Enforcement Director in writing, and (b) within 10 days of receiving the funds or monetary benefit, Defendant must transfer to the Bureau the full amount of such funds or monetary benefit (Additional Payment) to the Bureau or to the Bureau’s agent according to the Bureau’s wiring instructions. After the Bureau receives the Additional Payment, the amount of the suspended judgment referenced in Paragraph 13 will be reduced by the amount of the Additional Payment and the Additional Payment will be applied toward satisfaction of the monetary judgment entered in Paragraph 13.

16.

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. Defendant will have no right to challenge any actions that the Bureau or its representatives may take under this Section. 18.

Payment of redress to any Affected Consumer under this Order may not be conditioned on that Affected Consumer waiving any right. VII.

Effect of Misrepresentation or Omission Regarding Financial Condition IT IS FURTHER ORDERED that:

19.

The suspension of the monetary judgment entered in Section VI of this Order is expressly premised on the truthfulness, accuracy, and completeness of Defendant’s financial statements and supporting documents Case 8:20-cv-00043-SB-ADS Document 181 Filed 05/04/21 Page 9 of 19 Page ID #:2354

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STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR submitted to the Bureau, which Defendant asserts are truthful, accurate, and complete, and which include the Financial Statement of Defendant, including the attachments, executed on September 8, 2020, and submitted to the Bureau on or about September 29, 2020.

20.

If upon motion by the Bureau, the Court determines that Defendant has failed to disclose any material asset, or that his Financial Statement identified in Paragraph 19 contains any material misrepresentations or omissions, including materially misstating the value of any asset, the Court shall terminate the suspension of the monetary judgment entered in Section VI of this Order and the full judgment of $7,000,000 entered shall be immediately due and payable, less any amounts paid to the Bureau under Section VI of this Order.

21.

Order to Pay Civil Money Penalties IT IS FURTHER ORDERED that:

22.

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STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR civil money penalty of $1.00 to the Bureau. This nominal penalty is based on Defendant’s limited ability to pay as attested to in its financial statements identified in Section VII above.

23.

Within 10 days of the Effective Date, Defendant must pay the civil money penalties in Paragraph 22 by wire transfer to the Bureau or to the Bureau’s agent in compliance with the Bureau’s wiring instructions. 24.

The civil money penalty paid under this Order will be deposited in the Civil Penalty Fund of the Bureau, as required by section 1017(d) of the CFPA, 12 U.S.C. § 5497(d).

25.

Additional Monetary Provisions 27.

In the event of any default on Defendant’s obligations to make payment under this Order, interest, computed under 28 U.S.C. § 1961, as Case 8:20-cv-00043-SB-ADS Document 181 Filed 05/04/21 Page 11 of 19 Page ID #:2356

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STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR amended, will accrue on any outstanding amounts not paid from the date of default to the date of payment, and will immediately become due and payable. 28.

Defendant relinquishes all dominion, control, title to the funds paid under this Order to the fullest extent permitted by law. No part of the funds may be returned to Defendant.

29.

30.

The facts alleged in the Complaint establish all elements necessary to sustain an action by the Bureau under to Section 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A). For such purposes, this Order will have collateral estoppel effect against Defendant, even in Defendant’s capacity as debtor-in-possession.

31.

Under 31 U.S.C. § 7701, Defendant, unless he already has done so, must furnish to the Bureau his taxpayer-identification numbers, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order.

32.

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STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR Defendant may not argue that Defendant is entitled to, nor may Defendant benefit by, any offset or reduction of any monetary remedies imposed in the Related Consumer Action because of the civil money penalty paid in this action, or because of any payment that the Bureau makes from the Civil Penalty Fund. If the court in any Related Consumer Action offsets or otherwise reduces the amount of compensatory monetary remedies imposed against Defendant based on the civil money penalty paid in this action, or based on any payment that the Bureau makes from the Civil Penalty Fund, Defendant must, within 30 days after entry of a final order granting such offset or reduction, notify the Bureau and pay the amount of the offset or reduction to the U.S. Treasury. Such a payment will not be considered an additional civil money penalty and will not change the amount of the civil money penalty imposed in this action. 33.

Reporting Requirements IT FURTHER ORDERED that:

34.

Defendant must notify the Bureau of any development that may affect compliance obligations arising under this Order, including but not limited to, a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor company; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order; the filing of any bankruptcy or insolvency proceeding by or against Defendant; or a change in Defendant’s name or address. Defendant must Case 8:20-cv-00043-SB-ADS Document 181 Filed 05/04/21 Page 13 of 19 Page ID #:2358

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STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR provide such notice at least 30 days before the development, or as soon as practicable after learning of the development, whichever is sooner. 35.

c. describe the activities of each such business, including the products and services offered, and the means of advertising, marketing, and sales;

d. identify Defendant’s telephone numbers and all electronic, physical, and postal addresses, including all residences; and e. describe in detail Defendant’s involvement in any business for which he performs services in any capacity or which he wholly or partially owns, including his title, role, responsibilities, participation, authority, control, and ownership. 36.

Defendant must report any change in the information required to be submitted under Paragraph 35 at least 30 days before the change, or as soon as practicable after learning about the change, whichever is sooner. 37.

Within 90 days of the Effective Date, and again one year after the Effective Date, Defendant must submit to the Enforcement Director an accurate written compliance progress report sworn to under penalty of perjury (“Compliance Report”), which, at a minimum: Case 8:20-cv-00043-SB-ADS Document 181 Filed 05/04/21 Page 14 of 19 Page ID #:2359

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STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR a. lists each applicable paragraph and subparagraph of this Order and describes in detail the manner and form in which such Defendant has complied with each such paragraph and subparagraph of this Order;

Order Distribution and Acknowledgment IT IS FURTHER ORDERED that, 38.

Within 7 days of the Effective Date, Defendant must submit to the Enforcement Director an acknowledgment of receipt of this Order, sworn under penalty of perjury.

39.

Defendant, for any business for which he is the majority owner or which he directly or indirectly controls, must deliver a copy of this Order to any business entity resulting from any change in structure referred to in Section X, any future owners, board members, officers, LLC members and managers, and general and limited partners, as well as any managers, employees, or other agents and representatives who will have responsibilities related to Consumer Reports before they assume their responsibilities. Case 8:20-cv-00043-SB-ADS Document 181 Filed 05/04/21 Page 15 of 19 Page ID #:2360

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STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR 41.

42.

Within 90 days of the Effective Date, Defendant must provide the Bureau with a list of all persons and their titles to whom this Order was delivered through that date under Paragraphs 39 and 40 and a copy of all signed and dated statements acknowledging receipt of this Order under Paragraph 41. XII.

Recordkeeping IT IS FURTHER ORDERED that, 43.

44.

Defendant must make these materials available to the Bureau upon the Bureau’s request.

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STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR XIII.

Notices IT IS FURTHER ORDERED that:

45.

Unless otherwise directed in writing by the Bureau, Defendant must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “CFPB v. Chou Team Realty, LLC, et al., Case No. 8:20-cv-00043-SB-ADS,” and send them by overnight courier or first-class mail to the below address, and contemporaneously by email to Enforcement [email protected]: Assistant Director for Enforcement Bureau of Consumer Financial Protection ATTENTION: Office of Enforcement 1700 G Street, N.W.

Washington D.C. 20552 46.

The Enforcement Director may, in his or her discretion, modify any non-material requirements of this Order (e.g., reasonable extensions of time and changes to reporting requirements) if he or she determines good cause justifies the modification. Any such modification by the Enforcement Director must be in writing.

XIV.

Cooperation with the Bureau IT IS FURTHER ORDERED that:

47.

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STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR 48.

Defendant must cooperate fully with the Bureau in this lawsuit, CFPB v. Chou Team Realty, LLC, et al., Case No. 8:20-cv-00043-SB-ADS (C.D. Cal.), and in any investigation related to or associated with the conduct described in the Complaint. Defendant must provide truthful and complete information, evidence, and testimony. Defendant must appear for interviews, discovery, hearings, trials, and any other proceedings that the Bureau may reasonably request upon 10 days written notice, or other reasonable notice, at such places and times as the Bureau may designate, without the service of compulsory process.

XV.

Compliance Monitoring IT IS FURTHER ORDERED that, to monitor Defendant’s compliance with this Order, including the financial representations upon which part of the judgment was suspended:

49.

Within 14 days of receipt of a written request from the Bureau, Defendant must submit additional compliance reports or other requested information, which must be sworn under penalty of perjury; provide testimony; or produce documents.

50.

For purposes of this Section, the Bureau may communicate directly with the Defendant, unless the Defendant retains counsel related to these communications.

51.

Nothing in this Order will limit the Bureau’s lawful use of compulsory process, under 12 C.F.R. § 1080.6. Case 8:20-cv-00043-SB-ADS Document 181 Filed 05/04/21 Page 18 of 19 Page ID #:2363

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STIPULATED FINAL JUDGMENT AND ORDER AS TO DAVID SKLAR XVI.

Retention of Jurisdiction IT IS FURTHER ORDERED that:

53.

The Court will retain jurisdiction of this matter for the purpose of enforcing this Order.

IT IS SO ORDERED.

Dated: May 4, 2021 Stanley Blumenfeld, Jr.

United States District Judge

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Stipulation (May 2021)

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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Bureau of Consumer Financial Protection, Plaintiff, vs.

Chou Team Realty, LLC, et al., Defendants.

) ) ) ) ) ) ) ) ) ) ) Case No.: 8-20-cv-00043-SB-ADS STIPULATED FINAL JUDGMENT AND ORDER AS TO DOCS DONE RIGHT, INC., DOCS DONE RIGHT, LP, AND EDUARDO MARTINEZ The Bureau of Consumer Financial Protection (Bureau) commenced this civil action on January 9, 2020, to obtain injunctive relief, redress, damages, civil penalties, and disgorgement. The Second Amended Complaint alleges that, in connection with providing Debt-Relief Services to consumers with student loans, certain entities and individuals, including Defendants Docs Done Right, Inc., Docs Done Right, LP, and Eduardo Martinez, violated the Telemarketing Sales Rule (TSR), 16 C.F.R. Part 310; and the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a)(1)(A). The Second Amended Complaint further alleges that certain entities and individuals, including Eduardo Martinez, violated the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681.

The Bureau and Docs Done Right, Inc., Docs Done Right, LP, and Eduardo Martinez agree to entry of this Stipulated Final Judgment and Order Case 8:20-cv-00043-SB-ADS Document 187 Filed 05/11/21 Page 1 of 18 Page ID #:2469 VPC May 11, 2021

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(Order), without adjudication of any issue of fact or law, to settle and resolve all matters in dispute between these parties arising from the conduct alleged in the Second Amended Complaint.

THEREFORE, it is ORDERED:

FINDINGS 1.

This Court has jurisdiction over the parties and the subject matter of this action.

Venue is proper in this district under 12 U.S.C. § 5564(f). 3.

The relief provided in this Order is appropriate and available under Sections 1054 and 1055 of the CFPA, 12 U.S.C. §§ 5564, 5565. 4.

Defendants neither admit nor deny any allegations in the Second Amended Complaint, except as specified in this Order. For purposes of this Order, Defendants admit the facts necessary to establish the Court’s jurisdiction over them and the subject matter of this action. 5.

Defendants waive all rights to seek judicial review or otherwise challenge or contest the validity of this Order and any claim they may have 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 Party agrees to bear its own costs and expenses, including, without limitation, attorneys’ fees. 6.

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

The following definitions apply to this Order: a. “Affected Consumers” includes all consumers who, since December 1, 2015, were charged fees by any of the Student Loan Debt Relief Companies.

b. “Assisting Others” includes, but is not limited to: i. formulating or providing, or arranging for the formulation or provision of, any advertising or marketing Case 8:20-cv-00043-SB-ADS Document 187 Filed 05/11/21 Page 2 of 18 Page ID #:2470

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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;

ii. providing names of, or contributing to the generation of, potential customers;

iii. participating in or providing services related to the offering, sale, or delivery of a product or service or the collection of payments for a product or service; iv. preparing documents, including application forms, for customers;

v. providing customer service support functions, including handling consumer complaints and refund requests; vi. acting or serving as an owner, officer, director, manager, principal, partner, limited partner, or employee of any entity; and vii. investing or loaning money.

e. “Corporate Defendants” means Docs Done Right, Inc. and Docs Done Right, LP, and their successors and assigns. f. “Debt-Relief Service” means any product, service, plan, or program represented, directly or by implication, to renegotiate, settle, or in any way alter the terms of payment or other terms of the debt, including but not limited to a student loan debt, Case 8:20-cv-00043-SB-ADS Document 187 Filed 05/11/21 Page 3 of 18 Page ID #:2471

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mortgage loan debt, credit card debt, or 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.

g. “Defendants” means the Individual Defendant and all of the Corporate Defendants, individually, collectively, or in any combination.

h. “Effective Date” means the date on which the Order is issued. i. “Enforcement Director” means the Assistant Director of the Office of Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

j. “Individual Defendant” means Eduardo Avalos Martinez, and any other names by which he might be known. k. “Prescreened Consumer Reports” means Consumer Reports relating to consumers furnished by a Consumer Reporting Agency in connection with credit or insurance transactions that are not initiated by the consumers, pursuant to 15 U.S.C. § 1681b(c).

l. “Student Loan Debt Relief Companies” means Docu Prep Center, Inc., d/b/a DocuPrep Center, d/b/a Certified Document Center; Document Preparation Services, LP, d/b/a DocuPrep Center, d/b/a Certified Document Center; Certified Doc Prep, Inc.; Certified Doc Prep Services, LP; Assure Direct Services, Inc.; Assure Direct Services, LP; Direct Document Solutions, Inc.; Direct Document Solutions, LP; Secure Preparation Services, Inc.; Secure Preparation Services, LP, and their Case 8:20-cv-00043-SB-ADS Document 187 Filed 05/11/21 Page 4 of 18 Page ID #:2472

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successors and assigns, individually, collectively, or in any combination.

m. “Related Consumer Action” means a private action by or on behalf of one or more consumers or an enforcement action by another governmental agency brought against Defendants based on substantially the same facts as described in the Second Amended Complaint.

ORDER CONDUCT RELIEF I.

Permanent Ban on Offering or Providing Debt-Relief Services IT IS ORDERED that:

Defendants, whether acting directly or indirectly, are permanently restrained and enjoined from:

Nothing in this Order shall be read as an exception to this Paragraph. II.

Permanent Ban on Using or Obtaining Prescreened Consumer Reports IT IS ORDERED that:

Individual Defendant, whether acting directly or indirectly, is permanently restrained and enjoined from using, obtaining, offering, providing, selling, or arranging for others to use or obtain Prescreened Consumer Reports Case 8:20-cv-00043-SB-ADS Document 187 Filed 05/11/21 Page 5 of 18 Page ID #:2473

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for any purpose. Nothing in this Order shall be read as an exception to this Paragraph.

III.

Permanent Ban on Using or Obtaining Consumer Reports for Any Business Purpose IT IS ORDERED that:

10.

Individual Defendant, whether acting directly or indirectly, is permanently restrained and enjoined from using, obtaining, offering, providing, selling, or arranging for others to use or obtain Consumer Reports for any business purpose. Nothing in this Order shall be read as an exception to this Paragraph.

IV.

Consumer Information IT IS ORDERED that:

11.

Defendants and their officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them, who receive actual notice of this Order, whether acting directly or indirectly, may not:

a. disclose, use, or benefit from consumer information, including the name, address, or any information about the consumer’s student loans, contained in or derived from Prescreened Consumer Reports obtained for use in marketing Debt-Relief Services; or b. disclose, use, or benefit 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 customer’s account (including a credit card, bank account, or other financial account), obtained from or Case 8:20-cv-00043-SB-ADS Document 187 Filed 05/11/21 Page 6 of 18 Page ID #:2474

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through the activities of the Student Loan Debt Relief Companies.

However, this Order does not prohibit the disclosure of consumer information if lawfully requested by a government agency or required by law, regulation, or court order.

MONETARY PROVISIONS V.

Order to Pay Redress IT IS FURTHER ORDERED that:

12.

A judgment for monetary relief is entered in favor of the Bureau and against Defendants, jointly and severally, in the amount of $18,000,000 for the purpose of providing redress to Affected Consumers; however, payment of this judgment will be suspended upon satisfaction of the obligations in Paragraphs 20 and 21 of Section VII and Paragraphs 255 through 29 and 31 of Section VIII and subject to Section VI of this Order. 13.

With regard to any redress that Defendants pay under this Section, if Defendants, directly or indirectly, receive any reimbursement or indemnification from any source, including but not limited to payment made under any insurance policy, or if Defendants secure a tax deduction or tax credit with regard to any federal, state, or local tax, Defendants must: (a) immediately notify the Enforcement Director in writing, and (b) within 10 days of receiving the funds or monetary benefit, Defendants must transfer to the Bureau the full amount of such funds or monetary benefit (Additional Payment) to the Bureau or to the Bureau’s agent according to the Bureau’s wiring instructions. After the Bureau receives the Additional Payment, the amount of the suspended judgment referenced in Paragraph 12 will be reduced by the amount of the Additional Payment and the Additional Payment will be applied toward satisfaction of the monetary judgment entered in Paragraph 12.

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14.

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. Defendants will have no right to challenge any actions that the Bureau or its representatives may take under this Section. 16.

Payment of redress to any Affected Consumer under this Order may not be conditioned on that Affected Consumer waiving any right. VI.

Effect of Misrepresentation or Omission Regarding Financial Condition IT IS FURTHER ORDERED that:

17.

The suspension of the monetary judgment entered in Section V of this Order is expressly premised on the truthfulness, accuracy, and completeness of Defendants’ financial statements and supporting documents submitted to the Bureau, which Defendants assert are truthful, accurate, and complete, and which include:

a. Financial Statement of Docs Done Right, Inc., including the attachments, executed on December 4, 2020, and submitted to the Bureau on or about December 7, 2020;

b. Financial Statement of Docs Done Right, LP, including the attachments, executed on December 4, 2020, and submitted to the Bureau on or about December 7, 2020;

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c. Financial Statement of Eduardo Martinez, including the attachments, executed on April 14, 2021, and submitted to the Bureau on or above April 14, 2021; and d. Supplemental financial information submitted to the Bureau on or about April 29, 2021.

18.

If upon motion by the Bureau, the Court determines that Defendants have failed to disclose any material asset, or that their financial statements and supporting documents identified in Paragraph 17 contain any material misrepresentations or omissions, including materially misstating the value of any asset, the Court shall terminate the suspension of the monetary judgment as to Defendants entered in Section V of this Order and the full judgment of $18,000,000 entered shall be immediately due and payable, less any amounts paid to the Bureau under Section V of this Order. 19.

Order to Pay Civil Money Penalties IT IS FURTHER ORDERED that:

20.

Under Section 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged in the Second Amended Complaint, and Case 8:20-cv-00043-SB-ADS Document 187 Filed 05/11/21 Page 9 of 18 Page ID #:2477

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taking into account the factors in 12 U.S.C. § 5565(c)(3), Defendants must pay a civil money penalty of $125,000 to the Bureau. 21.

Defendants must make the following payments by wire transfer to the Bureau or the Bureau’s agent, in compliance with the Bureau’s wiring instructions, to satisfy the penalty described in Paragraph 20. Within 10 days of the Effective Date, Defendants must pay $62,500. Within 40 days of the Effective Date, Defendants must pay an additional $62,500. 22.

The civil money penalty paid under this Order will be deposited in the Civil Penalty Fund of the Bureau, as required by Section 1017(d) of the CFPA, 12 U.S.C. § 5497(d).

23.

Defendants must treat the civil money penalty paid under this Order as a penalty paid to the government for all purposes. Regardless of how the Bureau ultimately uses those funds, Defendants may not: a. claim, assert, or apply for a tax deduction, tax credit, or any other tax benefit for any civil money penalty paid under this Order; or b. seek or accept, directly or indirectly, reimbursement or indemnification from any source, including but not limited to payment made under any insurance policy, with regard to any civil money penalty paid under this Order. 24.

Individual Defendant agrees that the civil penalties imposed by the Order represent civil penalties owed to the United States Government, are not compensation for actual pecuniary loss, and, thus, as to Individual Defendant, the penalties are not subject to discharge under the Bankruptcy Code under 11 U.S.C. § 523(a)(7).

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VIII.

Additional Monetary Provisions 25.

In the event of any default on Defendants’ obligations to make payment under this Order, interest, computed under 28 U.S.C. § 1961, as amended, will accrue on any outstanding amounts not paid from the date of default to the date of payment, and will immediately become due and payable. 26.

Defendants relinquish all dominion, control, title to the funds paid under this Order to the fullest extent permitted by law. No part of the funds may be returned to Defendants.

27.

The facts alleged in the Second Amended Complaint establish all elements necessary to sustain an action by the Bureau under to Section 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A). For such purposes, this Order will have collateral estoppel effect against each Defendant, even in such Defendant’s capacity as debtor-in-possession. 29.

Under 31 U.S.C. § 7701, Defendants, unless they already have done so, must furnish to the Bureau their taxpayer-identification numbers, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order.

30.

Within 30 days of the entry of a final judgment, order, or settlement in a Related Consumer Action, Defendants must notify the Enforcement Director of the final judgment, order, or settlement in writing. That notification must indicate the amount of redress, if any, that Defendants Case 8:20-cv-00043-SB-ADS Document 187 Filed 05/11/21 Page 11 of 18 Page ID #:2479

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paid or are required to pay to consumers, and it must describe the consumers or classes of consumers to whom that redress has been or will be paid. To preserve the deterrent effect of the civil money penalty in any Related Consumer Action, Defendants may not argue that any Defendant is entitled to, nor may any Defendant benefit by, any offset or reduction of any monetary remedies imposed in the Related Consumer Action because of the civil money penalty paid in this action, or because of any payment that the Bureau makes from the Civil Penalty Fund. If the court in any Related Consumer Action offsets or otherwise reduces the amount of compensatory monetary remedies imposed against any Defendant based on the civil money penalty paid in this action, or based on any payment that the Bureau makes from the Civil Penalty Fund, such Defendant must, within 30 days after entry of a final order granting such offset or reduction, notify the Bureau and pay the amount of the offset or reduction to the U.S. Treasury. Such a payment will not be considered an additional civil money penalty and will not change the amount of the civil money penalty imposed in this action.

31.

Under Section 604(a)(I) of FCRA, 15 U.S.C.§ 168l b(a)(1), any Consumer Reporting Agency may furnish a Consumer Report concerning any Defendant to the Bureau, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. COMPLIANCE PROVISIONS IX.

Reporting Requirements IT FURTHER ORDERED that:

32.

Defendants must notify the Bureau of any development that may affect compliance obligations arising under this Order, including but not limited to, a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor company; the creation or dissolution of a Case 8:20-cv-00043-SB-ADS Document 187 Filed 05/11/21 Page 12 of 18 Page ID #:2480

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subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order; the filing of any bankruptcy or insolvency proceeding by or against Defendants; or a change in Defendants’ name or address. Defendants must provide such notice at least 30 days before the development, or as soon as practicable after learning of the development, whichever is sooner. 33.

Within 7 days of the Effective Date, each Defendant must: a. designate at least one telephone number and email, physical, and postal address as points of contact, which the Bureau may use to communicate with Defendant;

c. describe the activities of each such business, including the products and services offered, and the means of advertising, marketing, and sales;

34.

Defendants must report any change in the information required to be submitted under Paragraph 33 at least 30 days before the change, or as soon as practicable after learning about the change, whichever is sooner. Case 8:20-cv-00043-SB-ADS Document 187 Filed 05/11/21 Page 13 of 18 Page ID #:2481

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35.

Within 90 days of the Effective Date, and again one year after the Effective Date, each Defendant must submit to the Enforcement Director an accurate written compliance progress report sworn to under penalty of perjury (“Compliance Report”), which, at a minimum: a. lists each applicable paragraph and subparagraph of this Order and describes in detail the manner and form in which such Defendant has complied with each such paragraph and subparagraph of this Order;

Order Distribution and Acknowledgment IT IS FURTHER ORDERED that, 36.

Within 7 days of the Effective Date, each Defendant must submit to the Enforcement Director an acknowledgment of receipt of this Order, sworn under penalty of perjury.

37.

Within 30 days of the Effective Date, Corporate Defendants and Individual Defendant, for any business for which he is the majority owner or which he directly or indirectly controls, must deliver a copy of this Order to each of its owners, board members, officers, LLC members and managers, and general and limited partners, as well as any managers, employees, or other agents and representatives who have responsibilities related to Consumer Reports.

38.

Corporate Defendants and Individual Defendant, for any business for which he is the majority owner or which he directly or indirectly controls, must deliver a copy of this Order to any business entity resulting from any Case 8:20-cv-00043-SB-ADS Document 187 Filed 05/11/21 Page 14 of 18 Page ID #:2482

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change in structure referred to in Section IX, any future owners, board members, officers, LLC members and managers, and general and limited partners, as well as any managers, employees, or other agents and representatives who will have responsibilities related to Consumer Reports before they assume their responsibilities.

39.

Defendants must secure a signed and dated statement acknowledging receipt of a copy of this Order, ensuring that any electronic signatures comply with the requirements of the E-Sign Act, 15 U.S.C. § 7001 et seq., within 30 days of delivery, from all persons receiving a copy of this Order under this Section.

40.

Within 90 days of the Effective Date, Defendants must provide the Bureau with a list of all persons and their titles to whom this Order was delivered through that date under Paragraphs 37 and 38 and a copy of all signed and dated statements acknowledging receipt of this Order under Paragraph 39. XI.

Recordkeeping IT IS FURTHER ORDERED that, 41.

Corporate Defendants and Individual Defendant, for any business for which he is the majority owner or which he directly or indirectly controls, must create all documents and business records necessary to demonstrate full compliance with each provision of this Order, including all submissions to the Bureau. Defendants must retain these documents for at least 10 years after creation and make them available to the Bureau upon the Bureau’s request. 42.

Corporate Defendants and Individual Defendant, for any business for which he is the majority owner or which he directly or indirectly controls, must maintain, for 10 years from the Effective Date, or 10 years after creation, whichever is longer:

a. all records concerning Consumer Reports used or obtained, Case 8:20-cv-00043-SB-ADS Document 187 Filed 05/11/21 Page 15 of 18 Page ID #:2483

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including without limitation FCRA certifications, payment records, training materials, internal communications, and communications with consumer reporting agencies, service providers, and consumers;

b. all consumer complaints and refund requests (whether received directly or indirectly, such as through a third party), and any responses to those complaints or requests; c. records showing, for each employee that has used or obtained Consumer Reports, that person’s: name; telephone number; email, physical, and postal address; job title or position; dates of service; and, if applicable, the reason for termination; and d. records showing, for each Consumer Reporting Agency providing Consumer Reports, the name of a point of contact, and that person’s telephone number; email, physical, and postal address; job title or position; and dates of service. Defendants must make these materials available to the Bureau upon the Bureau’s request.

XII.

Notices IT IS FURTHER ORDERED that:

43.

Unless otherwise directed in writing by the Bureau, Defendants must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “CFPB v. Chou Team Realty, LLC, et al., Case No. 8:20-cv-00043-JVS-ADS,” and send them by overnight courier or first-class mail to the below address, and contemporaneously by email to [email protected]: Assistant Director for Enforcement Consumer Financial Protection Bureau Case 8:20-cv-00043-SB-ADS Document 187 Filed 05/11/21 Page 16 of 18 Page ID #:2484

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ATTENTION: Office of Enforcement 1700 G Street, N.W.

Washington D.C. 20552 XIII.

Cooperation with the Bureau IT IS FURTHER ORDERED that:

44.

Defendants must cooperate fully to help the Bureau determine the identity and location of, and the amount of injury sustained by, each Affected Consumer. Defendants must provide such information in their agents’ possession or control within 14 days of receiving a written request from the Bureau.

45.

Each Defendant must cooperate fully with the Bureau in this lawsuit, CFPB v. Chou Team Realty, LLC, et al., Case No. 8:20-cv-00043-SB- ADS (C.D. Cal.), and in any investigation related to or associated with the conduct described in the Second Amended Complaint. Each Defendant must provide truthful and complete information, evidence, and testimony. Individual Defendant must appear and Corporate Defendants must cause their officers, employees, representatives, or agents to appear for interviews, discovery, hearings, trials, and any other proceedings that the Bureau may reasonably request upon 10 days written notice, or other reasonable notice, at such places and times as the Bureau may designate, without the service of compulsory process.

XIV.

Compliance Monitoring IT IS FURTHER ORDERED that, to monitor Defendants’ compliance with this Order, including the financial representations upon which part of the judgment was suspended as to Defendants:

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46. Within 14 days of receipt of a written request from the Bureau, Defendants must submit additional compliance reports or other requested information, which must be sworn under penalty of perjury; provide testimony; or produce documents.

47.

For purposes of this Section, the Bureau may communicate directly with any Defendant, unless the Defendant retains counsel related to these communications.

48.

Defendants must permit Bureau representatives to interview any employee or other person affiliated with Defendants who has agreed to such an interview. The person interviewed may have counsel present. 49.

Nothing in this Order will limit the Bureau’s lawful use of compulsory process, under 12 C.F.R. § 1080.6. XV.

Retention of Jurisdiction IT IS FURTHER ORDERED that:

50.

The Court will retain jurisdiction of this matter for the purpose of enforcing this Order.

IT IS SO ORDERED.

DATED this 11th day of May, 2021.

_________________________________

Hon. Stanley Blumenfeld, Jr.

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Judgment (May 2021)

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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Bureau of Consumer Financial Protection, Plaintiff, vs.

Chou Team Realty, LLC, et al., Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) Case No.: 8-20-cv-00043-SB-ADS DEFAULT JUDGMENT AND ORDER AGAINST STUDENT LOAN DEBT RELIEF COMPANIES Plaintiff Bureau of Consumer Financial Protection (Bureau) commenced this civil action on January 9, 2020. The Bureau alleged that, in connection with providing Debt-Relief Services to consumers with student loans, certain entities and individuals violated the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681; the Telemarketing Sales Rule (“TSR”), 16 C.F.R. Part 310, the implementing regulation of the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. §§ 6102(c)(2), 6105(d) (“Telemarketing Act”); and the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531(a), 5536(a)(1)(A). ECF No. 1.

As relevant here, the Bureau alleged claims under FCRA, the TSR, and the CFPA against five student loan debt relief businesses (collectively, the “Student Loan Debt Relief Companies”), each of which was composed of a Case 8:20-cv-00043-SB-ADS Document 183 Filed 05/07/21 Page 1 of 18 Page ID #:2397

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corporation and an associated limited partnership: (1) Docu Prep Center, Inc. and Document Preparation Services, LP (collectively, “Docu Prep Center”); (2) Certified Doc Prep, Inc. and Certified Doc Prep Services, LP (collectively, “Certified Doc Prep Services”); (3) Assure Direct Services, Inc. and Assure Direct Services, LP (collectively, “Assure Direct Services”); (4) Direct Document Solutions, Inc. and Direct Document Solutions, LP (collectively, “Direct Document Solutions”); and (5) Secure Preparation Services, Inc. and Secure Preparation Services, LP (collectively, “Secure Preparation Services”). Between January and June 2020, the Bureau served the original Complaint on, or obtained waivers of service from, each of the ten entities that comprised the Student Loan Debt Relief Companies and filed proofs of service with this Court. ECF Nos. 25, 26, 28, 29, 34, 38, 41, 63, 66, 103. The Bureau filed applications for the Clerk to enter default against each of the Student Loan Debt Relief Companies. ECF Nos. 68, 75, 100, 121. The Clerk entered defaults against each of the Student Loan Debt Relief Companies between April 10, 2020 and July 15, 2020. ECF Nos. 71, 76, 101, 122. As of the date this Order, the Student Loan Debt Relief Companies have not answered, moved to dismiss, or otherwise appeared in this action. The Bureau filed its First Amended Complaint (“FAC”) on July 10, 2020, and then filed the Second Amended Complaint (“SAC”) on August 26, 2020. ECF Nos. 117, 141. Those pleadings asserted the same claims against the Student Loan Debt Relief Companies as the original Complaint. The Bureau filed its Notice of Application and Application for Entry of Default Judgment and Order against the Student Loan Debt Relief Companies pursuant to Fed. R. Civ. P. 55(b)(2) and Local Rules 55-1 and 55-2. The Court, having considered the Bureau’s Application, supporting declarations, and the entire record in this matter, granted the Application in part, as described in the Court’s Order on Applications for Default Judgment. ECF No. 177. The Court Case 8:20-cv-00043-SB-ADS Document 183 Filed 05/07/21 Page 2 of 18 Page ID #:2398

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finds good cause to grant the following relief against the Student Loan Debt Relief Companies.

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED as follows: FINDINGS 1.

This is an action instituted by the Bureau under FCRA, 15 U.S.C. § 1681b(f), the Telemarketing Act, 15 U.S.C. §§ 6102(c)(2), 6105(d), and the CFPA, 12 U.S.C. §§ 5531, 5536(a), based on violations of FCRA, the TSR, and the CFPA. The SAC seeks permanent injunctive relief, rescission or reformation of contracts, disgorgement, damages, redress, and civil money penalties. The Bureau has the authority to seek this relief. 12 U.S.C. § 5565. 2.

This Court has subject-matter jurisdiction over this action because it was brought under federal consumer financial law, 12 U.S.C. § 5565(a)(1), presents a federal question, 28 U.S.C. § 1331, and the plaintiff is an agency of the United States, 28 U.S.C. § 1345. Venue is proper in this district because Defendants are located, reside, or do business in this district. 12 U.S.C. § 5564(f).

Certified Doc Prep, Inc., Certified Doc Prep Services, LP, Direct Document Solutions, Inc., Direct Document Solutions, LP, and Secure Preparation Services, LP have each been properly served with a summons and the Complaint through their respective registered agents for service of process. 4.

Docu Prep Center, Inc., Document Preparation Services, LP, and Assure Direct Services, LP each waived formal service of process and, thus, each has been properly served.

Docu Prep Center, Inc., Document Preparation Services, LP, and Assure Direct Services, LP were served with written notices of the Bureau’s application for entry of a default judgment on March 5, 2021, at least seven days before any hearing on the Application. The written notices included the amount of redress and civil penalties requested by the Bureau against them. Case 8:20-cv-00043-SB-ADS Document 183 Filed 05/07/21 Page 3 of 18 Page ID #:2399

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In its Alternative Service Order, the Court granted the Bureau permission to serve Assure Direct Services, Inc. via the California Secretary of State. See ECF No. 98. The Bureau complied with the Alternative Service Order by serving a summons, a copy of the Complaint, and a copy of the Alternative Service Order on the California Secretary of State on June 4, 2020. Thus, Assure Direct Services, Inc. has been properly served. 7.

Each of the Student Loan Debt Relief Companies has failed to answer, appear, or otherwise defend this action, and no attorney has filed an appearance on behalf of any of the companies. 8.

The Clerk of Court properly entered defaults against each of the Student Loan Debt Relief Companies.

Because the Student Loan Debt Relief Companies were in default, and because the FAC and the SAC asserted the same claims against the Student Loan Debt Relief Companies as the original Complaint, the Bureau was not required to serve the FAC and the SAC on the Student Loan Debt Relief Companies. See Fed. R. Civ. P. 5(a)(2).

10.

The Student Loan Debt Relief Companies are not minors, incompetent persons, or current members of the military service. 11.

The Bureau has satisfied the procedural requirements for obtaining entry of default judgment against the Student Loan Debt Relief Companies. 12.

The SAC states claims upon which relief can be granted. 13.

Because of the Student Loan Debt Relief Companies’ defaults, the allegations in the SAC are taken as true as against them. See TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–18 (9th Cir. 1987); Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977) (citing Pope v. United States, 323 U.S. 1 (1944)).

14.

The seven factors set forth in Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986), weigh in favor of a judgment of default against the Case 8:20-cv-00043-SB-ADS Document 183 Filed 05/07/21 Page 4 of 18 Page ID #:2400

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Student Loan Debt Relief Companies.

15.

Because damages are capable of ascertainment from definite figures contained in the documentary evidence and affidavits submitted by the Bureau, the Court need not hold a hearing prior to entering judgment by default. 16.

Judgment is entered against the Student Loan Debt Relief Companies, in favor of the Bureau, on Counts I, II, III, IV, VII, VIII, and XI. 17.

Judgment is entered against Docu Prep Center, in favor of the Bureau, on Counts V and IX.

18.

The Bureau seeks (1) a permanent injunction to prevent future violations of FCRA, the TSR, and the CFPA; (2) monetary relief to redress injury to consumers; and (3) civil money penalties. This Court is empowered to order these forms of relief under Section 1055 of the CFPA. 12 U.S.C. § 5565. Moreover, it is within this Court’s discretion to enter injunctive and monetary relief at this stage, without holding an evidentiary hearing. Davis v. Fendler, 650 F.2d 1154, 1161 (9th Cir. 1981).

19.

The Bureau has established, through competent evidence, that consumers were victimized by and paid money to the Student Loan Debt Relief Companies, and that during the Relevant Period these consumers paid at least the following amounts to them:

Docu Prep Center: $8,739,347;

Certified Doc Prep Services: $3,806,626;

Assure Direct Services: $3,404,455;

Direct Document Solutions: $1,902,259; and e.

Secure Preparation Services: $1,847,182.

20.

As explained in the evidence submitted in support of the Bureau’s Application, these figures were derived from ACH transaction records of two third-party payment processors used by the Student Loan Debt Relief Companies and from credit card transaction data produced by defendants Docs Case 8:20-cv-00043-SB-ADS Document 183 Filed 05/07/21 Page 5 of 18 Page ID #:2401

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Done Right, Inc. and Docs Done Right, LP.

21.

The amounts in Paragraph 19 represent a reasonable approximation of consumer loss attributable to each of the Student Loan Debt Relief Companies.

22.

The Bureau is entitled to an Order imposing a permanent injunction and requiring Docu Prep Center, Inc. and Document Preparation Services, LP to pay, jointly and severally, $8,739,347 for redress, and a civil money penalty in the amount of $2,702,662 under the CFPA. 23.

The Bureau is entitled to an Order imposing a permanent injunction and requiring Certified Doc Prep, Inc. and Certified Doc Prep Services, LP to pay, jointly and severally, $3,806,626 for redress, and a civil money penalty in the amount of $2,702,662 under the CFPA. 24.

The Bureau is entitled to an Order imposing a permanent injunction and requiring Assure Direct Services, Inc. and Assure Direct Services, LP to pay, jointly and severally, $3,404,455 for redress, and a civil money penalty in the amount of $2,702,662 under the CFPA. 25.

The Bureau is entitled to an Order imposing a permanent injunction and requiring Direct Document Solutions, Inc. and Direct Document Solutions, LP to pay, jointly and severally, $1,902,259 for redress, and a civil money penalty in the amount of $1,637,075 under the CFPA. 26.

The Bureau is entitled to an Order imposing a permanent injunction and requiring Secure Preparation Services, Inc. and Secure Preparation Services, LP to pay, jointly and severally, $1,847,182 for redress, and a civil money penalty in the amount of $1,637,075 under the CFPA. 27.

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.

28.

Entry of this Order is in the public interest. Case 8:20-cv-00043-SB-ADS Document 183 Filed 05/07/21 Page 6 of 18 Page ID #:2402

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DEFINITIONS 29.

The following definitions apply to this Order: a. “Affected Consumers” includes all consumers who, since January 1, 2015, were charged fees by any of the Student Loan Debt Relief Companies.

b. “Affected Assure Direct Services Consumers” includes all consumers who, since January 1, 2015, were charged fees by Assure Direct Services.

c. “Affected Certified Doc Prep Services Consumers” includes all consumers who, since January 1, 2015, were charged fees by Certified Doc Prep Services.

d. “Affected Direct Document Solutions Consumers” includes all consumers who, since January 1, 2015, were charged fees by Direct Document Solutions.

e. “Affected Docu Prep Center Consumers” includes all consumers who, since January 1, 2015, were charged fees by Docu Prep Center.

f. “Affected Secure Preparation Services Consumers” includes all consumers who, since January 1, 2015, were charged fees by Secure Preparation Services.

g. “Assisting Others” includes, but is not limited to: i.

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ii.

providing names of, or contributing to the generation of, potential customers;

iii.

participating in or providing services related to the offering, sale, or servicing of a product, or the collection of payments for a product; and iv.

acting or serving as an owner, officer, director, manager, or principal of any entity.

h. “Assure Direct Services” means Assure Direct Services, Inc. and Assure Direct Services, LP, and their successors and assigns, individually, collectively, or in any combination. i. “Bureau” means the Bureau of Consumer Financial Protection. j. “Certified Doc Prep Services” means Certified Doc Prep, Inc. and Certified Doc Prep Services, LP, and their successors and assigns, individually, collectively, or in any combination. k. “Consumer Report” means a “consumer report,” as that term is defined in Section 603(d) of FCRA, 15 U.S.C. § 1681a(d). l. “Consumer Reporting Agency” means a “consumer reporting agency,” as that term is defined in Section 603(f) of FCRA, 15 U.S.C. § 1681a(f).

m. “Debt-Relief Service” means any product, service, plan, or program represented, directly or by implication, to renegotiate, settle, or in any way alter the terms of payment or other terms of the debt, including but not limited to a student loan debt, mortgage loan debt, credit card debt, or 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.

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n. “Direct Document Solutions” means Direct Document Solutions, Inc. and Direct Document Solutions, LP, and their successors and assigns, individually, collectively, or in any combination.

o. “Docu Prep Center” means Docu Prep Center, Inc. and Document Preparation Services, LP, and their successors and assigns, individually, collectively, or in any combination. p. “Effective Date” means the date on which the Order is entered. q. “Enforcement Director” means the Assistant Director of the Office of Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

r. “Prescreened Consumer Reports” means Consumer Reports relating to consumers furnished by a Consumer Reporting Agency in connection with credit or insurance transactions that are not initiated by the consumers, pursuant to 15 U.S.C. § 1681b(c).

s. “Related Consumer Action” means a private action by or on behalf of one or more consumers or an enforcement action by another governmental agency brought against any of the Student Loan Debt Relief Defendants based on substantially the same facts as described in the SAC. t. “Secure Preparation Services” means Secure Preparation Services, Inc. and Secure Preparation Services, LP, and their successors and assigns, individually, collectively, or in any combination.

u. “Student Loan Debt Relief Companies” means Docu Prep Center, Inc., d/b/a DocuPrep Center, d/b/a Certified Document Center; Document Preparation Services, LP, d/b/a DocuPrep Case 8:20-cv-00043-SB-ADS Document 183 Filed 05/07/21 Page 9 of 18 Page ID #:2405

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Center, d/b/a Certified Document Center; Certified Doc Prep, Inc.; Certified Doc Prep Services, LP; Assure Direct Services, Inc.; Assure Direct Services, LP; Direct Document Solutions, Inc.; Direct Document Solutions, LP; Secure Preparation Services, Inc.; Secure Preparation Services, LP, and their successors and assigns, individually, collectively, or in any combination.

ORDER I.

Permanent Ban on Offering or Providing Debt-Relief Services IT IS ORDERED that:

30.

The Student Loan Debt Relief Companies, whether acting directly or indirectly, are permanently restrained from: a. participating in, advertising, marketing, promoting, offering for sale, selling, or providing any Debt-Relief Service; or b. Assisting Others in, or receiving any remuneration or other consideration from, the provision, advertising, marketing, promoting, offering for sale, sale or production of any Debt-Relief Service.

Nothing in this Order shall be read as an exception to this Paragraph. II.

Permanent Ban on Using or Obtaining Consumer Reports IT IS FURTHER ORDERED that:

31.

The Student Loan Debt Relief Companies, whether acting directly or indirectly, are permanently restrained and enjoined from using, obtaining, offering, providing, selling, or arranging for others to use or obtain Consumer Reports, including Prescreened Consumer Reports, for any purpose. Nothing in this Order shall be read as an exception to this Paragraph. Case 8:20-cv-00043-SB-ADS Document 183 Filed 05/07/21 Page 10 of 18 Page ID #:2406

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III.

Consumer Information IT IS ORDERED that:

32.

The Student Loan Debt Relief Companies and their officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them, who receive actual notice of this Order, whether acting directly or indirectly, may not: a. disclose, use, or benefit from consumer information, including the name, address, or any information about the consumer’s student loans, contained in or derived from Prescreened Consumer Reports obtained for use in marketing Debt-Relief Services; or b. disclose, use, or benefit 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 customer’s account (including a credit card, bank account, or other financial account), obtained from or through the activities of the Student Loan Debt Relief Companies. However, consumer information may be disclosed if lawfully requested by a government agency or required by law, regulation, or court order. MONETARY PROVISIONS IV.

Order to Pay Redress IT IS FURTHER ORDERED that:

33.

A judgment for monetary relief is entered in favor of the Bureau and against Docu Prep Center, Inc. and Document Preparation Services, LP, jointly and severally, in the amount of $8,739,347 for the purpose of providing redress to Affected Docu Prep Center Consumers. The monetary judgment set forth in this Section is immediately due and payable upon entry of this Order Case 8:20-cv-00043-SB-ADS Document 183 Filed 05/07/21 Page 11 of 18 Page ID #:2407

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and is enforceable against any Asset owned by, on behalf of, for the benefit of, or in trust by or for Docu Prep Center.

34.

A judgment for monetary relief is entered in favor of the Bureau and against Certified Doc Prep, Inc. and Certified Doc Prep Services, LP, jointly and severally, in the amount of $3,806,626 for the purpose of providing redress to Affected Certified Doc Prep Services Consumers. 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 Certified Doc Prep Services. 35.

A judgment for monetary relief is entered in favor of the Bureau and against Assure Direct Services, Inc. and Assure Direct Services, LP, jointly and severally, in the amount of $3,404,455 for the purpose of providing redress to Affected Assure Direct Services Consumers. 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 Assure Direct Services.

36.

A judgment for monetary relief is entered in favor of the Bureau and against Direct Document Solutions, Inc. and Direct Document Solutions, LP, jointly and severally, in the amount of $1,902,259 for the purpose of providing redress to Affected Direct Document Solutions Consumers. 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 Direct Document Solutions. 37.

A judgment for monetary relief is entered in favor of the Bureau and against Secure Preparation Services, Inc. and Secure Preparation Services, LP, jointly and severally, in the amount of $1,847,182 for the purpose of providing redress to Affected Secure Preparation Services Consumers. The monetary judgment set forth in this Section is immediately due and payable Case 8:20-cv-00043-SB-ADS Document 183 Filed 05/07/21 Page 12 of 18 Page ID #:2408

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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 Secure Preparation Services. 38.

Any funds received by the Bureau in satisfaction of the judgments in this Section 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, as appropriate, Affected Docu Prep Center Consumers, Affected Certified Doc Prep Services Consumers, Affected Assure Direct Services Consumers, Affected Direct Document Solutions Consumers, and Affected Secure Preparation Services 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. 39.

If the Bureau determines, in its sole discretion, that providing redress to consumers is wholly or partially impracticable or if funds remain after the administration of redress is completed, the Bureau will deposit any remaining funds in the U.S. Treasury as disgorgement. The Student Loan Debt Relief Companies will have no right to challenge the Bureau’s choice of remedies under this Section, and will have no right to contest the manner of distribution chosen by the Bureau.

40.

Payment of redress to any Affected Consumer under this Order may not be conditioned on that Affected Consumer waiving any right. V.

Order to Pay Civil Money Penalty to Plaintiff It is FURTHER ORDERED that:

41.

Under section 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged in the SAC and taking into account the factors in 12 U.S.C. § 5565(c)(3), Docu Prep Center, Inc. and Document Preparation Services, LP, jointly and severally, must pay a civil money penalty of $2,702,662 to the Bureau.

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42.

Under section 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged in the SAC and taking into account the factors in 12 U.S.C. § 5565(c)(3), Certified Doc Prep, Inc. and Certified Doc Prep Services, LP, jointly and severally, must pay a civil money penalty of $2,702,662 to the Bureau.

43.

Under section 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged in the SAC and taking into account the factors in 12 U.S.C. § 5565(c)(3), Assure Direct Services, Inc. and Assure Direct Services, LP, jointly and severally, must pay a civil money penalty of $2,702,662 to the Bureau.

44.

Under section 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged in the SAC and taking into account the factors in 12 U.S.C. § 5565(c)(3), Direct Document Solutions, Inc. and Direct Document Solutions, LP, jointly and severally, must pay a civil money penalty of $1,637,075 to the Bureau.

45.

Under section 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged in the SAC and taking into account the factors in 12 U.S.C. § 5565(c)(3), Secure Preparation Services, Inc. and Secure Preparation Services, LP, jointly and severally, must pay a civil money penalty of $1,637,075 to the Bureau.

46.

The civil money penalties set forth in this Section are immediately due and payable upon entry of this Order and are enforceable against any Asset owned by, on behalf of, for the benefit of, or in trust by or for any of the Student Loan Debt Relief Companies.

47.

The civil money penalties paid under this Order will be deposited in the Civil Penalty Fund of the Bureau as required by Section 1017(d) of the CFPA, 12 U.S.C. § 5497(d).

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VI.

Additional Monetary Provisions It is FURTHER ORDERED that:

48.

In the event of any default on the Student Loan Debt Relief Companies’ obligations to make payment under this Order, interest, computed under 28 U.S.C. § 1961, as amended, will accrue on any outstanding amounts not paid from the date of default to the date of payment, and will immediately become due and payable.

49.

The Student Loan Debt Relief Companies must relinquish all dominion, control, and title to the funds transferred or paid under this Order to the fullest extent permitted by law and no part of the funds may be returned to the Student Loan Debt Relief Companies.

50.

51.

The facts alleged in the SAC establish all elements necessary to sustain an action by the Bureau under Section 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A), and for such purposes this Order will have collateral estoppel effect against the Student Loan Debt Relief Companies, even in such Student Loan Debt Relief Companies’ capacity as debtor-in-possession. 52.

Under 31 U.S.C. § 7701, Student Loan Debt Relief Companies, unless they have already done so, must furnish to the Bureau any taxpayeridentification numbers associated with it, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. 53.

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settlement in a Related Consumer Action, the Student Loan Debt Relief Companies must notify the Enforcement Director of the final judgment, order, or settlement in writing. That notification must indicate the amount of redress, if any, that the Student Loan Debt Relief Companies paid or are required to pay to consumers and describe the consumers or classes of consumers to whom that redress has been or will be paid. To preserve the deterrent effect of the civil money penalty in any Related Consumer Action, the Student Loan Debt Relief Companies may not argue that they are entitled to, nor may the Student Loan Debt Relief Companies benefit by, any offset or reduction of any monetary remedies imposed in the Related Consumer Action because of the civil money penalty paid in this action or because of any payment that the Bureau makes from the Civil Penalty Fund. If the court in any Related Consumer Action offsets or otherwise reduces the amount of compensatory monetary remedies imposed against the Student Loan Debt Relief Companies based on the civil money penalty paid in this action or based on any payment that the Bureau makes from the Civil Penalty Fund, the Student Loan Debt Relief Companies must, within 30 days after entry of a final order granting such offset or reduction, notify the Bureau and pay the amount of the offset or reduction to the U.S. Treasury. Such a payment will not be considered an additional civil money penalty and will not change the amount of the civil money penalty imposed in this action.

54.

The Student Loan Debt Relief Companies must treat all civil money penalties paid under this Order as a penalty paid to the government for all purposes. Regardless of how such funds are used, the Student Loan Debt Relief Companies may not:

a. claim, assert, or apply for a tax deduction, tax credit, or any other tax benefit for any civil money penalty paid under this Order; or Case 8:20-cv-00043-SB-ADS Document 183 Filed 05/07/21 Page 16 of 18 Page ID #:2412

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b. seek or accept, directly or indirectly, reimbursement or indemnification from any source, including but not limited to payment made under any insurance policy, with regard to any civil money penalty paid under this Order.

VII.

COMPLIANCE MONITORING IT IS FURTHER ORDERED, that to monitor the Student Loan Debt Relief Companies’ compliance with this Order:

a. Within 14 days of receipt of a written request from the Bureau, the Student Loan Debt Relief Companies must submit compliance reports or other requested information, which must be sworn to under penalty of perjury; provide sworn testimony; or produce documents. b. For purposes of this Section, the Bureau may communicate directly with the Student Loan Debt Relief Companies, unless such the Student Loan Debt Relief Company retains counsel related to these communications. c. The Student Loan Debt Relief Companies must permit Bureau representatives to interview any employee or other person affiliated with them who has agreed to such an interview. The person interviewed may have counsel present.

d. Nothing in this Order will limit the Bureau’s lawful use of civil investigative demands under 12 C.F.R. § 1080.6 or other compulsory process.

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VIII.

Retention of Jurisdiction It is FURTHER ORDERED that:

88.

The Court will retain jurisdiction of this matter for the purpose of enforcing this Order.

It is SO ORDERED, this 7th day of May, 2021.

_______________________________

The Honorable Stanley Blumenfeld, Jr. United States District Judge

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Stipulation (May 2021)

PDF of this document (19 pages)

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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Bureau of Consumer Financial Protection, Plaintiff, vs.

Chou Team Realty, LLC, et al., Defendants.

) ) ) ) ) ) ) ) ) ) ) Case No.: 8-20-cv-00043-SB-ADS STIPULATED FINAL JUDGMENT AND ORDER AS TO FRANK ANTHONY SEBREROS The Bureau of Consumer Financial Protection (Bureau) commenced this civil action on January 9, 2020, to obtain injunctive relief, redress, civil penalties, and disgorgement. The Complaint alleges that, in connection with providing Debt-Relief Services to consumers with student loans, certain entities and individuals, including Defendant Frank Anthony Sebreros, violated the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681; the Telemarketing Sales Rule (TSR), 16 C.F.R. Part 310; and the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a)(1)(A).

The Bureau and Defendant Sebreros agree to entry of this Stipulated Final Judgment and Order (Order), without adjudication of any issue of fact or law, to settle and resolve all matters in dispute between these parties. Case 8:20-cv-00043-SB-ADS Document 188 Filed 05/11/21 Page 1 of 19 Page ID #:2487 VPC May 11, 2021

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THEREFORE, it is ORDERED:

FINDINGS 1.

This Court has jurisdiction over the parties and the subject matter of this action.

Venue is proper in this district under 12 U.S.C. § 5564(f). 3.

The relief provided in this Order is appropriate and available under sections 1054 and 1055 of the CFPA, 12 U.S.C. §§ 5564, 5565. 4.

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

The following definitions apply to this Order: a. “Affected Consumers” includes all consumers who, since January 1, 2015, were charged fees by Assure Direct Services. b. “Assisting Others” includes, but is not limited to: i. 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 Case 8:20-cv-00043-SB-ADS Document 188 Filed 05/11/21 Page 2 of 19 Page ID #:2488

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Internet website, email, or other electronic communication;

ii. providing names of, or contributing to the generation of, potential customers;

iii. participating in or providing services related to the offering, sale, or servicing of a product, or the collection of payments for a product;

iv. acting or serving as an owner, officer, director, manager, principal, partner, or limited partner of any entity; v. investing or loaning money; and vi. renting or otherwise providing office space. c. “Assure Direct Services” means Assure Direct Services, Inc.; Assure Direct Services, LP; and their successors and assigns, individually, collectively, or in any combination d. “Consumer Financial Product or Service” is synonymous in meaning and equal in scope to the definition of the term in the CFPA, 12 U.S.C. § 5481(5), and, subject to applicable restrictions contained in the CFPA, includes but is not limited to:

i. 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); ii. providing financial advisory services to consumers on individual consumer financial matters or relating to proprietary financial products or services, including providing credit counseling to any consumer or providing Case 8:20-cv-00043-SB-ADS Document 188 Filed 05/11/21 Page 3 of 19 Page ID #:2489

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services to assist a consumer with debt management or debt settlement, modifying the terms of any extension of credit, or avoiding foreclosure; and iii. engaging in deposit-taking activities, transmitting or exchanging funds, or otherwise acting as a custodian of funds or any financial instrument for use by or on behalf of a consumer.

e. “Consumer Report” means a “consumer report,” as that term is defined in Section 603(d) of FCRA, 15 U.S.C. § 1681a(d). f. “Consumer Reporting Agency” means a “consumer reporting agency,” as that term is defined in Section 603(f) of FCRA, 15 U.S.C. § 1681a(f).

g. “Debt-Relief Service” means any product, service, plan, or program represented, directly or by implication, to renegotiate, settle, or in any way alter the terms of payment or other terms of the debt, including but not limited to a student loan debt, mortgage loan debt, credit card debt, or 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.

h. “Defendant” means Frank Anthony Sebreros, and any other name by which he might be known.

i. “Effective Date” means the date on which the Order is issued. j. “Enforcement Director” means the Assistant Director of the Office of Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

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ORDER CONDUCT RELIEF I.

Permanent Ban on Offering or Providing Debt-Relief Services IT IS ORDERED that:

Defendant, whether acting directly or indirectly, is permanently restrained and enjoined from:

Nothing in this Order shall be read as an exception to this Paragraph. II.

Permanent Ban on Telemarketing Consumer Financial Products or Services 9.

Permanent Ban on Using or Obtaining Prescreened Consumer Reports IT IS ORDERED that:

10.

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arranging for others to use or obtain Prescreened Consumer Reports for any purpose. Nothing in this Order shall be read as an exception to this Paragraph. IV.

Prohibition on Using or Obtaining Consumer Reports for Any Business Purpose IT IS ORDERED that:

11.

Defendant, and his officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them, who receive actual notice of this Order, whether acting directly or indirectly, are permanently restrained and enjoined from using, obtaining, offering, providing, selling, or arranging for others to use or obtain Consumer Reports for any business purpose. Nothing in this Order shall be read as an exception to this Paragraph.

Consumer Information IT IS ORDERED that:

12.

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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), obtained from or through the activities of the Student Loan Debt Relief Companies.

However, this Order does not prohibit the disclosure of consumer information if lawfully requested by a government agency or required by law, regulation, or court order.

MONETARY PROVISIONS VI.

Order to Pay Redress IT IS FURTHER ORDERED that:

13.

A judgment for monetary relief is entered in favor of the Bureau and against Defendant, in the amount of $3,404,455 for the purpose of providing redress to Affected Consumers; however, full payment of this judgment will be suspended upon satisfaction of the obligations in Paragraphs 14 through 18 of this Section and Paragraphs 27 through 31 and 33 of Section IX and subject to Section VII of this Order. 14.

Within 10 days of the Effective Date, Defendant 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, the following payments in partial satisfaction of the judgment referenced in Paragraph 13 of this Section. Within 10 days of the Effective Date, Defendant must pay $17,500. Within 40 days of the Effective Date, Defendant must pay an additional $8,750. Within 70 days of the Effective Date, Defendant must pay an additional $8,750. 15.

With regard to any redress that Defendant pays under this Section, if Defendant, directly or indirectly, receives any reimbursement or Case 8:20-cv-00043-SB-ADS Document 188 Filed 05/11/21 Page 8 of 19 Page ID #:2494

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indemnification from any source, including but not limited to payment made under any insurance policy, or if Defendant secures a tax deduction or tax credit with regard to any federal, state, or local tax, Defendant must: (a) immediately notify the Enforcement Director in writing, and (b) within 10 days of receiving the funds or monetary benefit, Defendant must transfer to the Bureau the full amount of such funds or monetary benefit (Additional Payment) to the Bureau or to the Bureau’s agent according to the Bureau’s wiring instructions. After the Bureau receives the Additional Payment, the amount of the suspended judgment referenced in Paragraph 13 will be reduced by the amount of the Additional Payment and the Additional Payment will be applied toward satisfaction of the monetary judgment entered in Paragraph 13.

16.

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. Defendant will have no right to challenge any actions that the Bureau or its representatives may take under this Section. 18.

Payment of redress to any Affected Consumer under this Order may not be conditioned on that Affected Consumer waiving any right. Case 8:20-cv-00043-SB-ADS Document 188 Filed 05/11/21 Page 9 of 19 Page ID #:2495

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VII.

Effect of Misrepresentation or Omission Regarding Financial Condition IT IS FURTHER ORDERED that:

19.

The suspension of the monetary judgment entered in Section VI of this Order is expressly premised on the truthfulness, accuracy, and completeness of Defendant’s sworn financial statements, supporting documents, and testimony submitted to the Bureau, which Defendant asserts are truthful, accurate, and complete, and which include:

a. the Financial Statement of Defendant, including the attachments, executed on October 26, 2020;

b. the supporting documents submitted to the Bureau on November 18, 2020;

c. the deposition testimony of Defendant on December 20, 2020; and d. the supplement to Defendant’s Financial Statement, including its attachment, executed on February 8, 2021. 20.

If upon motion by the Bureau, the Court determines that Defendant has failed to disclose any material asset, or that his Financial Statement, testimony, or supporting documents identified in Paragraph 19 contain any material misrepresentations or omissions, including materially misstating the value of any asset, the Court shall terminate the suspension of the monetary judgment entered in Section VI of this Order and the full judgment of $3,404,455 entered shall be immediately due and payable, less any amounts paid to the Bureau under Section VI of this Order. 21.

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U.S.C. § 1961, as amended, on any outstanding amounts not paid; provided, however, that in all other respects this Order shall remain in full force and effect unless otherwise ordered by the Court; and, provided further, that proceedings instituted under this provision would be in addition to, and not in lieu of any other civil or criminal remedies as may be provided by law, including any other proceedings that the Bureau may initiate to enforce this Order. VIII.

Order to Pay Civil Money Penalties IT IS FURTHER ORDERED that:

22.

23.

The civil money penalty paid under this Order will be deposited in the Civil Penalty Fund of the Bureau, as required by section 1017(d) of the CFPA, 12 U.S.C. § 5497(d).

25.

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26.

Additional Monetary Provisions 27.

Defendant relinquishes all dominion, control, title to the funds paid under this Order to the fullest extent permitted by law. No part of the funds may be returned to Defendant.

29.

30.

The facts alleged in the Complaint establish all elements necessary to sustain an action by the Bureau under to Section 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A). For such purposes, this Order will Case 8:20-cv-00043-SB-ADS Document 188 Filed 05/11/21 Page 12 of 19 Page ID #:2498

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have collateral estoppel effect against Defendant, even in Defendant’s capacity as debtor-in-possession.

31.

32.

Under Section 604(a)(I) of FCRA, 15 U.S.C.§ 168l b(a)(1), any Consumer Reporting Agency may furnish a Consumer Report concerning Case 8:20-cv-00043-SB-ADS Document 188 Filed 05/11/21 Page 13 of 19 Page ID #:2499

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Defendant to the Bureau, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. COMPLIANCE PROVISIONS X.

Reporting Requirements IT FURTHER ORDERED that:

34.

c. describe the activities of each such business, including the products and services offered, and the means of advertising, marketing, and sales;

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Order Distribution and Acknowledgment IT IS FURTHER ORDERED that, 38.

Within 7 days of the Effective Date, Defendant must submit to the Enforcement Director an acknowledgment of receipt of this Order, sworn under penalty of perjury.

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39.

40.

Defendant, for any business for which he is the majority owner or which he directly or indirectly controls, must deliver a copy of this Order to any business entity resulting from any change in structure referred to in Section X, any future owners, board members, officers, LLC members and managers, and general and limited partners, as well as any managers, employees, or other agents and representatives who will have responsibilities related to Consumer Reports before they assume their responsibilities. 41.

42.

Recordkeeping IT IS FURTHER ORDERED that, 43.

Defendant, for any business for which he is the majority owner or which he directly or indirectly controls, must create all documents and business Case 8:20-cv-00043-SB-ADS Document 188 Filed 05/11/21 Page 16 of 19 Page ID #:2502

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records necessary to demonstrate full compliance with each provision of this Order, including all submissions to the Bureau. Defendant must retain these documents for at least 10 years after creation and make them available to the Bureau upon the Bureau’s request.

44.

XIII.

Notices IT IS FURTHER ORDERED that:

45.

Unless otherwise directed in writing by the Bureau, Defendant must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “CFPB v. Chou Team Realty, LLC, et al., Case No. 8:20-cv-00043-SB-ADS,” and send them by overnight courier or first-class mail to the below address, and contemporaneously by email to [email protected]: Assistant Director for Enforcement Bureau of Consumer Financial Protection ATTENTION: Office of Enforcement 1700 G Street, N.W.

Washington D.C. 20552 Case 8:20-cv-00043-SB-ADS Document 188 Filed 05/11/21 Page 17 of 19 Page ID #:2503

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XIV.

Cooperation with the Bureau IT IS FURTHER ORDERED that:

46.

XV.

Compliance Monitoring IT IS FURTHER ORDERED that, to monitor Defendant’s compliance with this Order, including the financial representations upon which part of the judgment was suspended:

48.

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49.

For purposes of this Section, the Bureau may communicate directly with the Defendant, unless the Defendant retains counsel related to these communications.

50.

Nothing in this Order will limit the Bureau’s lawful use of compulsory process, under 12 C.F.R. § 1080.6. XVI.

Retention of Jurisdiction IT IS FURTHER ORDERED that:

52.

The Court will retain jurisdiction of this matter for the purpose of enforcing this Order.

IT IS SO ORDERED.

DATED this 11th day of May, 2021.

_________________________________

Hon. Stanley Blumenfeld, Jr.

Case 8:20-cv-00043-SB-ADS Document 188 Filed 05/11/21 Page 19 of 19 Page ID #:2505

Stipulation (May 2021)

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STIPULATED FINAL JUDGMENT AND ORDER AS TO LEND TECH LOANS, INC.

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Bureau of Consumer Financial Protection, Plaintiff, vs.

Chou Team Realty, LLC, et al., Defendants.

) ) ) ) ) ) ) ) ) ) ) Case No.: 8-20-cv-00043-SB-ADS STIPULATED FINAL JUDGMENT AND ORDER AS TO LEND TECH LOANS, INC.

The Bureau of Consumer Financial Protection (Bureau) commenced this civil action on January 9, 2020, to obtain injunctive relief, redress, civil penalties, and disgorgement. The Second Amended Complaint alleges that, in connection with providing Debt-Relief Services to consumers with student loans, certain entities and individuals violated the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681; the Telemarketing Sales Rule (TSR), 16 C.F.R. Part 310; and the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a)(1)(A). The Second Amended Complaint alleges that Defendant Lend Tech Loans, Inc. (“Lend Tech”) was a sham entity that violated FCRA by obtaining consumer reports for the purpose of marketing debt relief services.

The Bureau and Defendant Lend Tech agree to entry of this Stipulated Case 8:20-cv-00043-SB-ADS Document 180 Filed 05/04/21 Page 1 of 11 Page ID #:2335 VPC May 4, 2021

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STIPULATED FINAL JUDGMENT AND ORDER AS TO LEND TECH LOANS, INC. Final Judgment and Order (Order), without adjudication of any issue of fact or law, to settle and resolve all matters in dispute between these parties. THEREFORE, it is ORDERED:

FINDINGS 1.

This Court has jurisdiction over the parties and the subject matter of this action.

Venue is proper in this district under 12 U.S.C. § 5564(f). 3.

The relief provided in this Order is appropriate and available under Sections 1054 and 1055 of the CFPA, 12 U.S.C. §§ 5564, 5565. 4.

Defendant waives all rights to seek judicial review or otherwise challenge or contest the validity of this Order and any claim it may have 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 Party agrees to bear its own costs and expenses, including, without limitation, attorneys’ fees. 6.

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

The following definitions apply to this Order: a. “Consumer Financial Product or Service” is synonymous in meaning and equal in scope to the definition of the term in the CFPA, 12 U.S.C. § 5481(5), and, subject to applicable restrictions contained in the CFPA, includes but is not limited to:

i. extending credit and servicing loans, including acquiring, purchasing, selling, brokering, or other extensions of Case 8:20-cv-00043-SB-ADS Document 180 Filed 05/04/21 Page 2 of 11 Page ID #:2336

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STIPULATED FINAL JUDGMENT AND ORDER AS TO LEND TECH LOANS, INC. credit (other than solely extending commercial credit to a person who originates consumer credit transactions); ii. providing financial advisory services to consumers on individual consumer financial matters or relating to proprietary financial products or services, including providing credit counseling to any consumer or providing services to assist a consumer with debt management or debt settlement, modifying the terms of any extension of credit, or avoiding foreclosure; and iii. engaging in deposit-taking activities, transmitting or exchanging funds, or otherwise acting as a custodian of funds or any financial instrument for use by or on behalf of a consumer.

b. “Consumer Report” means a “consumer report,” as that term is defined in Section 603(d) of FCRA, 15 U.S.C. § 1681a(d). c. “Consumer Reporting Agency” means a “consumer reporting agency,” as that term is defined in Section 603(f) of FCRA, 15 U.S.C. § 1681a(f).

d. “Defendant” means Lend Tech Loans, Inc., and its successors and assigns.

e. “Effective Date” means the date on which the Order is issued. f. “Enforcement Director” means the Assistant Director of the Office of Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

g. “Prescreened Consumer Reports” means Consumer Reports relating to consumers furnished by a Consumer Reporting Agency in connection with credit or insurance transactions that Case 8:20-cv-00043-SB-ADS Document 180 Filed 05/04/21 Page 3 of 11 Page ID #:2337

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STIPULATED FINAL JUDGMENT AND ORDER AS TO LEND TECH LOANS, INC. are not initiated by the consumers, pursuant to 15 U.S.C. § 1681b(c).

h. “Related Consumer Action” means a private action by or on behalf of one or more consumers or an enforcement action by another governmental agency brought against Defendant based on substantially the same facts as described in the Complaint. ORDER CONDUCT RELIEF I.

Corporate Dissolution IT IS ORDERED that:

Defendant shall promptly take the steps necessary to cause Defendant to be dissolved and to cease to exist as a corporate entity. 9.

Defendant shall not take any steps that would result in the emergence of a successor company, including a sale, merger, or assignment. II.

Ban on Offering or Providing Consumer Financial Products or Services 10.

Defendant, whether acting directly or indirectly, is restrained and enjoined from offering or providing any Consumer Financial Product or Service. Nothing in this Order shall be read as an exception to this Paragraph. III.

Ban on Using or Obtaining Consumer Reports IT IS ORDERED that:

11.

Defendant, whether acting directly or indirectly, is restrained and enjoined from using, obtaining, offering, providing, selling, or arranging for others to use or obtain Consumer Reports for any purpose. Nothing in this Order shall be read as an exception to this Paragraph. Case 8:20-cv-00043-SB-ADS Document 180 Filed 05/04/21 Page 4 of 11 Page ID #:2338

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STIPULATED FINAL JUDGMENT AND ORDER AS TO LEND TECH LOANS, INC. IV.

Consumer Information IT IS ORDERED that:

12.

Defendant and its owner, officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them, who receive actual notice of this Order, whether acting directly or indirectly, may not disclose, use, or benefit from consumer information, including the name, address, or any information about the consumer’s student loans, contained in or derived from Prescreened Consumer Reports obtained by Defendant.

However, this Order does not prohibit the disclosure of consumer information if lawfully requested by a government agency or required by law, regulation, or court order.

MONETARY PROVISIONS V.

Order to Pay Civil Money Penalty IT IS FURTHER ORDERED that:

13.

Under Section 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged against Defendant in the Complaint, and taking into account the factors in 12 U.S.C. § 5565(c)(3), Defendant must pay a civil money penalty of $1 to the Bureau. This nominal penalty is based on Defendant’s limited ability to pay as attested to in the Financial Statement of Defendant, including the attachments, executed on December 4, 2020, and submitted to the Bureau on or about December 7, 2020. 14.

Within 10 days of the Effective Date, Defendant must pay the civil money penalties in Paragraph 13 by wire transfer to the Bureau or to the Bureau’s agent in compliance with the Bureau’s wiring instructions. Case 8:20-cv-00043-SB-ADS Document 180 Filed 05/04/21 Page 5 of 11 Page ID #:2339

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STIPULATED FINAL JUDGMENT AND ORDER AS TO LEND TECH LOANS, INC. 15.

The civil money penalty paid under this Order will be deposited in the Civil Penalty Fund of the Bureau, as required by Section 1017(d) of the CFPA, 12 U.S.C. § 5497(d).

16.

Defendant relinquishes all dominion, control, title to the funds paid under this Order to the fullest extent permitted by law. No part of the funds may be returned to Defendant.

20.

The facts alleged in the Complaint will be taken as true and be given collateral estoppel effect, without further proof, in any proceeding based on the entry of the Order, or in any subsequent civil litigation by, or on behalf of the Bureau, including in a proceeding to enforce its rights to any payment or Case 8:20-cv-00043-SB-ADS Document 180 Filed 05/04/21 Page 6 of 11 Page ID #:2340

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STIPULATED FINAL JUDGMENT AND ORDER AS TO LEND TECH LOANS, INC. monetary judgment under this Order, such as a nondischargeability complaint in any bankruptcy case.

21.

Under 31 U.S.C. § 7701, Defendant, unless it already has done so, must furnish to the Bureau his taxpayer-identification numbers, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order.

22.

Under Section 604(a)(I) of FCRA, 15 U.S.C.§ 1681b(a)(1), any Consumer Reporting Agency may furnish a Consumer Report concerning Case 8:20-cv-00043-SB-ADS Document 180 Filed 05/04/21 Page 7 of 11 Page ID #:2341

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STIPULATED FINAL JUDGMENT AND ORDER AS TO LEND TECH LOANS, INC. Defendant to the Bureau, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. COMPLIANCE PROVISIONS VI.

Reporting Requirements IT FURTHER ORDERED that:

24.

Until Defendant has dissolved, Defendant must notify the Bureau of any development that may affect compliance obligations arising under this Order, including any development affecting its ability to dissolve or the timing of its dissolution. Defendant must provide such notice at least 30 days before the development, or as soon as practicable after learning of the development, whichever is sooner.

25.

Within 7 days of the Effective Date, Defendant must designate at least one telephone number and email, physical, and postal address as points of contact, which the Bureau may use to communicate with Defendant. 26.

Defendant must report any change in the information required to be submitted under Paragraph 25 at least 30 days before the change, or as soon as practicable after learning about the change, whichever is sooner. 27.

Within 90 days of the Effective Date, and each 90 days thereafter until it has dissolved, Defendant must submit to the Enforcement Director an accurate written compliance progress report sworn to under penalty of perjury (“Compliance Report”), which, at a minimum: a. lists each applicable paragraph and subparagraph of this Order and describes in detail the manner and form in which such Defendant has complied with each such paragraph and subparagraph of this Order;

b. describes in detail the manner in which and purposes for which Defendant has used or obtained Consumer Reports; and Case 8:20-cv-00043-SB-ADS Document 180 Filed 05/04/21 Page 8 of 11 Page ID #:2342

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STIPULATED FINAL JUDGMENT AND ORDER AS TO LEND TECH LOANS, INC. c. attaches a copy of each Order Acknowledgment obtained under Section XI, unless previously submitted to the Bureau. VII.

Order Distribution and Acknowledgment IT IS FURTHER ORDERED that, 28.

Within 7 days of the Effective Date, Defendant must submit to the Enforcement Director an acknowledgment of receipt of this Order, sworn under penalty of perjury.

29.

Within 14 days of the Effective Date, Defendant must deliver a copy of this Order to its owner, as well as any managers, employees, brokers, or other agents and representatives.

30.

Defendant must secure a signed and dated statement acknowledging receipt of a copy of this Order, ensuring that any electronic signatures comply with the requirements of the E-Sign Act, 15 U.S.C. § 7001 et seq., within 14 days of delivery, from all persons receiving a copy of this Order under this Section.

31.

Within 30 days of the Effective Date, Defendant must provide the Bureau with a list of all persons and their titles to whom this Order was delivered through that date under Paragraphs 28 and 29 and a copy of all signed and dated statements acknowledging receipt of this Order under Paragraph 30. VIII.

Notices IT IS FURTHER ORDERED that:

32.

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STIPULATED FINAL JUDGMENT AND ORDER AS TO LEND TECH LOANS, INC. overnight courier or first-class mail to the below address, and contemporaneously by email to [email protected]: Assistant Director for Enforcement Bureau of Consumer Financial Protection ATTENTION: Office of Enforcement 1700 G Street, N.W.

Washington D.C. 20552 33.

IX.

Compliance Monitoring IT IS FURTHER ORDERED that, until Defendant has dissolved, to monitor Defendant’s compliance with this Order:

34.

35.

For purposes of this Section, the Bureau may communicate directly with the Defendant, unless the Defendant retains counsel related to these communications.

36.

Nothing in this Order will limit the Bureau’s lawful use of compulsory process, under 12 C.F.R. § 1080.6. Case 8:20-cv-00043-SB-ADS Document 180 Filed 05/04/21 Page 10 of 11 Page ID #:2344

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STIPULATED FINAL JUDGMENT AND ORDER AS TO LEND TECH LOANS, INC. X.

Retention of Jurisdiction IT IS FURTHER ORDERED that:

38.

The Court will retain jurisdiction of this matter for the purpose of enforcing this Order.

IT IS SO ORDERED.

Dated: May 4, 2021 Stanley Blumenfeld, Jr.

United States District Judge

Case 8:20-cv-00043-SB-ADS Document 180 Filed 05/04/21 Page 11 of 11 Page ID #:2345

Judgment (Sept. 2021)

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Page 266

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

Chou Team Realty, LLC, et al., Defendants.

) ) ) ) ) ) ) ) ) ) ) Case No.: 8-20-cv-00043-SB-ADS JUDGMENT AGAINST JAWAD NESHEIWAT Plaintiff Bureau of Consumer Financial Protection (“Bureau”) filed a motion for summary judgment under Federal Rule of Civil Procedure 56 against Defendant Jawad Nesheiwat (“Defendant”). On August 10, 2021, after considering the pleadings, declarations, exhibits, summary-judgment briefing, evidentiary objections, and the entire record in this matter, the Court granted the Bureau’s motion for summary judgment against Defendant on all claims and found that injunctive relief, restitution, and a civil money penalty were appropriate remedies in this case. Dkt. No. 233. The Court also filed a separate Order today addressing Defendant’s objections to the proposed Judgment filed by the Bureau. Accordingly, the Court finds good cause to grant the following relief against Defendant.

JS-6 Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 1 of 39 Page ID #:5437 VPC September 23, 2021

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IT IS HEREBY ORDERED, ADJUDGED, AND DECREED as follows: FINDINGS 1.

This is an action instituted by the Bureau under the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681; the Telemarketing Sales Rule (“TSR”), 16 C.F.R. Part 310, the implementing regulation of the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. §§ 6102(c)(2), 6105(d); and the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531(a), 5536(a)(1)(A). The Second Amended Complaint seeks permanent injunctive relief, rescission or reformation of contracts, disgorgement, damages, redress, and civil money penalties. The Bureau has the authority to seek this relief. 12 U.S.C. § 5565. 2.

This Court has subject-matter jurisdiction over this action because it was brought under federal consumer-financial law, 12 U.S.C. § 5565(a)(1), presents a federal question, 28 U.S.C. § 1331, and the plaintiff is an agency of the United States, 28 U.S.C. § 1345.

Sections 1054 and 1055 of the CFPA, 12 U.S.C. §§ 5564, 5565, empower this Court to order injunctive and other equitable and legal relief against Defendant for violations of FCRA, the TSR, and the CFPA, and to award restitution, damages, refund of moneys, disgorgement of ill-gotten gains resulting from Defendant’s unlawful practices, and civil money penalties for violations of the Federal consumer-financial laws. 4.

Uncontroverted facts show that, since February 2015, the Student Loan Debt Relief Companies charged Affected Consumers approximately $19,699,870 in fees paid by Affected Consumers (not including fees that were refunded to consumers).

Because of his violations of the TSR and CFPA, Defendant is jointly and severally liable for the full amount of fees paid by Affected consumers to the Student Loan Debt Relief Companies. Pursuant to the Court’s Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 2 of 39 Page ID #:5438

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authority to award legal restitution, the Bureau is entitled to a judgment for monetary relief of $19,699,870 against Defendant as redress for the fees paid by Affected Consumers. This restitution is owed jointly and severally with the Student Loan Debt Relief Companies in the amounts imposed in the default judgment entered against each of them at Dkt. No. 177. 6.

Defendant has recklessly violated FCRA, the TSR, and the CFPA, warranting a second tier civil money penalty of $20,000,000. 12 U.S.C. § 5565(c)(2)(B).

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.

Entry of this Judgment is in the public interest. DEFINITIONS 9.

The following definitions apply to this Order: a. “Affected Consumers” includes all consumers who, since February 1, 2015, were charged fees by any of the Student Loan Debt Relief Companies.

b. “Assisting Others” includes but is not limited to: i.

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;

ii.

providing names of, or contributing to the generation of, potential customers;

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iii.

participating in or providing services related to the offering, sale, or servicing of a product, or the collection of payments for a product; iv.

acting or serving as an owner, officer, director, manager, principal, partner, limited partner, member, employee, independent contractor, or agent of any entity; and v.

investing or loaning money.

c. “Bureau” means the Bureau of Consumer Financial Protection. d. “Consumer Financial Product or Service” is synonymous in meaning and equal in scope to the definition of the term in the CFPA, 12 U.S.C. § 5481(5), and, subject to applicable restrictions contained in the CFPA, includes but is not limited to:

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);

ii.

providing financial advisory services to consumers on individual consumer financial matters or relating to proprietary financial products or services, including providing credit counseling to any consumer or providing services to assist a consumer with debt management or debt settlement, modifying the terms of any extension of credit, or avoiding foreclosure; and Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 4 of 39 Page ID #:5440

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iii.

engaging in deposit-taking activities, transmitting or exchanging funds, or otherwise acting as a custodian of funds or any financial instrument for use by or on behalf of a consumer.

e. “Consumer Report” means a “consumer report,” as that term is defined in § 603(d) of FCRA, 15 U.S.C. § 1681a(d). f. “Consumer Reporting Agency” means a “consumer reporting agency,” as that term is defined in § 603(f) of FCRA, 15 U.S.C. § 1681a(f).

g. “Debt-Relief Service” means any product, service, plan, or program represented, directly or by implication, to renegotiate, settle, or in any way alter the terms of payment or other terms of the debt, including but not limited to a student-loan debt, mortgage-loan debt, credit-card debt, or 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. h. “Defendant” means Jawad Nesheiwat, and any other names by which he may be known.

i. “Dwelling” means a residential structure containing four or fewer units, whether or not that structure is attached to real property, that is primarily for personal, family, or household purposes. The term includes any of the following if used as a residence: an individual condominium unit, cooperative unit, mobile home, manufactured home, or trailer. j. “Effective Date” means the date on which the Order is entered on the docket.

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k. “Enforcement Director” means the Assistant Director of the Office of Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

l. “Mortgage Loan” means any loan secured by a dwelling, and any associated deed of trust or mortgage. m. “Prescreened Consumer Reports” means Consumer Reports relating to consumers furnished by a Consumer Reporting Agency in connection with credit or insurance transactions that are not initiated by the consumers, pursuant to 15 U.S.C. § 1681b(c).

o. “Student Loan Debt Relief Companies” means Docu Prep Center, Inc., d/b/a DocuPrep Center, d/b/a Certified Document Center; Document Preparation Services, LP, d/b/a DocuPrep Center, d/b/a Certified Document Center; Certified Doc Prep, Inc.; Certified Doc Prep Services, LP; Assure Direct Services, Inc.; Assure Direct Services, LP; Direct Document Solutions, Inc.; Direct Document Solutions, LP; Secure Preparation Services, Inc.; Secure Preparation Services, LP, and their successors and assigns, individually, collectively, or in any combination.

p. “Telemarketing” means a plan, program, or campaign that is conducted to induce the purchase of goods or services or a Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 6 of 39 Page ID #:5442

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charitable contribution, by use of one or more telephones and which involves more than one interstate phone call.

ORDER I.

Permanent Ban on Offering or Providing Debt-Relief Services IT IS ORDERED that:

10.

Defendant, whether acting directly or indirectly, is permanently restrained from:

a. participating in, advertising, marketing, promoting, offering for sale, selling, or providing any Debt-Relief Service; and b. Assisting Others in, or receiving any remuneration or other consideration from, the provision, advertising, marketing, promoting, offering for sale, sale, or production of any Debt-Relief Service.

Nothing in this Order shall be read as an exception to this paragraph. II.

Permanent Ban on Offering or Providing Mortgage Loans IT IS FURTHER ORDERED that:

11.

Defendant, whether acting directly or indirectly, is permanently restrained and enjoined from:

a. participating in, advertising, marketing, promoting, offering for sale, selling, or providing any Mortgage Loan; and b. Assisting Others in, or receiving any remuneration or other consideration from, the provision, advertising, marketing, promoting, offering for sale, sale, or production of any Mortgage Loan.

Nothing in this Order shall be read as an exception to this paragraph.

Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 7 of 39 Page ID #:5443

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III.

Permanent Ban on Telemarketing Consumer Financial Products or Services IT IS FURTHER ORDERED that:

12.

Permanent Ban on Using or Obtaining Prescreened Consumer Reports IT IS FURTHER ORDERED that:

13.

Permanent Ban on Using or Obtaining Consumer Reports for Any Business Purpose IT IS FURTHER ORDERED that:

14.

Defendant, and his officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them, who receive actual notice of this Order, whether acting directly or indirectly, are permanently restrained and enjoined from using, obtaining, offering, providing, selling, or arranging for others to use or obtain Consumer Reports for any business purpose. Nothing in this Order shall be read as an exception to this paragraph.

Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 8 of 39 Page ID #:5444

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VI.

Consumer Information IT IS FURTHER ORDERED that:

15.

a. disclose, use, or benefit from consumer information, including the name, address, or any information about the consumer’s student loans, contained in or derived from Prescreened Consumer Reports obtained for use in marketing Debt-Relief Services; or b. disclose, use, or benefit 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 customer’s account (including a credit card, bank account, or other financial account), obtained from or through the activities of the Student Loan Debt Relief Companies. However, consumer information may be disclosed if lawfully requested by a government agency or required by law, regulation, or court order. MONETARY PROVISIONS VII.

Order to Pay Redress IT IS FURTHER ORDERED that:

16.

A judgment for monetary relief is entered in favor of the Bureau and against Defendant in the amount of $19,699,870 for the purpose of providing redress to Affected Consumers. The monetary judgment set forth in this section is immediately due and payable upon entry of this Order and is Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 9 of 39 Page ID #:5445

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enforceable against any asset owned by, on behalf of, for the benefit of, or in trust by or for Defendant.

17.

Any funds received by the Bureau in satisfaction of the judgment in this section 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 Affected 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. 18.

If the Bureau determines, in its sole discretion, that providing redress to consumers is wholly or partially impracticable or if funds remain after the administration of redress is completed, the Bureau will deposit any remaining funds in the U.S. Treasury as disgorgement. Defendant will have no right to challenge the Bureau’s choice of remedies under this section and will have no right to contest the manner of distribution chosen by the Bureau. 19.

Payment of redress to any Affected Consumer under this Order may not be conditioned on that Affected Consumer waiving any right. VIII.

Order to Pay Civil Money Penalty to Plaintiff IT IS FURTHER ORDERED that:

20.

Under §§ 1042(a) 1055(c) of the CFPA, 12 U.S.C. §§ 5552(a), 5565(c), by reason of Defendant’s violations of law and taking into account the factors in 12 U.S.C. § 5565(c)(3), Defendant must pay a civil money penalty of $20,000,000 to the Bureau.

21.

The civil money penalty 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 Defendant. Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 10 of 39 Page ID #:5446

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22.

The civil money penalty paid under this Order will be deposited in the Civil Penalty Fund of the Bureau as required by § 1017(d) of the CFPA, 12 U.S.C. § 5497(d).

IX.

Additional Monetary Provisions IT IS FURTHER ORDERED that:

23.

Defendant must relinquish all dominion, control, and title to the funds transferred or paid under this Order to the fullest extent permitted by law, and no part of the funds may be returned to Defendant. 25.

The facts found in the Court’s order granting summary judgment to the Bureau will be taken as true and given collateral estoppel effect, without further proof, in any proceeding based on the entry of the Order, or in any subsequent civil litigation by or on behalf of the Bureau, including in a proceeding to enforce their rights to any payment or monetary judgment under this Order, such as a non-dischargeability complaint in any bankruptcy case. 26.

The facts found in the Court’s order granting summary judgment to the Bureau establish all elements necessary to sustain an action by the Bureau under § 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A), and for such purposes this Order will have collateral estoppel effect against Defendant, even in such Defendant’s capacity as debtor-in-possession. 27.

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28.

29.

Within 30 days of the entry of a final judgment, order, or settlement in a Related Consumer Action, Defendant must notify the Enforcement Director of the final judgment, order, or settlement in writing. That notification must indicate the amount of redress, if any, that Defendant paid or is required to pay to consumers and describe the consumers or classes of consumers to whom that redress has been or will be paid. To preserve the deterrent effect of the civil money penalty in any Related Consumer Action, Defendant may not argue that he is entitled to, nor may Defendant benefit by, any offset or reduction of any monetary remedies imposed in the Related Consumer Action because of the civil money penalty paid in this action or because of any payment that the Bureau makes from the Civil Penalty Fund. If the court in any Related Consumer Action offsets or otherwise reduces the amount of compensatory monetary remedies imposed against Defendant based on the civil money penalty paid in this action or based on any payment that the Bureau makes from the Civil Penalty Fund, Defendant must, within 30 days after entry of a final order granting such offset or reduction, notify the Bureau and pay the amount of the offset or reduction to the U.S. Treasury. Such a payment will not be considered an additional civil money penalty and will not change the amount of the civil money penalty imposed in this action. 30.

Defendant must treat the civil money penalty paid under this Order as a penalty paid to the government for all purposes. Regardless of how such funds are used, Defendant may not:

a. claim, assert, or apply for a tax deduction, tax credit, or any other tax benefit for any civil money penalty paid under this Order; or Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 12 of 39 Page ID #:5448

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31.

Upon written request of a representative of the Bureau, any consumer reporting agency must furnish consumer reports to the Bureau concerning Defendant under § 604(a)(1) of FCRA, 15 U.S.C.§ 1681b(a)(1), which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order.

COMPLIANCE PROVISIONS X.

Reporting Requirements IT IS FURTHER ORDERED that:

32.

Defendant must notify the Bureau of any development that may affect compliance obligations arising under this Order, including but not limited to a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor company; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order; the filing of any bankruptcy or insolvency proceeding by or against Defendant; or a change in Defendant’s name or address. Defendant must provide such notice at least 30 days before the development, or as soon as practicable after learning of the development, whichever is sooner. 33.

b. identify all businesses for which Defendant is the majority owner, or that Defendant directly or indirectly controls, by all Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 13 of 39 Page ID #:5449

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of their names, telephone numbers, and electronic, physical, and postal addresses;

c. describe the activities of each such business, including the products and services offered, and the means of advertising, marketing, and sales;

Within 14 days of the Effective Date, Defendant must submit to the Enforcement Director a completed financial statement accurate as of the Effective Date, using the form attached as Attachment A to this Order, and all documents requested in the form attached as Attachment A. 35.

Defendant must report any change in the information required to be submitted under Paragraph 33 at least 30 days before the change, or as soon as practicable after learning about the change, whichever is sooner. 36.

b. describes in detail the manner in which and purposes for which Defendant has used or obtained Consumer Reports; and Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 14 of 39 Page ID #:5450

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c. attaches a copy of each Order Acknowledgment obtained under Section XI, unless previously submitted to the Bureau. XI.

Order Distribution and Acknowledgment IT IS FURTHER ORDERED that:

37.

Within 7 days of the Effective Date, Defendant must submit to the Enforcement Director an acknowledgment of receipt of this Order, sworn under penalty of perjury.

38.

39.

Defendant, for any business for which he is the majority owner or which he directly or indirectly controls, must deliver a copy of this Order to any business entity resulting from any change in structure referred to in Section X, any future owners, board members, officers, LLC members and managers, and general and limited partners, as well as any managers, employees, or other agents and representatives who will have responsibilities related to Consumer Reports before they assume their responsibilities. 40.

41.

Within 90 days of the Effective Date, Defendant must provide the Bureau with a list of all persons and their titles to whom this Order was Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 15 of 39 Page ID #:5451

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delivered through that date under Paragraphs 38 and 39 and a copy of all signed and dated statements acknowledging receipt of this Order under Paragraph 40. XII.

Recordkeeping IT IS FURTHER ORDERED that:

42.

43.

Defendant must make these materials available to the Bureau upon the Bureau’s request.

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XIII.

Notices IT IS FURTHER ORDERED that:

44.

Unless otherwise directed in writing by the Bureau, Defendant must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “CFPB v. Chou Team Realty, LLC, et al., Case No. 8:20-cv-00043-SB-ADS,” and send them by overnight courier or first-class mail to the below address, and contemporaneously by email to [email protected]: Assistant Director for Enforcement Bureau of Consumer Financial Protection ATTENTION: Office of Enforcement 1700 G Street, N.W.

Washington D.C. 20552 XIV.

Cooperation with the Bureau IT IS FURTHER ORDERED that:

45.

Compliance Monitoring IT IS FURTHER ORDERED that:

46.

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47.

For purposes of this section, the Bureau may communicate directly with Defendant, unless Defendant retains counsel related to these communications.

48.

Nothing in this Order will limit the Bureau’s lawful use of compulsory process, under 12 C.F.R. § 1080.6. XVI.

Retention of Jurisdiction It is FURTHER ORDERED that:

50.

The Court will retain jurisdiction of this matter for the purpose of enforcing this Order.

It is SO ORDERED, this 23rd day of September, 2021. _______________________________ The Honorable Stanley Blumenfeld, Jr.

United States District Judge Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 18 of 39 Page ID #:5454

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Attachment A to the Judgment Against Defendant Jawad Nesheiwat

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CONSUMER FINANCIAL PROTECTION BUREAU

FINANCIAL DISCLOSURE FORM FOR INDIVIDUAL DEFENDANT

Instructions:

Complete all items. Enter “None” or “N/A” (“Not Applicable”) where appropriate. If you cannot fully answer a question, explain why.

“Dependents” include your live-in companion, dependent children, or any other person, whom you or your spouse (or your children’s other parent) claimed or could have claimed as a dependent for tax purposes at any time during the past five years.

“Assets” and “Liabilities” include ALL assets and liabilities, located within the United States or elsewhere, whether held individually or jointly.

Attach continuation pages as needed. On the financial disclosure form, state next to the Item number that the Item is being continued. On the continuation page(s), identify the Item number(s) being continued. Provide requested documents and information for the current fiscal year and the prior three complete fiscal years through the signing of this document, unless specifically instructed otherwise. Type or print legibly.

Initial each page in the space provided in the lower right corner.

Sign and date the completed financial disclosure form on the last page.

Penalty for False Information:

Federal law provides that any person may be imprisoned for not more than five years, fined, or both, if such person in any: (a) “matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully (1) falsifies, conceals or covers up by any trick, scheme, or device a material fact; (2) makes any false, fictitious or fraudulent statement or representation; or (3) makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry” (18 U.S.C. § 1001); (2) “statement under penalty of perjury as permitted under section 1746 of title 28, United States Code, willfully subscribes as true any material matter which he does not believe to be true” (18 U.S.C. § 1621); or (3) “(...statement under penalty of perjury as permitted under section 1746 of title 28, United States Code) in any proceeding before or ancillary to any court or grand jury of the United States knowingly makes any false material declaration or makes or uses any other information...knowing the same to contain any false material declaration.” (18 U.S.C. § 1623)

For a felony conviction under the provisions cited above, federal law provides that the fine may be not more than the greater of (i) $250,000 for an individual or $500,000 for a corporation, or (ii) if the felony results in pecuniary gain to any person or pecuniary loss to any person other than the defendant, the greater of twice the gross gain or loss. 18 U.S.C. § 3571.

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BACKGROUND INFORMATION Item 1. Information About You

Your Full Name ______________________________________________ Social Security No. ___________________

Place of Birth _________________________ Date of Birth _______________ Drivers License No. _______________

Current Address ______________________________________________________ From (Date) _________________

Rent or Own? _________ Telephone No. _________________________ Facsimile No. _________________________

E-Mail Address _____________________________________ Internet Home Page ____________________________

Previous Addresses for past five years:

Address___________________________________________ Rent or Own?________ From/Until_________________

Identify any other name(s) and/or social security number(s) you have used, and the time period(s) during which they were

used________________________________________________________________________________________

Marital Status: ______________________ (i.e., Married, Single, Divorced, Widowed, Separated)

Item 2. Information About Your Spouse or Live-In Companion

Spouse/Companion's Name _____________________________________ Social Security No. ___________________

Place of Birth _________________________________________ Date of Birth _______________________________

Identify any other name(s) and/or social security number(s) your spouse/companion has used, and the time period(s) during

which they were used ________________________________________________________________________

Address (if different from yours) _____________________________________________________________________

From (Date) _________________________ Rent or Own?___________ Telephone No._________________________

Employer’s Name and Address ______________________________________________________________________

Job Title _______________________ Years in Present Job _________ Annual Gross Salary/Wages $______________

Item 3. Information About Your Previous Spouse

Previous Spouse’s Name & Address __________________________________________________________________

___________________________________ Social Security No. _________________ Date of Birth _______________ Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 21 of 39 Page ID #:5457

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Item 4. Contact Information

Name & Address of Nearest Living Relative or Friend ___________________________________________________

____________________________________________________________ Telephone No. ______________________

Item 5. Information About Dependents Who Live With You

Name ______________________________________________ Date of Birth ________________________________

Relationship _________________________________________ Social Security No. ____________________________

Name ______________________________________________ Date of Birth ________________________________

Relationship _________________________________________ Social Security No. ____________________________

Name ______________________________________________ Date of Birth ________________________________

Relationship _________________________________________ Social Security No. ____________________________

Item 6. Information About Dependents Who Do Not Live With You

Name & Address ________________________________________________________________________________

Date of Birth __________________ Relationship ____________________ Social Security No.___________________

Name Address __________________________________________________________________________________

Date of Birth __________________ Relationship ____________________ Social Security No.__________________

Name & Address ________________________________________________________________________________

Date of Birth __________________ Relationship ____________________ Social Security No.__________________

Item 7. Employment Information

Provide the following information for this year-to-date and for each of the previous five full years, for each company of which you were a director, officer, employee, agent, contractor, participant or consultant at any time during that period. “Income” includes, but is not limited to, any salary, commissions, draws, consulting fees, loans, loan payments, dividends, royalties or other benefits for which you did not pay (e.g., health insurance premiums, automobile lease or loan payments) received by you or anyone else on your behalf.

Company Name & Address ________________________________________________________________________

Dates Employed: From (Month/Year) ________________________ To (Month/Year) _________________________

Positions Held with Beginning and Ending Dates ________________________________________________________

Income Received: This year-to-date: $______________________ _______: $______________________

20_____:

$______________________ _______: $______________________

_______:

$______________________ _______: $______________________

Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 22 of 39 Page ID #:5458

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Company Name & Address ________________________________________________________________________

Dates Employed: From (Month/Year) ________________________ To (Month/Year) _________________________

Positions Held with Beginning and Ending Dates ________________________________________________________

Income Received: This year-to-date: $______________________ _______: $______________________

20_____:

$______________________ _______: $______________________

_______:

$______________________ _______: $______________________

Company Name & Address ________________________________________________________________________

Dates Employed: From (Month/Year) ________________________ To (Month/Year) _________________________

Positions Held with Beginning and Ending Dates ________________________________________________________

Income Received: This year-to-date: $______________________ _______: $______________________

20_____:

$______________________ _______: $______________________

_______:

$______________________ _______: $______________________

Item 8. Pending Lawsuits Filed by You or Your Spouse

List all pending lawsuits that have been filed by you or your spouse in court or before an administrative agency. (List lawsuits that resulted in final judgments or settlements in Items 16 and 25).

Opposing Party’s Name & Address ___________________________________________________________________

Court’s Name & Address ___________________________________________________________________________

Docket No. _________________ Relief Requested ____________________ Nature of Lawsuit ___________________

____________________________________ Status ______________________________________________________

Item 9. Pending Lawsuits Filed Against You or Your Spouse

List all pending lawsuits that have been filed against you or your spouse in court or before an administrative agency. (List lawsuits that resulted in final judgments or settlements in Items 16 and 25).

Opposing Party’s Name & Address ___________________________________________________________________

Court’s Name & Address ___________________________________________________________________________

Docket No. _________________ Relief Requested ____________________ Nature of Lawsuit ___________________

____________________________________ Status ______________________________________________________

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Item 10. Safe Deposit Boxes

List all safe deposit boxes, located within the United States or elsewhere, held by you, your spouse, or any of your dependents, or held by others for the benefit of you, your spouse, or any of your dependents. On a separate page, describe the contents of each box.

Owner’s Name Name & Address of Depository Institution

Box No.

________________ _______________________________________________ ________________________

_______________ ____________________________________________ ______________________

Item 11. Business Interests

List all businesses for which you, your spouse, or your dependents are an officer or director.

Business’ Name & Address ________________________________________________________________________

Business Format (e.g., corporation) __________________________ Description of Business _____________________

______________________________ Position(s) Held, and By Whom _______________________________________

Business’ Name & Address ________________________________________________________________________

Business Format (e.g., corporation) __________________________ Description of Business _____________________

______________________________ Position(s) Held, and By Whom _______________________________________

Business’ Name & Address ________________________________________________________________________

Business Format (e.g., corporation) __________________________ Description of Business _____________________

______________________________ Position(s) Held, and By Whom _______________________________________

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FINANCIAL INFORMATION: ASSETS AND LIABILITIES

REMINDER: “Assets” and “Liabilities” include ALL assets and liabilities, located within the United States or elsewhere, whether held individually or jointly.

Item 12. Cash, Bank, and Money Market Accounts

List cash and all bank and money market accounts, including but not limited to, checking accounts, savings accounts, and certificates of deposit, held by you, your spouse, or your dependents, or held by others for the benefit of you, your spouse, or your dependents. The term “cash” includes currency and uncashed checks.

Cash on Hand $____________________________ Cash Held For Your Benefit $____________________________

Name on Account Name & Address of Financial Institution

Account No.

Current Balance

_________________ __________________________________________________ _______________ $__________

Item 13. U.S. Government Securities

List all U.S. Government securities, including but not limited to, savings bonds, treasury bills, and treasury notes, held by you, your spouse, or your dependents, or held by others for the benefit of you, your spouse, or your dependents.

Name on Account Type of Obligation

Security Amount

Maturity Date ____________________ ________________________ $________________ _____________

___________________ ________________________ $________________

_____________

___________________ _________________________ $________________

_____________

Item 14. Publicly Traded Securities and Loans Secured by Them

List all publicly traded securities, including but not limited to, stocks, stock options, registered and bearer bonds, state and municipal bonds, and mutual funds, held by you, your spouse, or your dependents, or held by others for the benefit of you, your spouse, or your dependents.

Issuer _______________________________ Type of Security __________________ No. of Units Owned ________

Name on Security _________________ Current Fair Market Value $______ Loan(s) Against Security $__________

Broker House, Address _____________________________________________ Broker Account No. ____________ Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 25 of 39 Page ID #:5461

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Item 15. Other Business Interests

List all other business interests, including but not limited to, non-public corporations, subchapter-S corporations, limited liability corporations (“LLCs”), general or limited partnership interests, joint ventures, sole proprietorships, and oil and mineral leases, held by you, your spouse, or your dependents, or held by others for the benefit of you, your spouse, or your dependents.

Business Format _____________________________ Business’ Name & Address____________________________

_________________________________________________________________________ Ownership % ________

Owner (e.g., self, spouse) ________________________________ Current Fair Market Value $_________________

Item 16. Monetary Judgments or Settlements Owed to You, Your Spouse, or Your Dependents

List all monetary judgments or settlements owed to you, your spouse, or your dependents.

Opposing Party’s Name & Address__________________________________________________________________

Court’s Name & Address __________________________________________________

Docket No. _______________ Nature of Lawsuit ______________________________

Date of Judgment _______________ Amount $____________

Item 17. Other Amounts Owed to You, Your Spouse, or Your Dependents

List all other amounts owed to you, your spouse, or your dependents.

Debtor’s Name, Address, & Telephone No. _________________________________________________________

Original Amount Owed $_____________ Current Amount Owed $____________ Monthly Payment $____________

Item 18. Insurance Policies

List all insurance policies, held by you, your spouse, or your dependents, including any life insurance policies, and riders, and any other policy that you, your spouse or your dependents, would receive reimbursement or indemnification for related to your legal fees or any remedies entered against you.

Insurance Company’s Name, Address, & Telephone No._________________________________________________

Insured ________________________ Beneficiary _______________________ Face Value $___________________

Policy No. _________________ Loans Against Policy $________________ Surrender Value $_________________

Insurance Company’s Name, Address, & Telephone No.________________________________________________

Insured ________________________ Beneficiary _______________________ Face Value $___________________

Policy No. _________________ Loans Against Policy $________________ Surrender Value $__________________

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Item 19. Deferred Income Arrangements

List all deferred income arrangements, including but not limited to, deferred annuities, pensions plans, profit-sharing plans, 401(k) plans, IRAs, Keoghs, and other retirement accounts, held by you, your spouse, or your dependents, or held by others for the benefit of you, your spouse, or your dependents.

Name on Account _________________________ Type of Plan ___________________ Date Established _________

Trustee or Administrator’s Name, Address & Telephone No.______________________________________________

Account No. ______________________ Surrender Value $___________________

Name on Account _________________________ Type of Plan ___________________ Date Established__________

Trustee or Administrator’s Name, Address & Telephone No.______________________________________________

Account No. ______________________ Surrender Value $___________________

Item 20. Personal Property

List all personal property, by category, whether held for personal use or for investment, including but not limited to, furniture and household goods of value, computer equipment, electronics, coins, stamps, artwork, gemstones, jewelry, bullion, other collectibles, copyrights, patents, and other intellectual property, held by you, your spouse, or your dependents, or held by others for the benefit of you, your spouse, or your dependents.

Property Category

Name of Owner Property Location Acquisition Current (e.g., artwork, jewelry)

Cost

Value ___________________ __________________ _______________ $_________ $________

___________________ __________________ _______________ $_________ $________

Item 21. Cars, Trucks, Motorcycles, Boats, Airplanes, and Other Vehicles

List all cars, trucks, motorcycles, boats, airplanes, and other vehicles owned or operated by you, your spouse, or your dependents, or held by others for the benefit of you, your spouse, or your dependents.

Vehicle Type __________________ Make ____________________ Model ______________________ Year_______

Registered Owner’s Name __________________________ Registration State & No.__________________________

Address of Vehicle’s Location _____________________________________________________________________

Purchase Price $_______________Current Value $_______________ Account/Loan No._______________________

Lender’s Name and Address_______________________________________________________________________

Original Loan Amount $______________ Current Loan Balance $______________ Monthly Payment $_________ Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 27 of 39 Page ID #:5463

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Mileage ________________ Current condition of car ________________________ Purchase date ______________

Vehicle Type __________________ Make ____________________ Model ______________________ Year ______

Registered Owner’s Name __________________________ Registration State & No. _________________________

Address of Vehicle’s Location _____________________________________________________________________

Purchase Price $_______________Current Value $_______________ Account/Loan No._______________________

Lender’s Name and Address_______________________________________________________________________

Original Loan Amount $______________ Current Loan Balance $______________ Monthly Payment $_________

Mileage ________________ Current condition of car ________________________ Purchase date ______________

Item 22. Real Property

List all real estate held by you, your spouse, or your dependents, or held by others for the benefit of you, your spouse, or your dependents.

Type of Property________________________________ Property’s Location_______________________________

Name(s) on Title and Ownership Percentages__________________________________________________________

Acquisition Date________________ Purchase Price $____________________ Current Value $_________________

Basis of Valuation_______________________________________ Loan or Account No._______________________

Lender’s Name and Address_______________________________________________________________________

Current Balance On First Mortgage $__________________ Monthly Payment $__________

Other Loan(s) (describe)_________________________________________ Current Balance $_________________

Monthly Payment $__________________ Rental Unit?_________________ Monthly Rent Received $___________

Type of Property________________________________ Property’s Location_______________________________

Name(s) on Title and Ownership Percentages__________________________________________________________

Acquisition Date________________ Purchase Price $____________________ Current Value $_________________

Basis of Valuation_______________________________________ Loan or Account No._______________________

Lender’s Name and Address_______________________________________________________________________

Current Balance On First Mortgage $__________________ Monthly Payment $__________

Other Loan(s) (describe)_________________________________________ Current Balance $_________________

Monthly Payment $__________________ Rental Unit?_________________ Monthly Rent Received $___________ Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 28 of 39 Page ID #:5464

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Item 23. Digital Assets

Have you used or held a Digital Asset, including but not limited to cryptocurrencies, tokens (e.g. security tokens, non-fungible tokens, utility tokens, e-Money tokens), stablecoins, and/or smart contracts Yes/No

This Digital Asset section does NOT request that you provide information necessary to transfer, dispose of or otherwise exert control over the digital asset.

If yes, and the value of the asset is greater than $2,500, list and describe all Digital Assets1, including but not limited to all cryptocurrency, tokens (e.g. security tokens, non-fungible tokens, utility tokens, e-Money tokens), stablecoins, and smart contracts held or used by you, your spouse, or your dependents.

Provide a copy of account statements received or available from a cryptocurrency exchange, IRS forms 1099-K, 1099-B or 1099-MISC received from a cryptocurrency exchange, or a money services business, and include Form 8949, as filed with your tax returns (see also, Item 29. Tax Returns).

In response, please include the name of the Digital Asset, amount (number of coins/tokens), acquisition date, acquisition value, disposition date; and identify how the company received each Digital Asset, whether transferred, retrieved, exchanged, purchased or otherwise acquired in exchange for value.

Name of Digital Asset and Symbol (e.g., Bitcoin, Ether) Description of Digital Asset (e.g.

coin, security token, stablecoin) Amount (e.g., number of coins, tokens) Acquisition Date Acquisition Value (USD) Disposition Date Disposition Value (USD) How Sent/Received (e.g.

transferred, retrieved, exchanged, purchased, etc.)

List all exchanges, including centralized and decentralized (e.g. peer-to-peer exchanges) exchanges, where the company engaged in Digital Asset transactions and the wallet where the digital asset is stored.

In response to this section, include the name and description of the exchange, any account number for the affiliated exchange and the amounts of assets currently held at the exchange.

Also include, all wallets where the Digital Asset is stored, including the wallet address/identifier, whether the wallet is hosted or un-hosted, the type of wallet (e.g. mobile, desktop, hardware, or other cold wallet); and, if an un-hosted wallet, provide the physical address and digital identifiers for that wallet.

Name of Digital Asset/Symbol (e.g., Bitcoin, Ether) Name and Description of Exchange Account Numbers Wallet Address/Identifier And/or Physical Address Wallet Description, including Type and Hosted/Un- Hosted Amount and kind of Assets Held (number and name of each kind of coins/tokens)

1 The term “Digital Asset,” as used in this document, refers to an asset that is issued and transferred using distributed ledger or blockchain technology, including, but not limited to, “cryptocurrency,” “virtual currency,” “coins,” “stablecoins,” and “tokens.” (in part from https://www.sec.gov/files/dlt-framework.pdf) Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 29 of 39 Page ID #:5465

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For all transactions effected by a peer-to-peer, decentralized exchange, provide all HASH or Transaction IDs, all Public Keys, and any other identifiers:

Name of Digital Asset/Symbol (e.g., Bitcoin, Ether) Amount and kind of Assets Held (number and name of each kind of coins/tokens) HASH/Transaction IDs Public Keys Other Identifiers

Did you over the last three years, or do you presently, participate in any crypto-mining and staking or crypto lending? Yes/No

Please list all additional income received from Digital Asset-related activity, including income from crypto-mining and staking, airdrops, hard forks and crypto lending interest:______________________________________________

Please list all smart contracts that you have entered into in exchange for any income, future income, or an asset:______________________________________________

For each smart contract that the company has entered into, provide the description of the contract, amount, electronic signature date, current value, description of the oracle, and the blockchain and/or distributed ledger where the smart contract has been or will be executed, in the below table:

Description Amount Electronic Signature Date Current Value (in USD) Oracle DTL/Blockchain

Item 24. Other Assets

List all other assets not identified above, held by you, your spouse, or your dependents, including but not limited to, patents and other intellectual property.

Description

Location

Acquisition Current Cost Value ____________________________ _____________________________________________ $__________ $_________

____________________________ _____________________________________________ $__________ $_________

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Item 25. Credit Cards

List each credit card held by you, your spouse, or your dependents. Also list any other credit cards that you, your spouse, or your dependents use.

Name of Credit Card (e.g., Visa, Account No.

Name(s) on Current Minimum MasterCard, Department Store)

Account Balance Monthly Payment

_______________________ __________________ _________________ $____________ $________________

Item 26. Taxes Payable

List all taxes, such as income taxes or real estate taxes, owed by you, your spouse, or your dependents.

Type of Tax

Amount Owed

Year Incurred _______________________________ $__________________________ ___________________

_______________________________ $__________________________ ___________________

Item 27. Judgments or Settlements Owed

List all judgments or settlements owed by you, your spouse, or your dependents.

Opposing Party’s Name & Address__________________________________________________________________

Court’s Name & Address____________________________________________________

Docket No._____________ Nature of Lawsuit_______________________________________

Date______________ Amount $______________

Item 28. Other Loans and Liabilities

List all other loans or liabilities in your, your spouse’s, or your dependents’ names.

Name & Address of Lender/Creditor ________________________________________________________________ Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 31 of 39 Page ID #:5467

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Nature of Liability___________________________________ Name(s) on Liability__________________________

Date of Liability___________________ Amount Borrowed $________________ Current Balance $______________

Payment Amount $_____________________ Frequency of Payment_____________________

Name & Address of Lender/Creditor ________________________________________________________________

Nature of Liability_____________________________________ Name(s) on Liability_________________________

Date of Liability___________________ Amount Borrowed $________________ Current Balance $______________

Payment Amount $_____________________ Frequency of Payment_____________________

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OTHER FINANCIAL INFORMATION

Item 29. Tax Returns

List all federal tax returns that were filed during the last three years by or on behalf of you, your spouse, or your dependents. Provide a copy of each signed tax return that was filed during the last three years, including amendments (if any).

Tax Year

Name(s) on Return

Refund Expected ___________ ____________________________________________________________ $_______________

___________ ____________________________________________________________ $_______________

Item 30. Applications for Credit

List all applications for bank loans or other extensions of credit that you, your spouse, or your dependents have submitted within the last two years. Provide a copy of each application, including all attachments.

Name(s) on Application

Name & Address of Lender ________________________ ____________________________________________________________

________________________ ____________________________________________________________

Item 31. Trusts and Escrows

List all trusts, escrows or other entities holding funds or other assets for which you, your spouse, or dependents have any benefit or legal interest in, directly or indirectly. Provide copies of all documents related to the creation, control or administration of the entity and the assets in the entity, and any amendments. For each entity list:

Name and Address of the trust: __________________________________________________________________

Name and Address of any Trustee, Escrow Agent or other person with authority over the entity or its assets including any person with dominion, use, administrative control or ownership of the subject assets and identify that person’s role:_______________________________________________________________________________________

Date Established and any date of amendments:_____________________________________________________

Name and Address of any Settlor, Grantor or other persons who have at any time conveyed assets to the entity:______________________________________________________________________________________

Name and Address of any Protector or other persons capable of directing the actions of any party that is administering the entity: ___________________________________________________________________________________

Name and Address of any Beneficiary or other person that can receive any value or benefit from the entity:______________________________________________________________________________________

The present market value of the assets with a description of how that value was calculated:__________________________________________________________________________________

A description of any uses made of the assets while situated in the entity, including but not limited to any loans from the assets or use of the assets as collateral or guaranty or any investments or income involving the assets:______________________________________________________________________________________

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Item 32. Transfers of Assets

List all payments, transfers, or assignments of assets worth more than $2,500, in the aggregate, to any individual or entity during the previous three years. For each such person, state the total amount transferred during that period.

Transferee’s Name, Address, & Relationship Property Aggregate Transfer Type of Transfer Transferred Value Date

(e.g., Loan, Gift)

______________________________________ ________________ $____________ __________ _______________

Item 33. Foreign Assets and Liabilities

In any location outside of the United States, do you, or your spouse, or your dependents have any of the following:

Do you, your spouse, or your dependents have, in any location outside of the United States, any assets not otherwise identified in this disclosure (including, but not limited to real estate, bank accounts, investments, or other financial products)?

Yes/No

Do you, your spouse or your dependents have, in any location outside of the United States, any liabilities not otherwise identified in this disclosure (including, but not limited to liens, credit card debt or other financial obligations)?

Yes/No

If yes, to any of the above, please separately list below each asset and liability category, their location, the acquisition cost and current value. Please include a copy of all Reports of Foreign Bank and Financial Accounts (FBAR) filings.

Asset Category

Asset Location

Acquisition Current Cost

Value ____________________________ _____________________________________________ $__________ $_________

____________________________ _____________________________________________ $__________ $_________

Liability Category

Liability Location

Acquisition Current Cost

Value ____________________________ _____________________________________________ $__________ $_________

____________________________ _____________________________________________ $__________ $_________

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Item 34. Foreign Positions

Have you, your spouse or your dependents been involved in the creation of, or have any interest in, any asset or entity located outside the United States? Yes/No

Have you, your spouse or your dependents, in the last three years, transferred or been involved in the transfer of any income or assets to any entity outside the United States? Yes/No

Do you, your spouse or your dependents hold any corporate office or partnership in any entity located outside the United States? Yes/No

Are you, your spouse or your dependents the trustee, escrow agent or similar role in any trust or similar entity outside the United States? Yes/No

If yes to any of the above, please separately list below the assets and their value, the recipient or transferee entity of the assets, the country under which such entity is organized and your, your spouse, or your dependent’s position with such entity. Please include a copy of all organizing or controlling documents and any amendments for each such entity.

Name of Entity or Trust

Country ________________________ ____________________________________________________________

________________________ ____________________________________________________________

Item 35. Credit Report

Provide a copy of you and your spouse’s most recent credit report, within the last 60 days upon receipt of this form, from a credit bureau.

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SUMMARY FINANCIAL SCHEDULES

Item 36. Combined Balance Sheet for You, Your Spouse, and Your Dependents

ASSETS

LIABILITIES

Cash on Hand (Item 12)

Credit Cards (Item 25)

Cash in Financial Institutions (Item 12)

Motor Vehicles - Liens (Item 21)

U.S. Government Securities (Item 13)

Real Property - Encumbrances (Item 22)

Publicly Traded Securities (Item 14)

Loans Against Publicly Traded Securities (Item 14)

Other Business Interests (Item 15)

Taxes Payable (Item 26)

Judgments or Settlements Owed to You (Item 16)

Judgments or Settlements Owed (Item 27)

Other Amounts Owed to You (Item 17)

Surrender Value of Life Insurance (Item 18)

Other Loans and Liabilities (Item 28)

Deferred Income Arrangements (Item 19)

Foreign Liabilities (Item 34)

Personal Property (Item 20)

Other Liabilities (Itemize):

Motor Vehicles (Item 21)

Real Property (Item 22)

Digital Assets (Item 23)

Foreign Assets (Item 34)

Other Assets (Itemize):

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Item 37. Combined Average Monthly Income and Expenses for You, Your Spouse, and Your Dependents for the Last 6 Months

Provide the average monthly income and expenses for you, your spouse, and your dependents for the last 6 months. Do not include credit card payments separately; rather, include credit card expenditures in the appropriate categories.

INCOME

EXPENSES

Salary - After Taxes $___________ Mortgage Payments for Residence(s) $___________ Fees, Commissions, and Royalties $___________ Property Taxes for Residence(s) $___________

Rental Property Expenses, Including

Interest $___________ Mortgage Payments, Taxes, and Insurance $___________

Car or Other Vehicle Lease or Loan

Dividends and Capital Gains $___________ Payments $___________ Gross Rental Income $___________ Food Expenses $___________ Profits from Sole Proprietorships $___________ Clothing Expenses $___________ Distributions from Partnerships,

S-Corporations, and LLCs $___________ Utilities $___________ Distributions from Trusts and

Estates $___________ Medical Expenses, Including Insurance $___________ Distributions from Deferred

Income Arrangements $___________ Other Insurance Premiums $___________ Social Security Payments $___________ Other Transportation Expenses $___________ Alimony/Child Support Received $___________ Other Household Expenses $___________ Gambling Income $___________ Other Expenses (Itemize)

Digital Assets Income $___________

Other Income (Itemize)

_________________________________ $___________ __________________________ $___________ _________________________________ $___________ __________________________ $___________ _________________________________ $___________ __________________________ $___________ _________________________________ $___________ Total Income $ ___________ Total Expenses $___________

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ATTACHMENTS

Item 38. Documents Attached to this Financial Disclosure Form

Indicate whether the below documents are being submitted with the financial disclosure form.

Item No. Document Description of Document Relates To

Item 23.

Digital Asset Account Statements and Tax Forms

Yes/Not Applicable Item 29.

Tax Returns

Yes/Not Applicable Item 30.

Applications of Credit

Yes/Not Applicable Item 31.

Trusts and Escrows Documents

Yes/Not Applicable Item 33.

Reports of Foreign Bank & Financial Account Filings

Yes/Not Applicable Item 35.

Credit Report

Yes/Not Applicable

List any other documents and forms as well as the item number, in the financial form, the document relates to and a description of the document.

Item No. Document

Description of Document

Relates To ______________

_______________________________________________________________________

______________

_______________________________________________________________________

______________

_______________________________________________________________________

______________

_______________________________________________________________________

______________

_______________________________________________________________________

______________

_______________________________________________________________________

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WARNING:

I am submitting this financial disclosure form with the understanding that it may affect action by the Consumer Financial Protection Bureau or a federal court. The responses I have provided to the items above are true and contain all the requested facts and information of which I have notice or knowledge. I have provided all requested documents in my custody, possession, or control. I further declare that I have no assets, owned either directly or indirectly (including owned by my spouse or dependents), or income of any nature other than as shown in, or attached to, this statement. I understand that the Consumer Financial Protection Bureau is a federal agency and that this financial disclosure form is being submitted in connection with a matter within its jurisdiction. I understand that a false, fictitious, or fraudulent statement or representation on this form, or the concealment of any material fact is a violation of Federal law and could result in criminal prosecution, and significant civil penalties. I understand that a false statement is punishable under 18 U.S.C. §§ 1001 and 3571 by imprisonment of not more than five years and/or a fine of up to $250,000.

Executed on:

______________________

_________________________________

(Date)

Signature

Case 8:20-cv-00043-SB-ADS Document 241 Filed 09/23/21 Page 39 of 39 Page ID #:5475

Memorandum (Dec. 2022)

PDF of this document (8 pages)

Page 305

NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CONSUMER FINANCIAL PROTECTION BUREAU,

Plaintiff-Appellee,

JAWAD NESHEIWAT,

Defendant-Appellant,

and

CHOU TEAM REALTY, LLC, FKA Chou Team Realty, Inc., DBA Monster Loans, DBA MonsterLoans; et al.,

Defendants.

No.

21-56052

D.C. No.

8:20-cv-00043-SB-ADS

MEMORANDUM*

Appeal from the United States District Court for the Central District of California Stanley Blumenfeld, Jr., District Judge, Presiding

Submitted November 17, 2022** Pasadena, California

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.

** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). FILED

DEC 27 2022

MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS Case 8:20-cv-00043-SB-ADS Document 249 Filed 12/27/22 Page 1 of 8 Page ID #:5543

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Before: WARDLAW and W. FLETCHER, Circuit Judges, and KENNELLY,*** District Judge.

Jawad Nesheiwat (Nesheiwat) appeals the district court’s grant of summary judgment and its award of restitution, civil penalties, and injunctive relief to the Consumer Protection Financial Bureau (CFPB). As the parties are familiar with the facts, we do not restate them here. We have jurisdiction under 28 U.S.C. § 1291, and we affirm. There are no genuine disputes of material facts regarding Nesheiwat’s liability under provisions of the Financial Credit Reporting Act (FCRA), 12 U.S.C. § 1681b(f)(1), the Telemarketing Sales Rule (TSR), 16 C.F.R. §§ 310.3(a)(2)(x), (a)(5), and the Consumer Financial Protection Act (CFPA), 12 U.S.C. §§ 5536(a)(1)(B), (a)(3). Nesheiwat’s baseless evidentiary objections, bald assertions that a jury could find other individuals ultimately (or similarly) responsible, and various procedural challenges are unavailing. 1.

Undisputed record evidence shows that Nesheiwat recklessly violated the FCRA by using and obtaining consumer reports for unauthorized purposes. 12 U.S.C. § 1681b(f)(1). Nesheiwat played a central role in a scheme to obtain prescreened lists of student loan borrowers under false pretenses, purporting to extend a “firm offer of credit or insurance,” id. § 1681b(c)(1)(B)(i), but in fact

*** The Honorable Matthew F. Kennelly, United States District Judge for the Northern District of Illinois, sitting by designation. Case 8:20-cv-00043-SB-ADS Document 249 Filed 12/27/22 Page 2 of 8 Page ID #:5544

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marketing false debt relief services offered through student loan debt relief (SLDR) companies. Nesheiwat knew these lists were used for an unauthorized purpose and instructed employees to prepare fraudulent “compliant mailers” to avoid detection by regulators.

Undisputed record evidence shows that Nesheiwat recklessly violated the TSR by charging advance fees to individuals for debt relief services, 16 C.F.R. § 310.4(a)(5), and misrepresenting material aspects of such services, id. § 310.3(a)(2)(x). Nesheiwat is individually liable for corporate violations of the TSR because “(1) he participated directly in the [unlawful] acts or had the authority to control them and (2) he had knowledge of [such conduct] . . . or was aware of a high probability of” such conduct and “intentional[ly] avoid[ed] . . . the truth.” FTC v. Stefanchik, 559 F.3d 924, 931 (9th Cir. 2009). Nesheiwat edited and approved telemarketing scripts for the SLDR companies. He directed managers at such companies to use these scripts, which instructed sales associates to collect advance fees, and materially misrepresented the SLDR companies’ services—promising false benefits such as lower interest rates and improved credit scores.

Nesheiwat provided “substantial assistance” to the SLDR companies in violating both provisions of the TSR. 16 C.F.R. § 310.3(b). First, neither party disputes that the SLDR companies violated the TSR. Second, Nesheiwat provided Case 8:20-cv-00043-SB-ADS Document 249 Filed 12/27/22 Page 3 of 8 Page ID #:5545

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more than mere “casual or incidental” assistance to the companies by approving and editing telemarketing scripts. FTC v. Chapman, 714 F.3d 1211, 1216–17 (10th Cir. 2013). Third, undisputed evidence shows that Nesheiwat knew, or consciously avoided knowing, that the companies were violating the TSR. 3.

Undisputed record evidence shows that Nesheiwat violated the CFPA. Evidence of Nesheiwat’s role in the SLDR companies’ telemarketing program makes out a basis for liability under both the deceptive acts provision of the TSR, 16 C.F.R. § 310.3(a)(2)(x), and a related provision of the CFPA, 12 U.S.C. § 5536(a)(1)(B). Additionally, Nesheiwat played a central role in the companies’ direct mail marketing, using contact information obtained in violation of the FCRA to encourage consumers to call in. These mailers misrepresented material aspects of the SDLR companies’ debt relief services in a manner “likely to mislead consumers acting reasonably under the circumstances,” CFPB v. Gordon, 819 F.3d 1179, 1192–93 (9th Cir. 2016) (citing FTC v. Pantron I Corp., 33 F.3d 1088, 1095 (9th Cir. 1994)), by touting lower interest rates, improved credit scores, and false claims that the Department of Education would become consumers’ new loan servicer.

Nesheiwat is individually liable for corporate violations of the CFPA. Gordon, 819 F.3d at 1193. He “participated directly” in these deceptive practices and “had the authority to control them.” Id. (quoting Stefanchik, 559 F.3d at 931). Case 8:20-cv-00043-SB-ADS Document 249 Filed 12/27/22 Page 4 of 8 Page ID #:5546

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Nesheiwat was also “recklessly indifferent to the truth or falsity of the misrepresentations,” id., and did not attempt to verify the truthfulness of statements in SLDR companies’ telemarketing and direct mail materials.

Nesheiwat provided substantial assistance to the SLDR companies in violating the CFPA. Our analysis regarding Nesheiwat’s liability for substantial assistance under the TSR largely tracks our analysis under the CFPA. First, neither party disputes that the SLDR companies violated the CFPA by making false promises to consumers via direct mail and sales calls. Second, Nesheiwat provided substantially more than “mere casual or incidental” assistance to the companies in their marketing program. Chapman, 714 F.3d at 1216–17. Third, undisputed evidence shows that Nesheiwat acted recklessly by failing to verify the truthfulness of the SLDR companies’ marketing materials.

Nesheiwat asserts that CFPB filed this action outside the CFPA’s three-year statute of limitations. 12 U.S.C. §§ 5564(b), (g)(1). He “bears the burden of proving that the plaintiff filed beyond the limitations period.” Payan v. Aramark Mgmt. Servs. Ltd. P’ship, 495 F.3d 1119, 1122 (9th Cir. 2007) (citations omitted). By merely gesturing at a handful of consumer complaints submitted to CFPB, he fails to carry his burden . At most, the 24 consumer complaints he identifies disclose some elements of the SLDR companies’ violations of the FCRA, TSR, and CFPA. None identifies Nesheiwat by name. Nesheiwat provides Case 8:20-cv-00043-SB-ADS Document 249 Filed 12/27/22 Page 5 of 8 Page ID #:5547

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no evidence that CFPB was aware of these complaints. Standing alone, they offer no insight into CFPB’s “date of discovery.” 12 U.S.C. § 5564(g)(1). 5.

The district court did not abuse its discretion in ordering restitution, civil penalties, and injunctive relief. To calculate restitution, the district court faithfully applied our circuit’s “two-step burden-shifting framework.” Gordon, 819 F.3d at 1195. At step one, CFPB bore its “burden of proving that the amount it seeks in restitution reasonably approximates the defendant’s unjust gains,” measured as net revenue. Id. (citation omitted). CFPB relied on undisputed evidence to calculate net revenue: the amount of fees charged to consumers minus refunds—$19,699,870. At step two, Nesheiwat failed to “demonstrate that the net revenues figure overstates the defendant’s unjust gains.” Id. The district court awarded “legal restitution” to CFPB. Accordingly, we need not decide what impact, if any, the Supreme Court’s holding in Liu v. SEC, 140 S. Ct. 1936 (2020), has on this appeal.

The district court did not abuse its discretion in imposing second-tier civil penalties for Nesheiwat’s reckless violations of Federal consumer financial law. 12 U.S.C. § 5565(c)(2)(B); 12 C.F.R. § 1083.1(a). Nesheiwat offers no legal argument to contest the district court’s award, instead asserting that such penalties are “seriously and unjustifiably disproportionate to the penalties imposed against” other defendants. He has waived his challenge. United States v. Cazares, 788 F.3d Case 8:20-cv-00043-SB-ADS Document 249 Filed 12/27/22 Page 6 of 8 Page ID #:5548

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956, 983 (9th Cir. 2015) (“The failure to cite to valid legal authority waives a claim for appellate review.”); Fed. R. App. P. 28(a)(8)(A). 7.

The district court did not abuse its discretion in granting a permanent injunction “broad[] enough to prevent [the defendant] from engaging in similarly illegal practices in [the] future.” Litton Indus., Inc. v. FTC, 676 F.2d 364, 370 (9th Cir. 1982) (quoting FTC v. Colgate-Palmolive Co., 380 U.S. 374, 395 (1965)). Fencing-in provisions, such as restrictions on an individual’s ability to work in a specific industry, “will be upheld so long as [they] bear[] a ‘reasonable relation to the unlawful practices found to exist.’” FTC v. Grant Connect, LLC., 763 F.3d 1094, 1105 (9th Cir. 2014) (quoting Colgate-Palmolive, 380 U.S. at 394–95). Nesheiwat “acted in blatant and utter disregard of the law.” Litton Indus., 676 F.2d at 371. Nesheiwat’s “elaborate and wide-ranging” unlawful conduct spanned multiple industries. Accordingly, the district court did not abuse its discretion in barring Nesheiwat from engaging in debt relief, mortgage loans, and telemarketing services, and obtaining consumer data.

We deem Nesheiwat’s other challenges to the district court’s holding waived. Nesheiwat waived his challenges to the court’s Local Rules and standing order on summary judgment. See Crime Just. & Am., Inc. v. Honea, 876 F.3d 966, 978 (9th Cir. 2017) (issues raised in captions in brief which are not supported by argument are waived). He also waived challenges to the district court’s denial of Case 8:20-cv-00043-SB-ADS Document 249 Filed 12/27/22 Page 7 of 8 Page ID #:5549

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his evidentiary objections. See Palmer v. IRS, 116 F.3d 1309, 1312–13 (9th Cir. 1997) (issue raised in motion that district court refused to consider “because it was untimely and in contravention of local rules” which a party does not appeal is waived).

AFFIRMED.

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