Consumer Advocacy Center Inc., d/b/a Premier Student Loan Center; True Count Staffing Inc., d/b/a SL Account Management; Prime Consulting LLC, d/b/a Financial Preparation Services; Albert Kim; Kaine Wen; and Tuong Nguyen

Agency: Consumer Financial Protection Bureau
Date: Oct. 21, 2019
Type: enforcement action
Source: consumerfinance.gov/enforcement/actions/premier-student-loan-center-et
Pages: 539
PDFs: 17 documents (links below)

Documents in this case

Document · 29 p.
Complaint · Oct. 2019 · 49 p.
Amended complaint · Jan. 2021 · 58 p.
Judgment · Jan. 2021 · 21 p.
Judgment · Jan. 2021 · 21 p.
Judgment · Jan. 2021 · 35 p.
Amended complaint · Apr. 2021 · 78 p.
Stipulation · June 2021 · 15 p.
Judgment · July 2021 · 18 p.
Judgment · July 14, 2021 · 23 p.
Amended complaint · Aug. 2021 · 78 p.
Judgment · Mar. 2022 · 22 p.
Stipulation · May 2022 · 14 p.
Stipulation · June 2022 · 30 p.
Judgment · July 2023 · 36 p.
Dismissal · Aug. 2023 · 4 p.
Document · Aug. 2025 · 7 p.

Case summary

On October 21, 2019, the Bureau along with the states of Minnesota, North Carolina, and California filed a complaint and sought a temporary restraining order and preliminary injunction against Consumer Advocacy Center Inc., d/b/a Premier Student Loan Center (Premier); True Count Staffing Inc., d/b/a SL Account Management (True Count); Prime Consulting LLC, d/b/a Financial Preparation Services (Prime); Albert Kim; Kaine Wen; and Tuong Nguyen. The third amended complaint alleged the debt relief companies operate as a common enterprise and have engaged in deceptive practices and charged unlawful advance fees in connection with the marketing and sale of student loan debt relief services to consumers. The Bureau also alleged the individuals substantially assisted the student loan debt relief companies. The complaint also named several relief defendants and sought disgorgement of those relief defendants’ ill-gotten gains.

On August 26, 2020, the court entered a corrected, amended stipulated final judgment as to defendants Prime and Horizon Consultants LLC (Horizon). The order imposes a judgment of $95,057,757 against Prime to provide redress to consumers. Horizon is jointly and severally liable for $12,942,045 of this amount. Full payment of these amounts is suspended based on Prime’s and Horizon’s demonstrated inability to pay following, among other things, their turnover of assets and their payment of a $1 civil money penalty to the Bureau. The order also bans Prime and Horizon from telemarketing or offering or providing debt relief services.

On August 28, 2020, the court entered a stipulated final judgment and order as to defendant Tuong Nguyen and relief defendant TN Accounting Inc. The order imposes a judgment of $95,057,757 against Nguyen to provide redress to consumers. Relief defendant TN Accounting is jointly and severally liable for $444,563 of this amount. Full payment of these amounts is suspended based on their demonstrated inability to pay following, among other things, Nguyen and TN Accounting’s turnover of assets and Nguyen’s payment of a $1 civil money penalty to the Bureau. The order also bans Nguyen from telemarketing or offering or providing debt relief services.

On September 8, 2020, the court entered a stipulated final judgment as to relief defendants Hold the Door, Corp. and Mice and Men LLC. The order imposes a judgment of $1,638,687 against relief defendant Hold the Door and $5,041,069 against relief defendant Mice and Men to provide redress to consumers. Full payment of these amounts will be suspended based on their demonstrated inability to pay following their turnover of assets.

On December 15, 2020, the court entered a default judgment against First Priority LLC and True Count Staffing Inc. The order imposes a judgment of $55,360,817.14 and $165,848.05 against True Count and First Priority, respectively, to provide redress to consumers. The order also requires True Count to pay a $30 million penalty, of which $29,850,000 is payable to the Bureau. It also requires First Priority to pay $3.75 million in penalties, of which $2,470,000 is payable to the Bureau. The order also bans the defaulted defendants from telemarketing or offering or providing debt relief services.

On June 15, 2021, the court entered a stipulated final judgment and order as to relief defendant Judy Dai. The order imposes a judgment of $3,088,381.80 against Dai for the purpose of providing redress to consumers.

On July 1, 2021, the court entered a stipulated final judgment and order as to relief defendants 1st Generation Holdings, LLC (1st Generation) and Infinite Management Corp (Infinite Management). The order imposes a judgment of $3,984,779.28 and $2,049,189.07 against 1st Generation and Infinite Management, respectively, for the purpose of providing redress to consumers. Full payment of the amount imposed on Infinite will be suspended based on its demonstrated inability to pay following its turnover of assets.

On July 14, 2021, the court entered a stipulated final judgment and order as to defendant Consumer Advocacy Center, Inc. (CAC). The order imposes a judgment of $35,105,017.93 against CAC for the purpose of providing consumer redress. The amount of redress to be collected will be based on the amount recovered by the bankruptcy trustee and the resolution of multiple claims against the CAC bankruptcy estate. The court also imposed a $1 civil money penalty in favor of the Bureau and against the CAC bankruptcy estate. The court also permanently restrained CAC from participating in any debt-relief service or telemarketing any consumer financial product.

On March 22, 2022, the court entered a stipulated final judgement and order as to defendant TAS 2019 LLC. The order imposes a judgment of $2,866,314.24 in consumer redress, a $1 civil money penalty, and injunctive relief permanently banning TAS 2019 LLC from participating in any debt relief service or telemarketing any consumer financial product.

On May 24, 2022, the court entered a stipulated final judgment and order against relief defendant Sarah Kim imposing a judgment amount of $483,662.60, which was suspended upon her payment of $85,000 and turnover of certain assets for liquidation.

On June 10, 2022, the court entered a stipulated final judgment and order as to defendant Albert Kim. The order imposes a judgment of $95,057,757 in consumer redress, a $1 civil money penalty, and injunctive relief including banning him from participating in any debt relief service or telemarketing any consumer financial product and making misrepresentations about certain aspects of any consumer financial products or services. Full payment of the judgment is suspended based on a demonstrated inability to pay following, among other things, Kim’s turnover of assets and payment of a $1 civil money penalty.

On August 8, 2023, the Bureau voluntarily dismissed its claim against relief defendant Anan Enterprise, Inc.

On July 7, 2023, the court granted the Bureau’s motion for summary judgment on all the Bureau’s claims against defendant, Kaine Wen. The order imposes a judgment of $95,057,757 in consumer redress, a $148 million civil money penalty, and imposes broad injunctive relief, including a permanent, industry-wide ban on Wen. Wen appealed, and on August 7, 2025, the U.S. Court of Appeals for the Ninth Circuit affirmed the district court’s summary judgment order against Wen.

Document

PDF of this document (29 pages)

Page 2

Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page1of29 Page ID #:6008

NO JS-6 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Bureau of Consumer Financial CASE NO. 8:19-cv-01998 MWE (KS)

Protection, et al., CORRECTED, AMENDED

Plaintit® STIPULATED FINAL aus, JUDGMENT AND ORDER AS TO DEFENDANTS PRIME v. CONSULTING LLC AND

Consumer Advocacy Center Inc., d/b/a HORIZON CONSULTANTS LLC

Premier Student Loan Center, et al., Court: Hon. Michael W. Fitzgerald

Defendants. Courtroom 5A

STIPULATED FINAL JUDGMENT AND ORDER AS TO DEFENDANTS PRIME CONSULTING LLC AND HORIZON CONSULTANTS LLC

permanent injunctive relief, damages, rescission or reformation of contracts,

STIPULATED FINAL JUDGMENT AND ORDER

Page 3

STIPULATED FINAL JUDGMENT AND ORDER refunds of moneys paid, restitution, disgorgement or compensation for unjust enrichment, civil money penalties, and other monetary and equitable relief from: (1) Defendants Consumer Advocacy Center Inc. d/b/a Premier Student Loan Center; True Count Staffing Inc. d/b/a SL Account Management; Prime Consulting LLC d/b/a Financial Preparation Services; TAS 2019 LLC d/b/a Trusted Account Services; Horizon Consultants LLC; First Priority LLC d/b/a Priority Account Management; Albert Kim; Kaine Wen; and Tuong Nguyen; and (2) Relief Defendants Infinite Management Corp., f/k/a Infinite Management Solutions Inc.; Hold The Door, Corp.; TN Accounting Inc.; Mice and Men LLC; Sarah Kim; 1st Generation Holdings, LLC; and Anan Enterprise, Inc. The Amended Complaint alleges violations of sections 1031(a) and 1036(a) of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a); the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. § 6102(c)(2) (Telemarketing Act), based on alleged violations of the Telemarketing Sales Rule (TSR), 16 C.F.R. pt. 310; the Minnesota Prevention of Consumer Fraud Act (MNCFA), Minn. Stat. §§ 325F.68-.694; the Minnesota Uniform Deceptive Trade Practices Act (MNDTPA), Minn. Stat. §§ 325D.43-.48; the North Carolina Debt Adjusting Act (NCDAA), N.C. Gen. Stat. § 14-423 et seq.; the North Carolina Telephonic Seller Registration Act (NCTSRA), N.C. Gen. Stat. § 66-260 et seq.; the North Carolina Unfair and Deceptive Practices Act (NCUDPA), N.C. Gen. Stat. § 75-1.1; and the California Business and Professions Code 17200 et seq. (the Unfair Competition Law or UCL) in connection with the above-named defendants’ marketing and sale of debt-relief services. The (1) Plaintiffs and (2) Defendants Prime Consulting LLC and Horizon Consultants LLC (Settling Defendants) 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 them arising from the conduct Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 2 of 29 Page ID #:6009

Page 4

STIPULATED FINAL JUDGMENT AND ORDER alleged in the Amended Complaint.

THEREFORE, IT IS ORDERED:

FINDINGS 1.

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

Settling Defendants neither admit nor deny the allegations in the Amended Complaint, except as specifically stated herein. For purposes of this Order, Settling Defendants admit the facts necessary to establish the Court’s jurisdiction over them and the subject matter of this action. 3.

Settling 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. 4.

Entry of this Order is in the public interest.

DEFINITIONS The following definitions apply to this Order:

“Affected Consumers” includes any consumer who paid Defendants or their officers, agents, servants, employees, or attorneys for any Debt-Relief Service from November 2, 2015, to October 23, 2019. 6.

“Assets” means any legal or equitable interest in, right to, or claim to any real, personal, or intellectual property owned or controlled by, or held, in whole or in part for the benefit of, or subject to access by any Defendant, wherever located, whether in the United States or abroad. This includes, but is not limited to, chattel, goods, instruments, equipment, fixtures, general intangibles, effects, leaseholds, contracts, mail or other deliverables, shares of stock, commodities, futures, inventory, checks, notes, accounts, credits, receivables (as those terms are Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 3 of 29 Page ID #:6010

Page 5

STIPULATED FINAL JUDGMENT AND ORDER defined in the Uniform Commercial Code), funds, cash, and trusts, including but not limited to any trust held for the benefit of any Defendant’s minor children, or any of Defendants’ spouses.

“Assist[ing] Others” includes, but is not limited to: a.

consulting in any form whatsoever;

providing paralegal or administrative support services; c.

performing customer service functions, including but not limited to, receiving or responding to consumer complaints; d.

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 or advertisement;

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

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

performing marketing, billing, or payment services of any kind; and h.

acting or serving as an owner, officer, director, manager, or principal of any entity.

“Bankruptcy Proceeding” means In re Consumer Advocacy Center Inc., Case No. 19-10655, currently pending in the United States Bankruptcy Court, Southern District of Florida, Fort Lauderdale Division. Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 4 of 29 Page ID #:6011

Page 6

STIPULATED FINAL JUDGMENT AND ORDER 9.

“Bureau” means the Bureau of Consumer Financial Protection. 10.

“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:

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 b.

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. 11.

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

Page 7

STIPULATED FINAL JUDGMENT AND ORDER Solutions, Prime Document Services, Financial Accounting Center, Doc Management Solutions, First Priority LLC, ALW Loans, Administrative Accounting Center, Best Choice Financial Center, First Document Services, Global Direct Accounting Solutions, Keystone Document Center, Pacific Palm Financial Group, Pacific Shores Advisory, Sequoia Account Management, Signature Loan Solutions, Yellowstone Account Services, ClearStudentLoanDebt, Clear Student Loan Debt, Trusted Account Services, Premier Student Loan Center, and Priority Account Management; b.

“Individual Defendants” means Albert Kim, a/k/a Albert King; Kaine Wen, a/k/a Wenting Kaine Dai, Wen-Ting Dai, Wen Ting Dai, Kaine Dai, and Kaine Wen Dai; and Tuong Nguyen, a/k/a Tom Nelson, collectively, or in any combination, and each of them by any other names by which they might be known; c.

“Receivership Defendants” means True Count Staffing Inc., Prime Consulting LLC, TAS 2019 LLC, Horizon Consultants LLC, and First Priority LLC, collectively, or in any combination, and their successors and assigns;

“Relief Defendants” means:

Infinite Management Corp., f/k/a Infinite Management Solutions Inc.; Hold The Door, Corp.; TN Accounting Inc.; Mice and Men LLC; 1st Generation Holdings, LLC; and Anan Enterprise, Inc., collectively, or in any combination, and their successors and assigns, and each of them by any other names by which they might be known; and ii.

Sarah Kim, and any other names by which she might be known.

Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 6 of 29 Page ID #:6013

Page 8

STIPULATED FINAL JUDGMENT AND ORDER e.

“Settling Defendants” means Prime Consulting LLC d/b/a Financial Preparation Services and Horizon Consultants LLC, collectively, or in any combination, and their successors and assigns, and each of them by any other names by which they might be known. 12.

“Debt-Relief Service” means 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 consumer 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 consumer to an unsecured creditor or debt collector. 13.

“Effective Date” means the date on which this Order is entered by the Court.

14.

“Enforcement Director” means the Assistant Director of the Office of Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

15.

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

16.

“Plaintiffs” means the Bureau of Consumer Financial Protection, the State of Minnesota, the State of North Carolina, and the People of the State of California, collectively, or in any combination. 17.

“Receiver” means Thomas W. McNamara.

18.

“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 Settling Defendant based on substantially the same facts as described in the Amended Complaint.

19.

“States” means the State of Minnesota, the State of North Carolina, and the People of the State of California. Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 7 of 29 Page ID #:6014

Page 9

STIPULATED FINAL JUDGMENT AND ORDER 20.

“Service Provider” means any person that provides a material service to a covered person, in connection with the offering or provision by such covered person of a Consumer Financial Product or Service, including a person that—(i) participates in designing, operating, or maintaining the Consumer Financial Product or Service; or (ii) processes transactions relating to the Consumer Financial Product or Service (other than unknowingly or incidentally transmitting or processing financial data in a manner that such data is undifferentiated from other types of data of the same form as the person transmits or processes). “Service provider” does not include a person solely by virtue of such person offering or providing to a covered person—(i) a support service of a type provided to businesses generally or a similar ministerial service; or (ii) time or space for an advertisement for a Consumer Financial Product or Service through print, newspaper, or electronic media.

CONDUCT RELIEF I Permanent Ban on Telemarketing and Offering or Selling Debt-Relief Services It is ORDERED that:

21.

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

participating in telemarketing or Assisting Others engaged in telemarketing any Consumer Financial Product or Service; b.

participating in or Assisting Others in advertising, marketing, promoting, offering for sale, selling, or providing any Debt-Relief Service; and c.

receiving any remuneration or other consideration from, holding any ownership interest in, providing services to, or working in Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 8 of 29 Page ID #:6015

Page 10

STIPULATED FINAL JUDGMENT AND ORDER any capacity for any Person engaged in or assisting in advertising, marketing, promoting, offering for sale, selling, or providing any Debt-Relief Service.

Nothing in this Order shall be read as an exception to this Paragraph. II Prohibited Misrepresentations and Other Conduct It is FURTHER ORDERED that:

22.

Settling Defendants and their officers, agents, servants, employees, and attorneys, and all other Persons in active concert or participation with them, who have actual notice of this Order, whether acting directly or indirectly, in connection with the advertising, marketing, promotion, offering for sale, sale, or performance of any Consumer Financial Product or Service, may not misrepresent, or Assist Others in misrepresenting, expressly or impliedly: a.

the benefits that a consumer will receive from the product or service, including but not limited to, the amount of savings a consumer will receive from purchasing, using, or enrolling in the Consumer Financial Product or Service;

the time required to achieve benefits from the Consumer Financial Product or Service;

any aspect of the nature or terms of a refund, cancellation, exchange, or repurchase policy of the Consumer Financial Product or Service, including but not limited to, the likelihood of a consumer obtaining a full or partial refund or the circumstances in which a full or partial refund will be granted to the consumer; and d.

the total costs or any other material term, fact, restriction, limitation, or condition of the Consumer Financial Product or Service. Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 9 of 29 Page ID #:6016

Page 11

STIPULATED FINAL JUDGMENT AND ORDER III State Injunctive Provisions It is FURTHER ORDERED that:

23.

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, shall be permanently restrained and enjoined from violating:

the Minnesota Uniform Deceptive Trade Practices Act, Minn. Stat. § 325D.44;

the Minnesota Consumer Fraud Act, Minn. Stat. § 325F.69; and c.

the Minnesota Debt Settlement Services Act, Minn. Stat. § 332B.

24.

Settling Defendants and their officers, agents, servants, employees and attorneys, and those Persons in active concert or participation with any of them who receive actual notice of this Order, shall be permanently restrained and enjoined from violating:

the North Carolina Debt Adjusting Act, N.C. Gen. Stat. § 14- 423, et seq.;

the North Carolina Unfair and Deceptive Practices Act, N.C. Gen. Stat. § 75-1.1; and c.

the North Carolina Telephonic Seller Registration Act, N.C. Gen. Stat. § 66-260, et seq.

25.

Page 12

STIPULATED FINAL JUDGMENT AND ORDER and their officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them, whether acting directly or indirectly, are permanently restrained from any of the following: a.

violating California Business and Professions Code section 17200, et seq., through unlawful, fraudulent and/or unfair acts or practices including but not limited to:

Violating California Financial Code section 12000, et seq., the California Check Sellers, Bill Payers and Proraters Law, by acting as a check seller, bill payer, or prorater within the State of California without first obtaining a license from the California Commissioner of Business Oversight; and ii.

Violating California Financial Code section 28100, et seq., the California Student Loan Servicing Act, by engaging in the business of servicing student loans in California without first obtaining a license as required under the Act. IV Customer Information It is FURTHER ORDERED that:

26.

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

disclose, use, or benefit from customer information, including the name, address, telephone number, email address, social security number, other identifying information, or any data that enables access to a customer’s account (including a credit card, bank account, or other financial account), that Defendants obtained before the Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 11 of 29 Page ID #:6018

Page 13

STIPULATED FINAL JUDGMENT AND ORDER Effective Date in connection with the offering or providing of Debt- Relief Services; and b.

attempt to collect, sell, assign, or otherwise transfer any right to collect payment from any consumer who purchased or agreed to purchase a Debt-Relief Service from any Defendant. 27.

However, customer information may be disclosed if 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:

28.

A judgment for monetary relief is entered in favor of Plaintiffs and against Settling Defendants as set forth below. Settling Defendant Prime Consulting LLC is liable, jointly and severally, in the amount of $95,057,757, for the purpose of providing redress to Affected Consumers. Of this judgment for monetary relief:

Settling Defendant Horizon Consultants LLC shall be jointly and severally liable for the amount of $12,942,045, such amount also being for the purpose of providing redress to Affected Consumers. 29.

However, full payment of each Settling Defendant’s portion of this judgment set forth in Paragraph 28 will be suspended, based on each Settling Defendant’s inability to pay, upon each Settling Defendant’s satisfaction of the obligations in Paragraphs 30-33 of this Section, Section VI, Paragraphs 42 and 44- 45 of Section VII, Paragraph 51 of Section IX, and subject to Section VIII of this Order.

30.

Except as necessary to effectuate the transfers required by Paragraph 79, Settling Defendants hereby grant to the Bureau all rights and claims they have Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 12 of 29 Page ID #:6019

Page 14

STIPULATED FINAL JUDGMENT AND ORDER to all Assets subject to the asset freeze imposed by the Preliminary Injunction entered on November 15, 2019 (ECF 103), and all Assets identified in Attachment A.

31.

To the extent they have not already done so, Settling Defendants are ordered to transfer and relinquish to the Receiver, or to its designated agent, possession, custody, and control of the following Assets within 7 days of entry of this Order, unless otherwise stated:

dominion and all legal and equitable right, title, and interest in, as well as any accounts receivable from, the following entities and their Assets: Settling Defendants, including their successors, assigns, affiliates, or subsidiaries, and each of them by whatever names each might be known; and b.

all Assets listed on Attachment A.

32.

Settling Defendants shall cooperate fully with the Receiver and shall execute any instrument or document presented by the Receiver, and take any other actions the Receiver deems necessary or appropriate to effect the transfers required by Paragraph 31. All property set forth in Paragraph 31 shall constitute Assets of the receivership estate.

33.

Except as necessary to effectuate the transfers required by Paragraph 79, Settling Defendants hereby grant to the Bureau all rights and claims they have to any Assets not subject to Paragraph 30 that are currently in the possession, custody, or control of the Receiver, including but not limited to any such Assets identified in Paragraph 31, and shall forfeit any rights and claims to the funds in the receivership estate, including but not limited to: all funds held, obtained, or to be obtained by the Receiver since the inception of the receivership whether through this Order or otherwise.

34.

The suspension of the monetary judgment in Paragraph 29 shall not Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 13 of 29 Page ID #:6020

Page 15

STIPULATED FINAL JUDGMENT AND ORDER affect the Receiver’s ability to pursue recovery of funds from any third parties to satisfy all or a portion of the full monetary judgment entered in Paragraph 28. Settling Defendants shall remain jointly and severally liable for full payment of this judgment to the extent that funds to satisfy all or a portion of this judgment are able to be recovered from third parties by the Receiver acting on behalf of the Receivership Defendants.

35.

With regard to any redress that Settling Defendants pay under this Section, if Settling Defendants receive, directly or indirectly, any reimbursement or indemnification from any source, including but not limited to payment made under any insurance policy, or if Settling Defendants secure a tax deduction or tax credit with regard to any federal, state, or local tax, Settling Defendants must: (a) immediately notify the Enforcement Director and States in writing, and (b) within 10 days of receiving the funds or monetary benefit, Settling Defendants must transfer 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 29 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 28. 36.

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.

37.

If the Bureau determines, in its sole discretion, that providing redress to consumers is wholly or partially impracticable or if funds remain after the Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 14 of 29 Page ID #:6021

Page 16

STIPULATED FINAL JUDGMENT AND ORDER administration of redress is completed, the Bureau will deposit any remaining funds in the U.S. Treasury as disgorgement. Settling Defendants 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. 38.

Payment of redress to any Affected Consumer under this Order may not be conditioned on that Affected Consumer waiving any right. VI Order to Pay Civil Money Penalty to the Bureau It is FURTHER ORDERED that:

39.

Under section 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged in the Amended Complaint and taking into account the factors in 12 U.S.C. § 5565(c)(3), each Settling Defendant must pay a civil money penalty of $1 to the Bureau. These nominal civil penalties are based on each Settling Defendant’s limited ability to pay as attested to in all financial statements and supporting documents listed in Section VIII. 40.

Within 10 days of the Effective Date, each Settling Defendant must pay the civil money penalty by wire transfer to the Bureau or to the Bureau’s agent in compliance with the Bureau’s wiring instructions. 41.

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).

VII Order to Pay Civil Money Penalties to the States It is FURTHER ORDERED that:

42.

Settling Defendants are each jointly and severally liable to pay civil penalties in this Enforcement Action under Minn. Stat. § 8.31 in the total amount of $25,000 to the State of Minnesota, as provided in Paragraph 79. Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 15 of 29 Page ID #:6022

Page 17

STIPULATED FINAL JUDGMENT AND ORDER 43.

The Minnesota Attorney General will remit these funds to the general fund of the State of Minnesota pursuant to Minn. Stat. §§ 8.31 and 16A.151. 44.

Settling Defendants are each jointly and severally liable to pay civil penalties in this Enforcement Action under N.C. Gen. Stat. § 75-15.2 in the total amount of $25,000 to the State of North Carolina, as provided in Paragraph 79. 45.

Settling Defendants are each jointly and severally liable to pay civil penalties in this Enforcement Action under California Business and Professions Code section 17206 in the total amount of $25,000 to the People of the State of California, as provided in Paragraph 79.

VIII Misrepresentation or Omission Regarding Financial Condition or Non- Compliance with Order to Pay Redress or Civil Money Penalty It is FURTHER ORDERED that:

46.

The suspension of the monetary judgment entered in Section V of this Order is expressly premised on the truthfulness, accuracy, and completeness of Settling Defendants’ sworn financial statements and supporting documents, which each Settling Defendant asserts are truthful, accurate, and complete, and which include:

Financial Statement of Prime Consulting LLC, including all attachments, signed on November 1, 2019, and submitted to the Bureau on or about November 4, 2019, and supplemented on August 7, 2020; and b.

Financial Statement of Horizon Consultants LLC, including all attachments, signed on August 13, 2020, and submitted to the Bureau on or about August 17, 2020.

47.

If upon motion by any Plaintiff, the Court determines that any Settling Defendant has failed to disclose any material Asset or that any of their financial Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 16 of 29 Page ID #:6023

Page 18

STIPULATED FINAL JUDGMENT AND ORDER statements contain any material misrepresentation or omission, including materially misstating the value of any Asset, the Court shall terminate the suspension of the monetary judgment for that Settling Defendant entered in Section V and without further adjudication, shall reinstate the judgment entered in Section V of this Order and the full judgment set forth in that Section with respect to that Settling Defendant shall be immediately due and payable, less any amounts paid to the Bureau under Section V of this Order by that Settling Defendant. 48.

If the Court terminates the suspension of the monetary judgment under this Section, the Bureau will be entitled to interest on the judgment, 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. 49.

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 Section 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 Plaintiffs may initiate to enforce this Order. IX Additional Monetary Provisions It is FURTHER ORDERED that:

50.

In the event of any default on Settling 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 by the defaulting Settling Defendant.

51.

Settling Defendants relinquish all dominion, control, and title to the funds and all other Assets transferred or paid under this Order to the fullest extent permitted by law and no part of the funds or other Assets may be returned to any Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 17 of 29 Page ID #:6024

Page 19

STIPULATED FINAL JUDGMENT AND ORDER Settling Defendant.

52.

The facts alleged in the Amended Complaint 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 Plaintiffs, 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.

53.

The facts alleged in the Amended Complaint establish all elements necessary to sustain an action by the Plaintiffs 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 each Settling Defendant, even in such Defendant’s capacity as debtor-in-possession.

54.

Under 31 U.S.C. § 7701, Settling Defendants, unless they already have done so, must furnish to Plaintiffs any taxpayer-identifying numbers associated with them or their Assets, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. 55.

Within 30 days of the entry of a final judgment, order, or settlement in a Related Consumer Action, Settling 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 the Settling 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, Settling Defendants may not argue that they are entitled to, nor may any Settling 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 Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 18 of 29 Page ID #:6025

Page 20

STIPULATED FINAL JUDGMENT AND ORDER Related Consumer Action offsets or otherwise reduces the amount of compensatory monetary remedies imposed against any Settling 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, the Settling 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. 56.

Settling Defendants 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, 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 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.

X Lifting of Asset Freeze It is FURTHER ORDERED that:

57.

The freeze on the Assets of Settling Defendants is modified to permit the payments and other transfers of Assets identified in Sections V, VI, VII and IX of this Order. Upon completion of all payments and other obligations identified in Sections V, VI, VII and IX of this Order, the freeze of the Settling Defendants’ Assets pursuant to the Preliminary Injunction entered on November 15, 2019 (ECF 103), shall be dissolved.

Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 19 of 29 Page ID #:6026

Page 21

STIPULATED FINAL JUDGMENT AND ORDER COMPLIANCE PROVISIONS XI Reporting Requirements It is FURTHER ORDERED that:

58.

Settling Defendants must notify Plaintiffs 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 any Settling Defendant; or a change in any Settling Defendant’s name or address. Settling Defendants must provide this notice at least 30 days before the development or as soon as practicable after learning about the development, whichever is sooner.

59.

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 Plaintiffs may use to communicate with such Settling Defendant;

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

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

60.

Each Settling Defendant must report any change in the information required to be submitted under Paragraph 59 above at least 30 days before the Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 20 of 29 Page ID #:6027

Page 22

STIPULATED FINAL JUDGMENT AND ORDER change or as soon as practicable after learning about the change, whichever is sooner.

XII Order Distribution and Acknowledgment It is FURTHER ORDERED that:

61.

For 5 years from the Effective Date, each Settling Defendant must deliver a copy of this Order to any business entity resulting from any change in structure referred to in Section XI, any future board members and executive officers, as well as to any managers, employees, Service Providers, or other agents and representatives who will have responsibilities related to the subject matter of the Order before they assume their responsibilities. XIII Recordkeeping It is FURTHER ORDERED that:

62.

Each Settling Defendant must create, for at least 10 years from the Effective Date, the following business records: all documents and records necessary to demonstrate full compliance with each provision of this Order, including all submissions to any Plaintiff. Each Settling Defendant must retain these documents for at least 10 years after creation and make them available to Plaintiffs upon any Plaintiff’s request.

63.

Settling Defendants must maintain, for at least 10 years from the Effective Date or 5 years after creation, whichever is longer: a.

copies of all sales scripts; training materials; advertisements; websites; and other marketing materials, including any such materials used by a third party on any Settling Defendant’s behalf, relating to any Consumer Financial Product or Service;

for each individual Affected Consumer and his or her Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 21 of 29 Page ID #:6028

Page 23

STIPULATED FINAL JUDGMENT AND ORDER enrollment in that Consumer Financial Product or Service: the consumer’s name, address, phone number, email address; amount paid, quantity of Consumer Financial Products or Services purchased, description of the Consumer Financial Product or Service purchased, the date on which the Consumer Financial Product or Service was purchased, a copy of any promotional or welcome materials provided, and, if applicable, the date and reason the consumer left the program; c.

for all Consumer Financial Products or Services, accounting records showing the gross and net revenues generated by the Consumer Financial Product or Service;

all consumer complaints and refund requests (whether received directly or indirectly, such as through a third party) relating to a Consumer Financial Product or Service, and any responses to those complaints or requests;

records showing, for each employee providing services related to a Consumer Financial Product or Service, 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 f.

records showing, for each Service Provider providing services related to a Consumer Financial Product or Service, the name of a point of contact, and that Person’s telephone number, email, physical, and postal address, job title or position, dates of service, and, if applicable, the reason for termination.

64.

Settling Defendants must make these materials available to Plaintiffs upon any Plaintiff’s request.

Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 22 of 29 Page ID #:6029

Page 24

STIPULATED FINAL JUDGMENT AND ORDER XIV Notices It is FURTHER ORDERED that:

65.

Unless otherwise directed in writing by the Bureau, Settling Defendants must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “CFPB, et al., v. CAC, et al., Case No. 8:19-cv-01998-MWF-KS” 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 66.

Unless otherwise directed by a representative of the State of Minnesota in writing, all submissions to the State of Minnesota pursuant to this Order must be sent by overnight courier or first-class mail to the below address and contemporaneously by email to [email protected]: Evan Romanoff, Assistant Attorney General Office of the Minnesota Attorney General 445 Minnesota Street, Suite 1200 St. Paul, Minnesota 55101 67.

Unless otherwise directed by a representative of the State of North Carolina in writing, all submissions to the State of North Carolina pursuant to this Order must be sent by overnight courier or first-class mail to the below address and contemporaneously by email to [email protected]: /// Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 23 of 29 Page ID #:6030

Page 25

STIPULATED FINAL JUDGMENT AND ORDER M. Lynne Weaver, Special Deputy Attorney General North Carolina Department of Justice 114 W. Edenton Street Raleigh, North Carolina 27603 68.

Christina Tusan Supervising Deputy City Attorney Los Angeles City Attorney’s Office 200 N. Main Street, 5th Floor Los Angeles, CA 90012 69.

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.

XV Cooperation with Plaintiffs It is FURTHER ORDERED that:

70.

Settling Defendants must cooperate fully with Plaintiffs in this matter and in any investigation or litigation related to or associated with the conduct described in the Amended Complaint, including related to the Bankruptcy Proceeding. Settling Defendants must provide truthful and complete information, evidence, and testimony. Settling Defendants must cause their officers, employees, representatives, or agents to appear for interviews, discovery, hearings, trials, and Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 24 of 29 Page ID #:6031

Page 26

STIPULATED FINAL JUDGMENT AND ORDER any other proceedings that any Plaintiff may reasonably request upon 10 days written notice, or other reasonable notice, at such places and times as Plaintiff may designate, without the service of compulsory process. 71.

Settling Defendants must cooperate fully to help Plaintiffs determine the identity, location, and contact information of any Defendant and any Person who might have contact information for any Defendant. Settling Defendants must provide such information in their or their agents’ possession or control within 14 days of receiving a written request from any Plaintiff. 72.

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

XVI 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:

73.

Within 14 days of receipt of a written request from any Plaintiff, each Settling Defendant must submit additional Compliance Reports or other requested information, which must be made under penalty of perjury; provide sworn testimony; or produce documents.

74.

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

75.

Each Settling Defendant must permit Plaintiffs’ representatives to interview any employee or other Person affiliated with the Settling Defendant who Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 25 of 29 Page ID #:6032

Page 27

STIPULATED FINAL JUDGMENT AND ORDER has agreed to such an interview. The Person interviewed may have counsel present. Nothing in this Order will limit the Bureau’s lawful use of civil investigative demands under 12 C.F.R. § 1080.6 or any Plaintiff’s use of other compulsory process.

76.

Plaintiffs are authorized by this Order to use all other lawful means, including posing, through representatives, as consumers, suppliers, or other individuals or entities, to the Settling Defendants or any individual or entity affiliated with Settling Defendants, without the necessity of identification or prior notice, and may record any communications that occur in the course of such contacts.

XVII Receivership It is FURTHER ORDERED that:

77.

The receivership imposed by this Court shall continue in the manner set forth in the Preliminary Injunction issued on November 15, 2019 (ECF 103), as to all Defendants and Relief Defendants, except as modified by this Section and Section X, and the Receiver shall continue to have the full powers of an equity receiver, as an agent of the Court, pursuant to Sections XIV and XV of the Preliminary Injunction, which shall remain in effect until further order of the Court.

78.

The Receiver shall take all necessary steps to wind down the affairs of the Settling Defendants. Within 14 days of entry of this Order, the Receiver shall transfer $1,400,000 of Settling Defendants’ Assets currently maintained in the Receiver’s account to the Bureau. Future transfers of funds recovered by the Receiver shall be treated as Additional Payments, pursuant to Paragraph 35. 79.

Within 14 days of liquidating Settling Defendants’ Assets transferred pursuant to Paragraph 31, the Receiver shall transfer $25,000 to the State of Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 26 of 29 Page ID #:6033

Page 28

STIPULATED FINAL JUDGMENT AND ORDER Minnesota, $25,000 to the North Carolina Attorney General, and $25,000 to the People of the State of California from the Settling Defendants’ Assets maintained in the Receiver’s account. These transfers shall be made to satisfy the civil money penalties to each State as set forth in Section VII. 80.

The Receiver shall promptly take all steps necessary to liquidate the Settling Defendants’ Assets using any commercially reasonable means, including auction and/or private sale, and all such sales shall be deemed authorized and approved under 28 U.S.C. § 2004 without further notice, hearing, or court order. After such liquidation, the Receiver shall remit the net proceeds to the Bureau or its designated representative as payment toward the monetary judgments entered against Settling Defendants within 21 days of each such sale or liquidation, subject to Paragraph 79.

81.

The Receiver and his representatives shall continue to be entitled to reasonable compensation for the performance of their duties pursuant to this Order from the Assets of the Receivership Defendants. The Receiver and his representatives shall not increase their hourly rates without prior approval of the Court.

XVIII Retention of Jurisdiction It is FURTHER ORDERED that:

82.

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

It is SO ORDERED, this 26th day of August, 2020.

MICHAEL W. FITZGERALD

United States District Court Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 27 of 29 Page ID #:6034

Page 29

ATTACHMENT A

Attachment A to [Proposed] Order Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 28 of 29 Page ID #:6035

Page 30

List of Assets Transferred Pursuant to Paragraphs 30-31 of the Order

Any and all Assets at the following financial institutions or entities and in the following accounts, including Assets transferred to the Receiver from the following entities and accounts:

a. JPMorgan Chase Bank, N.A.:

account number ending in 0325 in the name of Prime Consulting LLC;

b. National Merchant Center, Inc.:

all accounts, including reserve funds, in the name of Horizon Consultants LLC;

c. Sunwest Bank:

account number ending in 1069 in the name of Horizon Consultants LLC; and ii.

account number ending in 1026 in the name of Prime Consulting LLC.

The following Assets and, for each Asset, all documents evidencing purchase and ownership, including all original packaging:

a. All Assets identified at item no. 23 on the Financial Statement of Prime Consulting LLC, including all attachments, signed on November 1, 2019, and submitted to the Bureau on or about November 4, 2019, and supplemented on August 7, 2020.

Attachment A to [Proposed] Order Case 8:19-cv-01998-MWF-KS Document 211 Filed 08/26/20 Page 29 of 29 Page ID #:6036

Complaint (Oct. 2019)

PDF of this document (49 pages)

Page 31

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 1 of 49 Page ID #:11

Page 32

COMPLAINT [FILED UNDER TEMPORARY SEAL]

BUREAU OF CONSUMER FINANCIAL PROTECTION SARAH PREIS (D.C. Bar No. 997387) (Pro Hac Vice application pending) Tel.: (202)-435-9318 / Email: [email protected] JESSE STEWART (N.Y. Bar No. 5145495) (Pro Hac Vice application pending) Tel: (202)-435-9651 / Email: [email protected] 1700 G Street, NW Washington, DC 20552 Fax: (202) 435-5471

LEANNE E. HARTMANN (CA Bar No. 264787) (Local Counsel for the Bureau of Consumer Financial Protection) 301 Howard Street, Suite 1200 San Francisco, CA 94105 Email: [email protected]/Fax: (415) 844-9788

Attorneys for Plaintiffs the Bureau of Consumer Financial Protection

THE STATE OF MINNESOTA EVAN ROMANOFF (Attorney Reg. No. 0398223) (Pro Hac Vice application pending) Assistant Attorney General 445 Minnesota Street, Suite 1200 St. Paul, MN 55101-2130 Tel.: (651) 757-1454/Email: [email protected]

Attorneys for Plaintiff the State of Minnesota

THE STATE OF NORTH CAROLINA M. LYNNE WEAVER (N.C. Bar No. 19397) (Pro Hac Vice application pending) MICHAEL T. HENRY (N.C. Bar No. 35338) (Pro Hac Vice application pending) North Carolina Department of Justice 114 W. Edenton Street Raleigh, NC 27602 Tel.: (919) 716-6000 / Fax: (919) 716-6050 Emails: lweaver@ncdoj,gov/[email protected]

Attorneys for Plaintiff the State of North Carolina

THE PEOPLE OF THE STATE OF CALIFORNIA MICHAEL N. FEUER, City Attorney (CA Bar No. 111529) MARY CLARE MOLIDOR, Chief Assistant City Attorney, (CA Bar No. 82404) CHRISTINA V. TUSAN, Supervising Deputy City Attorney (CA Bar No. 192203) OFFICE OF THE CITY ATTORNEY 200 N. Main Street, 500 City Hall East Los Angeles, California 90012-4131 Tel: (213) 978-8707/Fax: (213) 978-8112 Emails: [email protected] / [email protected]

Attorneys for Plaintiff the People of the State of California

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 2 of 49 Page ID #:12

Page 33

COMPLAINT [FILED UNDER TEMPORARY SEAL]

UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT OF CALIFORNIA

Bureau of Consumer Financial Protection; State of Minnesota, by its Attorney General, Keith Ellison; State of North Carolina, ex rel. Joshua H. Stein, Attorney General; and The People of The State of California, Michael N. Feuer, Los Angeles City Attorney, Plaintiffs, v.

Consumer Advocacy Center Inc., d/b/a Premier Student Loan Center; True Count Staffing Inc., d/b/a SL Account Management; Prime Consulting LLC, d/b/a Financial Preparation Services; Albert Kim, a/k/a Albert King; Kaine Wen, a/k/a Wenting Kaine Dai, Wen Ting Dai, and Kaine Wen Dai; and Tuong Nguyen, a/k/a Tom Nelson, Defendants, and

Infinite Management Corp., f/k/a Infinite Management Solutions Inc.; Hold The Door, Corp.; and TN Accounting Inc., Relief Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No:

COMPLAINT [FILED UNDER TEMPORARY SEAL]

INTRODUCTION 1.

The Bureau of Consumer Financial Protection (Bureau) brings this action under §§ 1031, 1036(a), 1054, and 1055 of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531, 5536(a), 5564 & 5565; and under and the Telemarketing and Consumer Fraud and Abuse Prevention Act (Telemarketing Act), 15 U.S.C. §§ 6101-6108, and its implementing regulation, the Telemarketing Sales Rule Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 3 of 49 Page ID #:13

Page 34

COMPLAINT [FILED UNDER TEMPORARY SEAL]

(TSR), 16 C.F.R. Part 310. The Bureau brings this action in connection with the offer and sale of debt-relief services by Defendants Consumer Advocacy Center Inc., d/b/a Premier Student Loan Center; True Count Staffing Inc., d/b/a SL Account Management; Prime Consulting LLC, d/b/a Financial Preparation Services (collectively, Student Loan Debt Relief Companies); and Defendants Albert Kim, Kaine Wen, and Tuong Nguyen (collectively, Individual Defendants).

The State of Minnesota, by its Attorney General, brings this enforcement action to, among other things, obtain temporary, preliminary, and permanent injunctive relief, restitution, and civil penalties for Defendants’ acts or practices in violation of the Minnesota Prevention of Consumer Fraud Act (MNCFA), Minn. Stat. §§ 325F.68-.694; the Minnesota Uniform Deceptive Trade Practices Act (MNDTPA), Minn. Stat. §§ 325D.43-.48; and the Telemarketing Act, 15 U.S.C. §§ 6101-6108, and its implementing regulation, the TSR, 16 C.F.R. Part 310, in connection with Defendants’ offer and sale of student loan debt relief services.

The State of North Carolina, by its Attorney General, brings this enforcement action to, among other things, obtain temporary, preliminary, and permanent injunctive relief, restitution, and civil penalties for Defendants’ acts or practices in violation of North Carolina’s Debt Adjusting Act, N.C. Gen. Stat. § 14-423, et seq., (NCDAA); North Carolina’s Unfair and Deceptive Practices Act, N.C. Gen. Stat. § 75- 1.1 (NCUDPA); North Carolina’s Telephonic Seller Registration Act, N.C. Gen. Stat. § 66-260, et seq. (NCTSRA); and the Telemarketing Act, 15 U.S.C. §§ 6101-6108, and its implementing regulation, the TSR, 16 C.F.R. Part 310, in connection with Defendants’ offer and sale of student loan debt relief services.

Page 35

COMPLAINT [FILED UNDER TEMPORARY SEAL]

Code section 17200 et seq. (the “Unfair Competition Law,” or “UCL”) and the Telemarketing Act, 15 U.S.C. §§ 6101-6108, and its implementing regulation, the TSR, 16 C.F.R. Part 310, in connection with Defendants’ offer and sale of student loan debt relief services.

Defendants engage in an ongoing, unlawful student-loan debt-relief business that harms consumers nationwide by charging consumers unlawful advance fees and misrepresenting the terms and conditions of their services. 6.

The Bureau and the States bring this action to stop Defendants’ unlawful conduct, obtain relief for harmed consumers, and impose civil money penalties on Defendants for their unlawful actions.

The Bureau and the States also bring this action against Infinite Management Corporation, Hold the Door, Corp., and TN Accounting Inc., as Relief Defendants. OVERVIEW 8.

Since at least 2015, Defendants have operated a debt-relief enterprise that has deceived thousands of federal-student-loan borrowers and collected over $71 million in illegal advance fees, in violation of the TSR, the CFPA, the MNCFA, the MNDTPA, the NCDAA, the NCUDPA, the NCTSRA, and the UCL. Unless otherwise noted, all references to “borrowers” and “consumers” in this Complaint include California, Minnesota, and North Carolina borrowers and consumers. 9.

Defendants purported to help federal-student-loan borrowers obtain loan forgiveness or lower monthly payments through programs administered by the U.S. Department of Education (DOE).

10.

In fact, Defendants deceived consumers, including by misrepresenting that consumers would qualify for loan forgiveness in a matter of months, when forgiveness takes at least 10 years of on-time payments and is determined by DOE; that consumers were approved for lower monthly payments on their student loans, when consumers had not yet been approved or when the new payment amount was approved based on false information; and that consumers’ lower payments would be permanent when in fact they Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 5 of 49 Page ID #:15

Page 36

COMPLAINT [FILED UNDER TEMPORARY SEAL]

are subject to change based on changes in the consumers’ family size, income, and marital status.

11.

Defendants also falsely told consumers, or led consumers to believe, that the consumers’ payments to the companies would go toward paying consumers’ student loan balances.

12.

When describing the services offered to consumers, Defendants failed to inform consumers that it was their practice to request that consumers’ loans be placed into forbearance or that interest would continue to accrue during the forbearance period, thereby increasing consumers’ overall loan balances. 13.

When describing the services offered to consumers, Defendants failed to inform consumers that it was their practice to submit false information about consumers’ income, family size, and marital status on loan adjustment applications in order to try to qualify consumers for lower monthly payments.

14.

Defendants charged consumers an initial fee, typically totaling about $900- $1,300 for Defendants’ services. This initial fee was typically levied well before consumers had been accepted to and made a payment under their new loan agreement, in violation of the TSR.

15.

Defendants conducted this operation using a network of several interrelated companies and over a dozen unregistered and fictitious business names. These entities operated as a common enterprise controlled by the individual defendants, rendering each jointly and severally liable for the illegal acts of all Defendants. JURISDICTION AND VENUE 16.

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. This Court has supplemental jurisdiction over the States’ claims pursuant to 28 U.S.C. § 1367.

17.

Venue is proper in this district pursuant to 12 U.S.C. § 5564(f) because

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 6 of 49 Page ID #:16

Page 37

COMPLAINT [FILED UNDER TEMPORARY SEAL]

Defendants are located, reside, or do business in this district. PARTIES 18.

19.

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 a permanent or temporary injunction as permitted by law.” 12 U.S.C. § 5564(a).

20.

Keith Ellison, Attorney General of the State of Minnesota, is authorized under Minnesota Statutes chapter 8; the MNCFA, Minn. Stat. § 325F.69, et seq.; the MNDTPA, Minn. Stat. § 325D.44, et seq.; the Telemarketing Act, 15 U.S.C. § 6103(a); and has common law authority, including parens patriae authority, to bring this action on behalf of the State of Minnesota and its citizens to enforce Minnesota law. 21.

The State of North Carolina is acting through its Attorney General Joshua H. Stein, pursuant to authority granted by Chapters 14, 66, 75, and 114 of the North Carolina General Statutes, and the Telemarketing Act, 15 U.S.C. § 6103(a). 22.

Michael N. Feuer, City Attorney for the City of Los Angeles, is authorized under California Business and Professions Code section 17200 et seq. (the “Unfair Competition Law,” or “UCL”) and the Telemarketing Act, 15 U.S.C. § 6103(a) and (f)(2), to bring this civil law enforcement action on behalf of the People of the State of California.

23.

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 7 of 49 Page ID #:17

Page 38

COMPLAINT [FILED UNDER TEMPORARY SEAL]

Margarita Pkwy, Suite 200F, Rancho Santa Margarita, CA 92688; 8 Hughes Parkway, Irvine, CA 92618; 5350 E Suncrest Rd., Anaheim, CA 92807; and 24852 Acropolis Dr., Mission Viejo, CA 92691.

24.

CAC has held itself out as doing business as Premier Student Loan Center. 25.

CAC has transacted its student-loan debt-relief business in the Central District of California since at least November 2015. 26.

On January 16, 2019, CAC filed for protection under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Florida. See In re Consumer Advocacy Center, Inc., No. 19-10655-BKC-JKO (Bankr. S.D. Fla.).

27.

Defendant True Count Staffing Inc. (True Count) registered as a California corporation on February 13, 2017, and it has held itself out as doing business at the following addresses: 173 Technology Dr., Ste 202, Irvine, CA 92618; 777 E. Sierra Madre Ave, Azusa, CA 91702; 8 Hughes Parkway, Irvine, CA 92618; and 7545 Irvine Center Drive, Suite 200, PMB #108, Irvine, CA, 92618. 28.

True Count has held itself out as doing business as SL Account Management.

29.

Defendant Prime Consulting LLC (Prime) is a Wyoming limited-liability company that registered with the California Secretary of State on April 25, 2018, and it has held itself out as doing business at 11932 Klingerman Street, Suite 3, El Monte, CA, 91732 and 7545 Irvine Center Drive, Suite 200, Room 108, Irvine, CA, 92618. 30.

Prime has held itself out as doing business as Financial Preparation Services. 31.

Defendant Albert Kim (a/k/a Albert King) is CAC’s primary owner and founder. Kim is a resident of the State of California and performed work for CAC while residing in this jurisdiction.

32.

Kim exercised substantial control over CAC’s business practices. 33.

Kim exercised managerial responsibility for CAC and participated in the conduct of its affairs.

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 8 of 49 Page ID #:18

Page 39

COMPLAINT [FILED UNDER TEMPORARY SEAL]

34.

Defendant Kaine Wen (a/k/a Wenting Kaine Dai, Wen Ting Dai) is True Count’s primary owner and founder and has also been an owner and manager of CAC. Wen incorporated True Count and has served as its chief executive officer, director, partner, and president.

35.

Wen exercised substantial control over True Count’s business practices. 36.

Wen exercised managerial responsibility for True Count and participated in the conduct of its affairs.

37.

Wen exercised managerial responsibility for CAC and participated in the conduct of its affairs.

38.

Defendant Tuong Nguyen (a/k/a Tom Nelson) served as CAC’s controller and as True Count’s secretary.

39.

Nguyen exercised managerial responsibility for CAC and participated in the conduct of its affairs.

40.

Nguyen exercised managerial responsibility for True Count and participated in the conduct of its affairs.

41.

Relief Defendant Infinite Management Corp., f/k/a Infinite Management Solutions Inc. (Infinite Management) registered as a California corporation on September 8, 2016, and it has held itself out as doing business at 9228 City Lights Drive, Aliso Viejo, CA, 92656.

42.

Kim served as Infinite Management’s registered agent and president, and he is the sole signatory on a bank account belonging to it. 43.

Relief Defendant Hold the Door Corp. (Hold the Door) registered as a California corporation on December 30, 2016, and it listed its address as 777 E. Sierra Madre Ave, Azusa, CA 91702. It described its business type as “consulting services” in corporate filings with the California Secretary of State. 44.

Hold the Door was incorporated by Wen, and he has served as its sole corporate officer.

45.

Relief Defendant TN Accounting Inc. (TN Accounting) is a California

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 9 of 49 Page ID #:19

Page 40

COMPLAINT [FILED UNDER TEMPORARY SEAL]

corporation that filed its Articles of Incorporation with the California Secretary of State on February 8, 2017, and it has listed its principal place of business address of 1704 S. Granada Ave, Alhambra, CA 91801 in corporate filings with the Secretary of State. 46.

Nguyen has served as TN Accounting’s president and sole corporate officer. FACTS Student Loan Forgiveness and Repayment Programs 47.

DOE administers several federal student-loan repayment programs. Some potentially offer lower monthly loan payments. Others allow consumers who make the requisite qualifying payments over a period ranging from 10 to 25 years (and who meet other eligibility criteria) to obtain loan forgiveness. 48.

One such program is the income-driven repayment (IDR) program. IDR plans may lower consumers’ monthly payments to more affordable amounts based on the consumers’ income and family size. Consumers enrolled in IDR plans who make qualifying payments may also have their outstanding student-loan balances forgiven after 20-25 years.

49.

Under another program, the Public Service Loan Forgiveness program, consumers who work full-time for a qualifying public-service employer, make 120 qualifying payments, and meet other eligibility criteria, can apply to have their outstanding student-loan balances forgiven after 10 years. 50.

Because a borrower’s income and family size can fluctuate over the life of the loan, consumers are required to recertify their eligibility for IDR programs on an annual basis. Variables such as marital status and tax-filing status (single, married filing separately, married filing jointly) may affect how DOE calculates monthly payment amounts. As a result, monthly payments under the IDR programs can vary from year to year.

The Student Loan Debt Relief Companies 51.

CAC began offering student-loan debt-relief services purporting to lower consumers’ monthly loan payments and obtain loan forgiveness through enrollment in

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 10 of 49 Page ID #:20

Page 41

COMPLAINT [FILED UNDER TEMPORARY SEAL]

loan forgiveness or IDR plans as early as November 2015. 52.

Initially, CAC’s internal structure included sales, processing, and customerservice departments.

53.

The sales department fielded incoming consumer calls, made outbound marketing calls, and enrolled consumers in the Student Loan Debt Relief Companies’ services by providing consumers with contracts for electronic signature during sales calls. 54.

The processing department charged consumers the initial advance fees, and prepared and submitted forbearance, loan-consolidation, and IDR requests to consumers’ student-loan servicers. The consumer’s student-loan servicer then evaluated the requests. 55.

In March 2018, Kim and Wen moved CAC’s processing and customerservice operations into a new entity, True Count. 56.

As part of this shift, CAC’s processing and customer-service departments physically moved to a new office location.

57.

CAC continued to handle sales, while True Count took over preparing and submitting loan-consolidation and IDR-plan applications and collecting payments from consumers (including from consumers who had enrolled for services with CAC). 58.

As early as April 2018, CAC transferred its sales functions to a new entity, Prime, which ultimately assumed CAC’s role as the main sales company enrolling consumers for True Count’s services.

Debt Relief Sales and Business Practices 59.

The Student Loan Debt Relief Companies marketed their debt-relief services through inbound and outbound calls, websites, social media, and direct mail. 60.

When consumers called the front-end sales company (CAC or Prime), the consumer first spoke with a sales representative. 61.

Sales representatives instructed consumers on how to create an ID and password for consumers’ online accounts with Federal Student Aid (FSA), an office of DOE, if the consumer had not previously done so. The sales representatives then instructed the consumer to provide the sales representative with the consumer’s FSA ID

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 11 of 49 Page ID #:21

Page 42

COMPLAINT [FILED UNDER TEMPORARY SEAL]

and password.

62.

Sales representatives downloaded student-loan data from the consumer’s online FSA account into the company’s customer–relationship-management system. 63.

Sales representatives often stated that there was an urgent need to sign up for the respective Student Loan Debt Relief Company’s services. 64.

For example, some sales representatives told consumers that they had a limited time in which they could apply for an IDR program. 65.

At times, sales representatives represented that the respective Student Loan Debt Relief Company was affiliated with DOE.

Representations about Fees 66.

During sales calls, sales representatives made affirmative representations or material omissions about the purpose of the fees paid by consumers to the Student Loan Debt Relief Companies.

67.

Sales representatives frequently represented that the fees would be applied to the balance of consumers’ student loans.

68.

In fact, all monies paid by the consumers to the Student Loan Debt Relief Companies were fees retained by the companies and were not remitted to student-loan servicers to be applied toward consumers’ loan balances. 69.

Sales representatives frequently represented that fees paid to the Student Loan Debt Relief Companies would be the only payments consumers would owe on their student loans after being accepted into a DOE repayment program. 70.

In fact, the fees paid to the Student Loan Debt Relief Companies were in addition to, and did not relieve consumers of, their obligation to pay their student loans. 71.

Sales representatives frequently represented to consumers that the fees charged by the Student Loan Debt Relief Companies were necessary to participate and remain enrolled in a loan-forgiveness or IDR program. 72.

In fact, consumers can apply free of charge for loan forgiveness or IDR programs, either through their student-loan servicer or directly to the DOE.

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 12 of 49 Page ID #:22

Page 43

COMPLAINT [FILED UNDER TEMPORARY SEAL]

73.

Moreover, consumers can recertify annually their eligibility to remain enrolled in their IDR plans through their student-loan servicer for free. Representations about Loan Forgiveness 74.

The Student Loan Debt Relief Companies’ sales representatives often told consumers that they were qualified or approved for loan forgiveness. 75.

Sales representatives frequently represented to consumers that they can get consumers’ student loans forgiven in whole or in part shortly after enrolling in the respective Student Loan Debt Relief Company’s services. 76.

The DOE’s loan forgiveness programs require anywhere from 10-25 years of qualifying payments, as well as satisfaction of other eligibility criteria, to qualify for loan forgiveness.

77.

Only the DOE can approve consumers for loan forgiveness. 78.

Because only the DOE can approve consumers for loan forgiveness, and only after a consumer makes qualifying monthly payments over a period ranging from 10 to 25 years, the Student Loan Debt Relief Companies’ representations to consumers that all or part of their loans would be forgiven upon payment of enrollment fees were false. Representations about Lower Monthly Payments 79.

The Student Loan Debt Relief Companies’ sales representatives often told consumers that they qualified or were approved for a specific lower monthly payment. 80.

In fact, the new, lower monthly payment amount identified by sales representatives was often calculated based on an incorrect family size, income, or marital status.

81.

Sales representatives often represented that consumers’ lower monthly payment would be in place over the life of the loan. 82.

In fact, monthly payment amounts are determined by student loan servicers and can fluctuate year to year depending on changes in consumers’ income, family size, or marital status, and it is therefore not possible to determine a set monthly payment for an IDR plan for the life of the loan.

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 13 of 49 Page ID #:23

Page 44

COMPLAINT [FILED UNDER TEMPORARY SEAL]

Preparing and Submitting Forbearance Requests and IDR Plan Applications 83.

Following an initial sales call, consumers who purchased the Student Loan Debt Relief Companies’ services were assigned to a company representative called a “processor.”

84.

Processors conducted a “welcome call” during which they typically asked consumers for proof of income and, at times, verified certain information. 85.

Following the welcome call, processors submitted forbearance requests to student-loan servicers on behalf of consumers. 86.

Processors typically asked for a forbearance period of three months in the forbearance requests they submitted.

87.

If a servicer approves a forbearance request, the consumer is excused from making his or her monthly student loan payments during the period of forbearance. But interest on the consumer’s student loan accrues during the period of forbearance and may be added to the principal balance.

88.

Typically, consumers were not informed during sales calls or the welcome call that processors would submit forbearance requests on their behalf. 89.

Typically, consumers were not informed during sales calls or the welcome call that interest on the consumer’s student loan accrues during the period of forbearance and may be added to the principal balance.

90.

In fact, most consumers did not ask the Student Loan Debt Relief Companies for forbearance requests, and many consumers were not aware that the Student Loan Debt Relief Companies submitted forbearance requests to their student loan servicers on their behalf.

91.

Processors signed the forbearance requests in the consumer’s name so that it appeared the request was submitted by the consumer. 92.

Many consumers were unaware the fees they paid to the Student Loan Debt Relief Companies were not paying down their student loans. /// Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 14 of 49 Page ID #:24

Page 45

COMPLAINT [FILED UNDER TEMPORARY SEAL]

Submitting Consolidation and IDR Requests with False Information 93.

Processors submitted IDR applications to servicers on behalf of consumers with false information about consumers’ income, family size, or marital status. 94.

For consumers who did not provide proof of income to the Student Loan Debt Relief Companies, processors frequently listed those consumers as unemployed on their IDR applications, even when the consumers were employed at the time. 95.

Processors frequently submitted IDR applications to consumers’ student loan servicers that listed consumers’ family sizes greater than the consumers’ actual family size.

96.

Processors frequently submitted IDR applications to consumers’ student loan servicers that listed consumers as single, even if the consumer had informed the Student Loan Debt Relief Companies that he or she was married. 97.

When submitting IDR applications to consumers’ student loan servicers, processors typically changed consumers’ email address to an email address created by the Student Loan Debt Relief Company in order to temporarily divert all email correspondence from the consumer’s student-loan servicer to the Student Loan Debt Relief Company.

98.

When submitting IDR applications to consumers’ student-loan servicers, processors typically changed consumers’ mailing address to a mailing address used by the Student Loan Debt Relief Company in order to temporarily divert all postal mail from the consumer’s student-loan servicer to the Student Loan Debt Relief Company. 99.

After receiving confirmation from a consumer’s student loan servicer that a consumer’s loan consolidation or IDR application had been approved, processors typically logged back into the consumer’s loan account and changed the consumers email and mailing address back to the consumer’s actual information. 100. The Student Loan Debt Relief Companies’ practice of diverting correspondence to consumers from the consumers’ student-loan servicers helped conceal the Student Loan Debt Relief Companies’ practice of submitting false information to

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 15 of 49 Page ID #:25

Page 46

COMPLAINT [FILED UNDER TEMPORARY SEAL]

student loan servicers.

Representations about and Collection of Fees from Consumers 101. The Student Loan Debt Relief Companies typically collected enrollment fees from consumers before consumers had been approved for a loan consolidation or an IDR plan.

102. The Student Loan Debt Relief Companies collected monthly fees, typically ranging from $10-$42, before submitting the consumer’s corresponding annual IDR plan recertification.

103. At all times material to this Complaint, the Student Loan Debt Relief Companies did not track whether consumers had made an initial payment on an adjusted loan.

104. As early as April 2018, the Student Loan Debt Relief Companies’ contracts began including a section entitled “No Advance Fees.” 105. The section of the Student Loan Debt Relief Companies’ contract entitled “No Advance Fees” states that the company “does not take any advance fees from Client” and further provides that consumer fees will be held in an independent third party “trust account” and not paid to the company until the consumer “has received a consolidation, adjustment, or otherwise satisfactory result” and makes one payment “towards such.” 106. At all times material to this Complaint, the Student Loan Debt Relief Companies did not use trust accounts to hold fees collected from consumers before placing consumers into loan repayment plans.

107. Rather, fees collected from consumers by the Student Loan Debt Relief Companies were directly deposited into the companies’ bank accounts and commingled with company assets.

108. The Defendants have collected over $71 million in illegal advance fees from thousands of consumers nationwide.

Roles of the Individual Defendants 109. Albert Kim (a/k/a Albert King) is CAC’s primary owner and manager. Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 16 of 49 Page ID #:26

Page 47

COMPLAINT [FILED UNDER TEMPORARY SEAL]

110. Kim was in the office frequently and helped manage CAC’s and True Count’s day-to-day operations.

111. Kim oversaw CAC’s marketing.

112. Kim signed CAC’s merchant-account applications or agreements with at least three different payment processors.

113. At times, Kim personally responded to consumers’ complaints. 114. Kim has controlled CAC’s bank accounts, and he has been an authorized user on CAC’s and True Count’s bank accounts.

115. When Kim applied for a merchant account on CAC’s behalf in or about July 2017, he agreed to maintain fraud and chargebacks below certain levels. 116. Monthly account statements sent to CAC’s corporate address for that merchant account identify tens of thousands of dollars in chargebacks and hundreds of thousands of dollars in consumer refunds between August 2017 and March 2019. 117. After CAC filed for bankruptcy, Kim personally generated marketing leads for Prime.

118. Kaine Wen served as CAC’s owner, managing partner, and general counsel. 119. CAC’s 2016 tax returns and U.K. registration documents list Wen as CAC’s 50% owner.

120. Wen made capital contributions to CAC in October 2015 that accounted for 75% of capital contributions by members at that time. 121. Wen participated in the decision to move CAC’s processing functions to True Count.

122. Wen personally guaranteed True Count’s lease agreement. 123. Wen set up payment-processing agreements for True Count. 124. Wen corresponded with payment processors regarding True Count’s excessive chargeback rates.

125. Wen represented to a payment processor that True Count “understands, currently fully complies with, and during the term of the Agreement will fully comply Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 17 of 49 Page ID #:27

Page 48

COMPLAINT [FILED UNDER TEMPORARY SEAL]

with” the TSR, CFPA, and “all other applicable federal, state, and local laws, rules, and regulations.”

126. Wen has been an authorized user on CAC’s, Premier Student Loan Center’s, True Count’s, and Hold the Door’s bank accounts. 127. Wen was also a point of contact or signed for at least three merchant accounts for CAC and at least one merchant account for True Count. 128. Tuong Nguyen served as the controller and provided accounting services for CAC.

129. Nguyen was responsible for paying CAC’s bills, reviewed its bank statements, and was a signatory on several of CAC’s bank accounts. 130. At times, Nguyen also responded to consumer complaints, and was listed as a point of contact for CAC’s d/b/a, Premier Student Loan Center, in the Bureau’s consumer-complaint portal.

131. True Count identified Nguyen as its secretary in select dealings with banks. 132. Nguyen was a point of contact for at least two of CAC’s merchant accounts and one of True Count’s merchant accounts.

133. In January 2018, Nguyen signed a letter to a payment processor acknowledging CAC had incurred “excessive chargebacks” during “December/2017.” 134. Nguyen also acknowledged that the top chargeback reasons included fraud. 135. Nguyen incorporated TN Accounting and served as its president and sole corporate officer.

136. Nguyen has been a signatory on a bank account held by TN Accounting. 137. TN Accounting’s primary source of income is over $225,000 from CAC and True Count from March 2017 through December 2018. 138. Nguyen was also an authorized user on bank accounts held by CAC, Premier Student Loan Center, and True Count.

/// /// Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 18 of 49 Page ID #:28

Page 49

COMPLAINT [FILED UNDER TEMPORARY SEAL]

The Student Loan Debt Relief Companies Operate as a Common Enterprise 139. CAC, True Count, and Prime shared employees, customers, scripts, and training materials, and they used the same database to store consumers’ information and track aspects of their business activity.

140. CAC, True Count, and Prime shared the proceeds of the debt-relief enterprise.

141. For example, since April 2018, True Count, acting as the purported “billing department” for CAC and Prime, has transferred at least $12 million to CAC and at least $25 million to Prime.

142. CAC lent hundreds of thousands of dollars to True Count without interest or any written agreement.

143. CAC stated in a lease guarantee that it had a “financial interest” in True Count.

144. CAC guaranteed at least one lease on behalf of Prime Consulting and two leases on behalf of True Count.

145. CAC, True Count, and Prime have used overlapping addresses to carry out the debt-relief operation.

146. For example, addresses True Count identifies as its business addresses are also business addresses for CAC, Prime, and Hold the Door. 147. To market their debt-relief services to consumers, CAC, True Count, and Prime shared over a dozen fictitious names, including but not limited to South Coast Financial Center, Direct Account Services, Financial Loan Advisors, Account Preparation Services, Administrative Financial, Tangible Savings Solutions, Coastal Shores Financial Group, First Choice Financial Centre (a/k/a First Choice Financial Center), Administrative Account Services, Primary Account Solutions, Prime Document Services, Financial Accounting Center, Doc Management Solutions, First Priority LLC, ALW Loans Administrative Accounting Center, Best Choice Financial Center, First Document Services, Global Direct Accounting Solutions, Keystone Document Center, Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 19 of 49 Page ID #:29

Page 50

COMPLAINT [FILED UNDER TEMPORARY SEAL]

Pacific Palm Financial Group, Pacific Shores Advisory, Sequoia Account Management, Signature Loan Solutions, Yellowstone Account Services, EDU Doc Support, ClearStudentLoanDebt, and Clear Student Loan Debt. 148. The websites for Doc Management Solutions, Financial Accounting Center, Prime Document Services, Primary Account Solutions, Administrative Account Services, South Coast Financial Center, First Choice Financial Center, Coastal Shores Financial Group, Tangible Savings Solutions, Administrative Financial, Account Preparation Services, Financial Loan Advisors, and Direct Account Services are nearly identical. Transfer of Assets to Relief Defendants 149. Defendants Wen, Kim, and Nguyen direct and control Relief Defendants Hold the Door, Infinite Management, and TN Accounting, respectively. 150. Wen, Kim, and Nguyen are the signatories on bank accounts for the respective companies and thus control the flow of money into and out of their corporate accounts.

151. From 2017 to 2019, payments from CAC or True Count made up most or almost all the income of Hold the Door, Infinite Management, and TN Accounting. 152. Monies were transferred from Hold the Door, Infinite Management, and TN Accounting to the respective individuals’ personal accounts or to pay their personal expenses.

153. Hold the Door made over $200,000 in direct transfers to Wen’s personal bank accounts, and it made payments for purchases of art and for Wen’s Tesla and Mercedes Benz automobiles.

154. Infinite Management made more than $300,000 in payments to pay Kim’s personal credit cards, wedding expenses, dental expenses, and to purchase luxury cars. 155. TN Accounting transferred over $100,000 to Nguyen’s personal bank accounts and made payments on Nguyen’s personal credit cards and Tesla. /// /// Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 20 of 49 Page ID #:30

Page 51

COMPLAINT [FILED UNDER TEMPORARY SEAL]

LEGAL BACKGROUND The TSR 156. 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).

157. 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). 158. 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).

159. 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).

160. The Student Loan Debt Relief Companies offer services to renegotiate, settle, or alter the terms of payments of consumers’ federal student loans by submitting requests for loan forgiveness or IDR plans to consumers’ student-loan servicers. 161. The Student Loan Debt Relief Companies offered and provided these services to consumers nationwide using the telephones and employed more than one interstate telephone call.

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

163. The Student Loan Debt Relief Companies are each a “telemarketer” or

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 21 of 49 Page ID #:31

Page 52

COMPLAINT [FILED UNDER TEMPORARY SEAL]

“seller” offering a “debt relief service” under the TSR. 164. Kim arranged for CAC to provide debt-relief services to consumers in exchange for consideration and personally generated marketing leads for Prime. Kim is a “telemarketer” or “seller” offering a “debt relief service” under the TSR. 16 C.F.R. § 310.2(dd), (ff), (o).

165. Wen arranged for CAC and True Count to provide debt-relief services to consumers in exchange for consideration. Wen is a “seller” offering a “debt relief service” under the TSR. 16 C.F.R. § 310.2(dd), (o). 166. Nguyen arranged for CAC and True Count to provide debt-relief services to consumers in exchange for consideration. Nguyen is a “seller” offering a “debt relief service” under the TSR. 16 C.F.R. § 310.2(dd), (o). The CFPA 167. 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.”

168. The Student Loan Debt Relief Companies are each “covered persons” under the CFPA because they offer or provide 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).

169. 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 consumer-financial 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). 170. Kim is a “related person” and “covered person” under the CFPA because he Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 22 of 49 Page ID #:32

Page 53

COMPLAINT [FILED UNDER TEMPORARY SEAL]

is CAC’s owner and officer and has managerial responsibility for CAC. He controlled CAC’s bank accounts, oversaw CAC’s sales and marketing, entered into contractual relationships on CAC’s behalf with payment processors, and responded to certain consumer complaints.

171. Wen is a “related person” and “covered person” under the CFPA because he is True Count’s owner and officer, has been an owner and manager of CAC, and has had managerial responsibility for both companies. He was involved in making decisions for CAC, including the decision to shift CAC’s processing function to True Count, entered into contractual relationships on behalf of True Count with payment processors, and was a signatory on True Count’s bank accounts.

172. Nguyen is a “related person” and “covered person” under the CFPA because he is an officer of CAC and True Count and has managerial responsibility for CAC , and because he materially participated in the conduct of the Student Loan Debt Relief Companies. He managed CAC’s finances and responded to consumers’ complaints on CAC’s behalf. He also was the point of contact for several of CAC’s and True Count’s merchant accounts.

COUNT I By the Bureau and the States (Advance Fees in Violation of the TSR – Enrollment Fees) (All Defendants)

173. The allegations in paragraphs 1-166 are incorporated by reference. 174. 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, debtmanagement 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, debt-management 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). Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 23 of 49 Page ID #:33

Page 54

COMPLAINT [FILED UNDER TEMPORARY SEAL]

175. In the course of providing, offering to provide, or arranging for others to provide debt-relief services, Defendants charged and collected from consumers enrollment fees before consumers had been approved for IDR plans and before consumers had made any payments toward such IDR plans, in violation of the TSR. 16 C.F.R. § 310. 4(a)(5)(i)(A)-(B).

176. Moreover, because the IDR plans in which consumers were placed often were based on false information about consumers’ family size, income, and marital status that the Defendants submitted to consumers’ student-loan servicers, none of the payments made by consumers in these plans were made pursuant to a “valid contractual agreement” within the meaning of the TSR and thus were collected in violation of the TSR. 16 C.F.R. § 310.4(a)(5)(i)(A)-(B) COUNT II By the Bureau and the States (Advance Fees in Violation of the TSR – Monthly Fees) (All Defendants)

177. The allegations in paragraphs 1-166 are incorporated by reference. 178. In the course of providing, offering to provide, or arranging for others to provide debt-relief services, the Defendants charged and collected from consumers monthly fees before consumers had completed their annual recertifications of eligibility for IDR plans and before consumers had made any payments toward such recertified IDR plans, in violation of the TSR. 16 C.F.R. § 310. 4(a)(5)(i)(A)-(B). 179. Moreover, because the IDR plans in which consumers were placed often were based on false information about consumers’ family size, income, and marital status that Defendants submitted to consumers’ student-loan servicers, none of the payments made by consumers in these plans were made pursuant to a “valid contractual agreement” within the meaning of the TSR and thus were collected in violation of the TSR. 16 C.F.R. § 310.4(a)(5)(i)(A)-(B).

/// /// Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 24 of 49 Page ID #:34

Page 55

COMPLAINT [FILED UNDER TEMPORARY SEAL]

COUNT III By the Bureau and the States (Misrepresentations About Material Aspects of Their Services in Violation of the TSR) (All Defendants)

180. The allegations in paragraphs 1-166 are incorporated by reference. 181. It is a deceptive practice under the TSR for a seller or telemarketer to misrepresent any material aspect of the efficacy of their services and to misrepresent any material aspect of a debt-relief service. 16 C.F.R. § 310.3(a)(2)(iii), (x). 182. Among other things, Defendants misrepresented, directly or indirectly, expressly or by implication that:

fees paid by consumers were payments toward the consumer’s outstanding loan debt;

fees paid by consumers reflected the adjusted amount of the consumers’ periodic payments toward their outstanding loan balance; c.

consumers’ loans would be forgiven in whole or in part shortly after enrolling in Student Loan Debt Relief Companies’ services; d.

consumers were eligible or approved for lower monthly payments, including where such payment amounts had been calculated based on an incorrect family size, income, or marital status; and e.

consumers’ monthly payment amount had been lowered for the life of the repayment plan; and f.

any fees collected would be held in trust accounts maintained by a third-party account provider until the Student Loan Debt Relief Companies had performed certain services.

183. Defendants also failed to inform consumers that: a.

it was Defendants’ practice to submit forbearance requests on behalf of consumers; and b.

it was Defendants’ practice to falsify consumers’ family size, marital

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 25 of 49 Page ID #:35

Page 56

COMPLAINT [FILED UNDER TEMPORARY SEAL]

status, and income to consumers’ student-loan servicers. Defendants’ acts or practices, as set forth in this paragraph, are deceptive acts or practices that violate the TSR, 16 C.F.R. 310.3(a)(2)(iii), (x). COUNT IV By the Bureau and the States (Substantial Assistance in Violation of the TSR) (Individual Defendants)

184. The allegations in paragraphs 1-166 are incorporated by reference. 185. 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 that engages in deceptive or abusive conduct” under the Rule. 16 C.F.R. § 310.3(b). 186. Kim managed both CAC’s and True Count’s day-to-day operations. As CAC’s co-owner and president, Kim oversaw CAC’s marketing and approved its sales scripts.

187. Kim knew, or recklessly avoided knowing, the material misrepresentations and omissions that CAC’s and True Count’s sales representatives and processors made to consumers.

188. Kim knew, or recklessly avoided knowing, that the Student Loan Debt Relief Companies charged and collected enrollment and monthly fees from consumers before the companies had obtained loan-repayment plans for consumers and before consumers had made their first payments toward such repayment plans. 189. Kim represented CAC in contractual relationships with payment processors. 190. As CAC’s point of contact on a merchant account where he agreed to keep chargebacks and fraud below a certain level, Kim knew, or recklessly avoided knowing, that the merchant’s monthly statements identified tens of thousands of dollars in chargebacks and hundreds of thousands of dollars in consumer refunds between August 2017 and March 2019.

191. As CAC’s co-owner and officer and True Count’s owner and officer, Wen

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 26 of 49 Page ID #:36

Page 57

COMPLAINT [FILED UNDER TEMPORARY SEAL]

entered into payment-processing agreements on True Count’s behalf, including at least one where he represented that True Count intended to fully comply with the TSR. 192. As a principal representative for CAC’s and True Count’s merchant accounts and a signatory on the bank accounts from which refunds and chargebacks to consumers were paid, Wen knew, or recklessly avoided knowing, CAC’s and True Count’s high chargeback and refund rates, including that during at least one period, the top chargeback reasons included “fraud.”

193. Wen knew, or recklessly avoided knowing, the material misrepresentations and omissions that CAC’s and True Count’s sales representatives and processors made to consumers.

194. Wen knew, or recklessly avoided knowing, that the Student Loan Debt Relief Companies charged and collected enrollment and monthly fees from consumers before the companies had obtained loan-repayment plans for consumers and before consumers had made their first payments toward such repayment plans. 195. As an officer of CAC and True Count, Nguyen managed CAC’s finances, served as a point of contact for several of CAC’s and True Count’s merchant accounts, and responded to consumer complaints on CAC’s behalf. 196. Because he signed a January 2018 letter from CAC to a payment processor in which he acknowledged that CAC had incurred excessive chargebacks and that fraud was one of the top reasons for such chargebacks, Nguyen knew, or recklessly avoided knowing, the material misrepresentations and omissions that CAC’s and True Count’s sales representatives and processors made to consumers. 197. Nguyen knew, or recklessly avoided knowing, that the Student Loan Debt Relief Companies charged and collected enrollment and monthly fees from consumers before the companies had obtained loan-repayment plans for consumers and before consumers had made their first payments toward such repayment plans. 198. Kim, Wen, and Nguyen provided substantial assistance to the Student Loan Debt Relief Companies in their violations of the TSR.

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 27 of 49 Page ID #:37

Page 58

COMPLAINT [FILED UNDER TEMPORARY SEAL]

COUNT V By the Bureau (CFPA – Deception) (All Defendants)

199. The allegations in paragraphs 1-155 and 167-172 are incorporated by reference.

200. Among other things, Defendants misrepresented, directly or indirectly, expressly or by implication that:

fees paid by consumers were payments toward the consumer’s outstanding loan debt;

fees paid by consumers reflected the adjusted amount of the consumers’ periodic payments toward their outstanding loan balance; c.

consumers’ loans would be forgiven in whole or in part following payment of the initial enrollment fees;

consumers were eligible or approved for lower monthly payments, including where such payment amounts have been calculated based on an incorrect family size, income, or marital status;

consumers’ monthly payment amounts had been lowered for the life of the repayment plan; and f.

any fees collected would be held in trust accounts maintained by a third-party account provider until the Student Loan Debt Relief Companies had performed certain services.

201. The Student Loan Debt Relief Companies also failed to inform consumers that:

it was Defendants’ practice to submit forbearance requests on behalf of consumers; and b.

it was Defendants’ practice to falsify consumers’ family size, marital status, and income to consumers’ student-loan servicers and the consequences for consumers of that practice.

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 28 of 49 Page ID #:38

Page 59

COMPLAINT [FILED UNDER TEMPORARY SEAL]

202. The Student Loan Debt Relief Companies’ representations were material and likely to mislead consumers acting reasonably under the circumstances. 203. Among other things, Kim generated marketing leads for Prime, approved sales scripts for CAC, and managed day-to-day operations for CAC and True Count. He was also aware of CAC’s and True Count’s high chargeback and consumer-refund rates. He participated directly in these representations or had the authority to control them as CAC’s co-owner and president and had knowledge of these 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. 204. Among other things, Wen managed payment-processor relationships on behalf of True Count, was a signatory on True Count’s bank accounts, and was aware of CAC’s and True Count’s high chargeback and consumer-refund rates. He participated directly in these representations or had the authority to control them as CAC’s co-owner and president and True Count’s owner and president and had knowledge of these 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.

205. Among other things, Nguyen managed CAC’s finances, responded to consumer complaints, and served as point of contact on several of CAC’s and True Count’s merchant accounts. He was aware of CAC’s and True Count’s high chargeback and consumer-refund rates. He participated directly in these representations or had the authority to control them and had knowledge of these 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. 206. Defendants have therefore engaged in deceptive acts or practices in violation of §§ 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531, 5536. /// ///

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 29 of 49 Page ID #:39

Page 60

COMPLAINT [FILED UNDER TEMPORARY SEAL]

COUNT VI By the Bureau (Substantial Assistance in Violation of the CFPA) (Individual Defendants)

207. The allegations in paragraphs 1-155 and 167-172 are incorporated by reference.

208. 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). 209. As CAC’s co-owner and president, and as someone who managed the dayto-day operations of CAC and True Count and who generated marketing leads for Prime, Kim knowingly or recklessly provided substantial assistance to the Student Loan Debt Relief Companies in their deceptive acts or practices. 210. As CAC’s co-owner and True Count’s owner and president who was aware that high chargeback and consumer refund rates were attributable at least in part to fraud, Wen knowingly or recklessly provided substantial assistance to the Student Loan Debt Relief Companies in their deceptive acts or practices. 211. As an individual responsible for managing CAC’s finances and responding to consumers’ complaints on behalf of CAC and who was aware that the Student Loan Debt Relief Companies’ high chargeback and consumer-refund rates were attributable at least in part to fraud, Nguyen knowingly or recklessly provided substantial assistance to the Student Loan Debt Relief Companies in their deceptive acts or practices. 212. The Individual Defendants thus 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 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 30 of 49 Page ID #:40

Page 61

COMPLAINT [FILED UNDER TEMPORARY SEAL]

COUNT VII By the Bureau CFPA Violation Based on Violation of TSR (All Defendants)

213. The allegations in paragraphs 1-172 are incorporated by reference. 214. The Bureau is authorized to enforce the Telemarketing Act with respect to the offering or provision of a consumer-financial product or service subject to the CFPA. 15 U.S.C. § 6105(d).

215. Defendants’ violations of the TSR are treated as violations of a rule under § 1031 of the CFPA. 15 U.S.C. § 6102(c).

216. Because Defendants are “covered persons” who violated the TSR by charging and collecting illegal advance fees from consumers and engaging in deceptive conduct, they violated § 1036(a)(1)(A) of the CFPA. 12 U.S.C. § 5536(a)(1)(A). COUNT VIII By the Bureau and the States (Relief Defendants)

217. The allegations in paragraphs 1-216 are incorporated by reference. 218. Relief Defendants Hold the Door, Infinite Management, and TN Accounting have received, directly or indirectly, funds or other assets from Defendants that are traceable to funds obtained from consumers through the deceptive and unlawful practices described herein.

219. The Relief Defendants are not bona fide purchasers with legal or equitable title to the funds or other assets received from Defendants. 220. The Relief Defendants would be unjustly enriched if not required to disgorge funds or the value of the benefits received as a result of Defendants’ unlawful acts or practices.

221. The Relief Defendants therefore hold funds and assets in constructive trust for the benefit of the Student Loan Debt Relief Companies’ customers. /// Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 31 of 49 Page ID #:41

Page 62

COMPLAINT [FILED UNDER TEMPORARY SEAL]

COUNT IX By the State of Minnesota Prevention of Consumer Fraud Act Minn. Stat. § 325F.69, et seq.

(All Defendants)

222. The allegations in paragraphs 1-198 and 217-221 are incorporated by reference.

223. Minnesota Statutes section 325F.69, subdivision 1 reads: The act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale of any merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby, is enjoinable as provided in section 325F.70. 224. The term “merchandise” within the meaning of Minnesota Statutes section 325F.69 includes services. See Minn. Stat. § 325F.68, subd. 2. 225. The term “person” includes “any natural person or legal representative, partnership, corporation (domestic and foreign), company, trust, business entity, or association, and any agent, employee, salesperson, partner, officer, director, member, stockholder, associate, trustee, or cestui que thereof.” Minn. Stat. § 325F.68, subd. 3. Defendants are “persons” within the meaning of the statute. 226. Defendants have repeatedly violated Minnesota Statutes section 325F.69, subdivision 1, by engaging in the deceptive and fraudulent practices described in this Complaint, with the intent that others rely thereon in connection with the sale of their student loan debt relief services. This conduct includes, but is not limited to: a.

Misrepresenting to consumers that Defendants could forgive consumers’ loans and otherwise misrepresenting their ability to reduce or eliminate student loan debt;

Misrepresenting to consumers that the consumers were “approved” for student loan relief, and otherwise misrepresenting their ability to qualify borrowers

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 32 of 49 Page ID #:42

Page 63

COMPLAINT [FILED UNDER TEMPORARY SEAL]

for government programs;

Misrepresenting and falsely leading consumers to believe that Defendants would apply payments made to it to consumers’ loans; d.

Misrepresenting and falsely leading consumers to believe that fees paid by consumers reflected the adjusted amount of the consumers’ periodic payments toward their outstanding loan balance; e.

Misrepresenting to consumers that the amount owed on their student loans would be reduced;

Misrepresenting to consumers that their loans would be forgiven in whole or in part following payment of the enrollment fees; g.

Misrepresenting to consumers that their monthly student loan payment amount had been lowered for the life of the repayment plan; h.

Misrepresenting to consumers that fees collected would be held in trust accounts maintained by a third-party account provider until the Student Loan Debt Relief Companies had performed certain services; i.

Misleading consumers to believe that Defendants are tied to or have a relationship with the federal government or a particular federal debt relief plan; j.

Misrepresenting government programs and payment plan terms to consumers; and k.

The other practices described in this Complaint. 227. Due to the deceptive and fraudulent conduct described in this Complaint, Minnesota consumers have made payments to Defendants for services that they otherwise would not have purchased, thereby causing harm to those consumers. 228. Defendants’ conduct, practices, and actions described in this Complaint constitute multiple, separate violations of Minnesota Statutes section 325F.69. /// /// /// Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 33 of 49 Page ID #:43

Page 64

COMPLAINT [FILED UNDER TEMPORARY SEAL]

COUNT X By the State of Minnesota Uniform Deceptive Trade Practices Act Minn. Stat. § 325F.43, et seq.

(All Defendants)

229. The allegations in paragraphs 1-198 and 217-221 are incorporated by reference.

230. Minnesota Statutes section 325D.44, subdivision 1 provides, in part that: A person engages in a deceptive trade practice when, in the course of business, vocation, or occupation, the person: *** (2) causes likelihood of confusion or of misunderstanding as to the source, sponsorship, approval, or certification of goods or services; *** (5) represents that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have or that a person has a sponsorship, approval, status, affiliation, or connection that the person does not have;

*** (7) represents that goods or services are of a particular standard [or] quality . . . if they are of another;

*** (9) advertises goods or services with intent not to sell them as advertised; [or] *** (13) engages in any other conduct which similarly creates a likelihood of confusion or of misunderstanding.

231. Defendants are “persons” within the meaning of the statute. Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 34 of 49 Page ID #:44

Page 65

COMPLAINT [FILED UNDER TEMPORARY SEAL]

232. Defendants have repeatedly violated Minnesota Statutes section 325D.44, subdivision 1, by, in the course of business, engaging in the deceptive and fraudulent practices described in this Complaint that caused a likelihood of confusion or of misunderstanding among consumers in connection with the sale of Defendants’ student loan debt relief services, including by making false, deceptive, fraudulent, and/or misleading representations to consumers regarding its advertised services. These practices include but are not limited to: a.

Misrepresenting to consumers that Defendants could forgive consumers’ loans and otherwise misrepresenting their ability to reduce or eliminate student loan debt;

Misrepresenting to consumers that the consumers were “approved” for student loan relief, and otherwise misrepresenting their ability to qualify borrowers for government programs;

Misrepresenting and falsely leading consumers to believe that Defendants would apply payments made to it to consumers’ loans; d.

Misrepresenting and falsely leading consumers to believe that fees paid by consumers reflected the adjusted amount of the consumers’ periodic payments toward their outstanding loan balance; e.

Misrepresenting to consumers that the amount owed on their student loans would be reduced;

Misrepresenting to consumers that their loans would be forgiven in whole or in part following payment of the enrollment fees; g.

Misrepresenting to consumers that their monthly student loan payment amount had been lowered for the life of the repayment plan; h.

Page 66

COMPLAINT [FILED UNDER TEMPORARY SEAL]

Misleading consumers to believe that Defendants are tied to or have a relationship with the federal government or a particular federal debt relief plan;

Misrepresenting government programs and payment plan terms to consumers; and k.

The other practices described in this Complaint. 233. Due to the deceptive and fraudulent conduct described in this Complaint, Minnesota consumers have made payments to Defendants for services that they otherwise would not have purchased, thereby causing harm to those consumers. 234. Defendants’ conduct, practices, and actions described in this Complaint constitute multiple, separate violations of Minnesota Statutes section 325D.44. Count XI By the State of North Carolina North Carolina Debt Adjusting Act N.C. Gen. Stat. § 14-423, et seq.

(All Defendants)

235. The allegations in paragraphs 1-198 and 217-221 are incorporated by reference.

236. Defendants are engaged in illegal “debt adjusting” as that term is defined in Article 56 of Chapter 14 of the North Carolina General Statutes. Specifically, N.C. Gen. Stat. § 14-423(2) defines “debt adjusting” as any of the following:

“Debt adjusting” means entering into or making a contract, express or implied, with a particular debtor whereby the debtor agrees to pay a certain amount of money periodically to the person engaged in the debt adjusting business and that person, for consideration, agrees to distribute, or distributes the same among certain specified creditors in accordance with a plan agreed upon.

Debt adjusting includes the business or practice of any person who holds himself out as acting or offering or attempting to act for consideration as an intermediary between a debtor and his creditors for the purpose of settling, compounding, or in any way altering the terms of payment of any debt of a debtor, and to that end receives money or other property from the debtor, or on behalf of the debtor, for the

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 36 of 49 Page ID #:46

Page 67

COMPLAINT [FILED UNDER TEMPORARY SEAL]

payment to, or distribution among, the creditors of the debtor.

Debt adjusting also includes the business or practice of debt settlement . . . whereby any person holds himself or herself out as acting for consideration as an intermediary between a debtor and the debtor’s creditors for the purpose of reducing, settling, or altering the terms of the payment of any debt of the debtor, whether or not the person distributes the debtor’s funds or property among the creditors, and receives a fee or other consideration for reducing, settling, or altering the terms of the payment of the debt in advance of the debt settlement having been completed or in advance of all the services agreed to having been rendered in full.

237. Debt adjusting is prohibited by N.C. Gen. Stat. § 14-424, which provides that “[i]f any person shall engage in, or offer to or attempt to, engage in the business or practice of debt adjusting, or if any person shall hereafter act, offer to act, or attempt to act as a debt adjuster, he shall be guilty of a Class 2 misdemeanor.” 238. Defendants’ offering and purported rendering of debt adjusting services to North Carolina’s debt adjusting statute. Specifically: a.

Defendants have entered into contracts with North Carolina student loan debtors whereby the debtors agree to pay certain amounts of money periodically to Defendants, and Defendants, for consideration, represent or imply that they will distribute debtors’ money among debtors’ student loan servicers or lenders and/or DOE in accordance with a plan agreed upon. b.

Defendants have engaged, and are engaged in, the business or practice of holding themselves out as acting or offering or attempting to act for consideration, as an intermediary between North Carolina student loan debtors and their servicers or lenders and/or DOE for the purpose of settling, compounding, or altering the terms of payment of the student loan debts of the debtors, and to that end receive money from the debtors, or on behalf of the debtors, for the payment to, or distribution among, the student loan creditors of the debtors. c.

Defendants have engaged, and are engaging in, a business or practice in which they hold themselves out as acting or offering or attempting to act, for consideration, as an intermediary between North Carolina student loan debtors and Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 37 of 49 Page ID #:47

Page 68

COMPLAINT [FILED UNDER TEMPORARY SEAL]

their student loan servicers or lenders and/or DOE for the purpose of reducing, settling, or altering the terms of payment of North Carolina debtors’ student loan debts, and defendants receive a fee in advance of the debt settlements having been completed or in advance of all the services agreed to having been rendered in full. 239. Pursuant to N.C. Gen. Stat. § 14-425, the Attorney General is authorized to seek (a) injunctive relief to enjoin Defendants from the continuation of any debt adjusting activities or the offering of any debt adjusting services in North Carolina; (b) the disgorgement of all monies unlawfully collected by Defendants from North Carolina consumers; (c) the appointment of a receiver to assist in the recovery of funds unlawfully collected by Defendants and to ensure their return to consumers; and (d) the assessment of civil penalties under N.C. Gen. Stat. § 75-15.2 and attorneys’ fees for the State under N.C. Gen. Stat. § 75-16.1.

Count XII By the State of North Carolina North Carolina Unfair and Deceptive Practices Act N.C. Gen. Stat. § 75-1.1 (All Defendants)

240. The allegations in paragraphs 1-198, 217-221, and 235-239 are incorporated by reference.

241. In the course of soliciting and promoting their student loan debt relief services to North Carolina consumers, in entering into agreements with North Carolina consumers to provide such services, and in either performing or failing to meaningfully perform those services, defendants have engaged in unfair and deceptive acts and practices in trade or commerce in violation of N.C. Gen. Stat. § 75-1.1. 242. Defendants are engaged in trade or commerce in the State of North Carolina. 243. Defendants’ unfair or deceptive acts and practices include, but are not limited to, the following:

Engaging in violations of the TSR, as set forth supra, which are specifically prohibited by 16 C.F.R. Part 310;

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 38 of 49 Page ID #:48

Page 69

COMPLAINT [FILED UNDER TEMPORARY SEAL]

Engaging in illegal debt adjusting activities, as set forth supra, which are specifically prohibited by N.C. Gen. Stat. 14-423, et seq.; c.

Failing to register as a telephonic seller under North Carolina’s Telephonic Seller Registration Act, N.C. Gen. Stat §§ 66-260 and 66-261, as set forth infra; and d.

Making deceptive and misleading representations to consumers, including but not limited to:

Misrepresenting to consumers that Defendants could forgive consumers’ loans and otherwise misrepresenting Defendants’ ability to reduce or eliminate student loan debt; i.

Misrepresenting to consumers that the consumers were “approved” for student loan relief, and otherwise misrepresenting their ability to qualify borrowers for government programs; ii.

Misrepresenting and falsely leading consumers to believe that Defendants would apply payments made to Defendants to the consumers’ outstanding loans;

iii.

Misrepresenting and falsely leading consumers to believe that fees paid by consumers reflected the adjusted amount of the consumers’ periodic payments toward their outstanding loan balance; iv.

Misrepresenting to consumers that the amount owed on their student loans would be reduced if students signed up for the Student Loan Debt Relief Companies’ services; v.

Misrepresenting to consumers that their loans would be forgiven in whole or in part shortly after enrolling in the Student Loan Debt Relief Companies’ services;

vi.

Misrepresenting to consumers that their monthly student loan payment amount had been lowered for the life of the repayment plan;

vii.

Misrepresenting that consumers were eligible or approved for lower monthly payments, including where such payment amounts Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 39 of 49 Page ID #:49

Page 70

COMPLAINT [FILED UNDER TEMPORARY SEAL]

had been calculated based on an incorrect family size, income, or marital status;

viii.

ix.

Misleading consumers to believe that the Student Loan Debt Relief Companies are tied to or have a relationship with the federal government or a particular federal debt relief plan; x.

Failing to inform consumers that it was their practice to submit false information about consumers’ income, family size, and marital status on loan adjustment applications in order to try to qualify consumers for lower monthly payments; xi.

Misrepresenting government programs and payment plan terms to consumers; and xii.

The other practices described in this Complaint. 244. The Attorney General is authorized to seek an injunction against Defendants’ practices under N.C. Gen. Stat. § 75-14, the restoration of any moneys obtained by defendants from North Carolina consumers as well as the cancellation of defendants’ contracts with North Carolina consumers under N.C. Gen. Stat. § 75-15.1, civil penalties under N.C. Gen. Stat. § 75-15.2, and attorneys’ fees under N.C. Gen. Stat. § 75-16.1.

Count XIII By the State of North Carolina North Carolina Telephonic Seller Registration Act N.C. Gen. Stat. § 66-260 (All Defendants)

245. The allegations in paragraphs 1-198, 217-221, and 235-244 are incorporated by reference.

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 40 of 49 Page ID #:50

Page 71

COMPLAINT [FILED UNDER TEMPORARY SEAL]

246. North Carolina’s Telephonic Seller Registration Act, N.C. Gen. Stat §§ 66- 260 and 66-261, requires any non-exempt person engaged in telephonic solicitations directed to North Carolina consumers to: (a) register with the North Carolina Secretary of State not less than 10 days before commencing telephone solicitations; (b) provide specified information on a form provided by the Secretary of State that contains the notarized signature of each principal of the telephonic seller; and (c) pay a $100.00 filing fee.

247. Pursuant to N.C. Gen. Stat. § 66-261(c), a registration of a telephonic seller is valid for one year from the effective date of the provision of all required information, and may be renewed annually by making the filing required by N.C. Gen. Stat. § 66-262, and paying the filing fee of $100.00.

248. Defendants are a “telephonic seller” as defined in N.C. Gen. Stat. § 66- 260(11), as defendants have caused directly, or through employees or agents, telephone solicitations or attempted telephone solicitations to occur, and Defendants are not exempt from the Act.

249. Defendants have engaged in violations of the Telephonic Seller Registration Act, N.C. Gen. Stat. § 66-260, et seq., by failing to register with the North Carolina Secretary of State as a telephonic seller; by failing to provide the North Carolina Secretary of State with the information mandated by N.C. Gen. Stat. § 66-262; by failing to pay the filing fee of $100.00; and by failing to register in each year defendants have engaged in telephonic solicitations.

250. N.C. Gen. Stat. § 66-266(a) provides that any violation of the Telephonic Seller Registration Act “shall constitute an unfair and deceptive trade practice in violation of N.C. Gen. Stat. §75-1.1.”

251. N.C. Gen. Stat. § 66-266(c) further provides that the remedies and penalties available under the section “shall be supplemental to others available under the law, both civil and criminal.”

252. Pursuant to N.C. Gen. Stat. §§ 66-266(b), in an action by the Attorney Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 41 of 49 Page ID #:51

Page 72

COMPLAINT [FILED UNDER TEMPORARY SEAL]

General against a telephonic seller for violation of the Telephonic Seller Registration Act, or for any other act or practice by a telephonic seller constituting a violation of N.C. Gen. Stat. § 75-1.1, the court may impose civil penalties of up to $25,000 for each violation involving North Carolina purchasers or prospective purchasers who are 65 years of age or older.

Count XIV

By the People of the State of California California Unfair Competition Law Cal. Bus. & Prof. Code § 17200 et seq.

(All Defendants)

253. The People of the State of California re-allege and incorporate herein paragraphs 1 through 221 of this Complaint.

254. California’s UCL, Business and Professions Code section 17200, prohibits any “unlawful, unfair or fraudulent business act[s] or practice[s].” Cal. Bus. & Prof. Code § 17200.

255. Section 17203 of the UCL provides that “(a)ny person performing or proposing to perform an act of unfair competition within this state may be enjoined in any court of competent jurisdiction.” Section 17203 also permits recovery of any “interest in money or property, real or personal” acquired by a violation of the UCL. Cal. Bus. & Prof. Code § 17203.

256. Section 17206, subdivision (a), of the UCL provides that any person violating Section 17200 “shall be liable for a civil penalty not to exceed two thousand five hundred dollars ($2,500) for each violation, which shall be assessed and recovered in a civil action brought in the name of the [P]eople of the State of California . . . by any city attorney of a city having a population in excess of 750,000,” thereby authorizing the City Attorney of Los Angeles, which has a population in excess of 750,000, to bring such an action. Cal. Bus. & Prof. Code § 17206.

257. Under the UCL’s Section 17205, these remedies and penalties are “cumulative to each other and to the remedies or penalties available under all other laws

Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 42 of 49 Page ID #:52

Page 73

COMPLAINT [FILED UNDER TEMPORARY SEAL]

of this state.” Cal. Bus. & Prof. Code § 17205. 258. Defendants are all “persons” within the meaning of UCL. Cal. Bus. & Prof. Code § 17201.

259. “Unlawful” acts or practices, “unfair” acts or practices, and “fraudulent” acts or practices each independently violate Section 17200. Beginning no later than 2015, and continuing to the present, Defendants, and each of them, have repeatedly violated the UCL by engaging in “unlawful, unfair, or fraudulent business act[s] or practice[s]” with the sale of their purported student loan debt settlement services. Cal. Bus & Prof Code § 17200. These violations include, but are not limited to: a. Violating the UCL through the following unlawful acts or practices committed against California consumers, including in the City and County of Los Angeles:

As to Defendants CAC, True Count, Infinite Management, Hold the Door, TN Accounting, Albert Kim, Kaine Wen and Tuong Nguyen violating California Financial Code § 12000 et seq., the California Check Sellers, Bill Payers and Proraters Law, by acting as a check seller, bill payer, or prorater without first obtaining a license from the California Commissioner of Business Oversight. Cal. Fin. Code § 12200; 1. As alleged in Paragraphs 8, 9, 23, 25, 27-31, 41, 43, 45 and 47-148 of this Complaint, California consumers have provided funds to Defendants based upon assurances and representations that Defendants will assist them in reducing or otherwise managing their student loan debts and/or negotiate with their creditors and distribute payments.

2. Defendants are not licensed by the California Corporations Commissioner as required by Financial Code § 12000 et seq. ii.

Violating California Financial Code section 28100, et seq., the California Student Loan Servicing Act, which requires Student Loan Servicers to be Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 43 of 49 Page ID #:53

Page 74

COMPLAINT [FILED UNDER TEMPORARY SEAL]

licensed to lawfully operate, by engaging in the business of servicing student loans in California without obtaining a license as required under the Act;

1. Defendants are “persons” under the Student Loan Servicing Act. Cal. Fin. Code § 28104, subd. (j).

2. As alleged in Paragraphs 8, 9, 23, 25, 27-31, 41, 43, 45 and 47-148 of this Complaint, Defendants have engaged in the business of servicing student loans in California. Cal. Fin. Code § 28104, subds. (f), (g), (l), (m), (n).

3. Defendants have never obtained a license to service student loans as required under the California Student Loan Servicing Act. Cal. Fin. Code § 28102, subd. (a).

iii.

Violating the Telemarketing Sales Rule (“TSR”), which is specifically set forth in 16 C.F.R. Part 310, as alleged in Paragraphs 8-15, 53, 57, 59, 66, 88-89, 156-166, 173-176 (Count I - Advance Fees in Violation of the TSR – Enrollment Fees), 177-179 (Count II - Advance Fees in Violation of the TSR – Monthly Fees), 180-183 (Count III - Misrepresentations About Material Aspects of Their Services in Violation of the TSR), and 184-198 (Count IV - Substantial Assistance in Violation of the TSR); and iv.

Violating the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531 et seq., as alleged in Paragraphs 8-148, 167-172, 199-206 (Count V- CFPA – Deception), 207-212 (Count VI - Substantial Assistance in Violation of the CFPA), and 213-216 (Count VII - CFPA Violation Based on Violation of TSR), as set forth in this Complaint. b. Defendants also violated the UCL through the following unlawful, fraudulent and/or unfair acts or practices committed against California consumers, including consumers in the City of Los Angeles: Case 8:19-cv-01998-JVS-JDE Document 2 Filed 10/21/19 Page 44 of 49 Page ID #:54

The rest of the text is omitted here to keep this page loading quickly; the full document is in the PDF.

Amended complaint (Jan. 2021)

PDF of this document (58 pages)

Page 80

FIRST AMENDED COMPLAINT

BUREAU OF CONSUMER FINANCIAL PROTECTION SARAH PREIS (D.C. Bar No. 997387) (admitted Pro Hac Vice) Tel.: (202)-435-9318 / Email: [email protected] JESSE STEWART (N.Y. Bar No. 5145495) (admitted Pro Hac Vice) Tel: (202)-435-9641 / Email: [email protected] 1700 G Street, NW Washington, DC 20552 Fax: (202) 435-5471

Attorneys for Plaintiff the Bureau of Consumer Financial Protection

THE STATE OF MINNESOTA EVAN ROMANOFF (Attorney Reg. No. 0398223) (admitted Pro Hac Vice) Assistant Attorney General 445 Minnesota Street, Suite 1200 St. Paul, MN 55101-2130 Tel.: (651) 757-1454/Email: [email protected]

Attorneys for Plaintiff the State of Minnesota

THE STATE OF NORTH CAROLINA M. LYNNE WEAVER (N.C. Bar No. 19397) (admitted Pro Hac Vice) MICHAEL T. HENRY (N.C. Bar No. 35338) (admitted Pro Hac Vice) North Carolina Department of Justice 114 W. Edenton Street Raleigh, NC 27602 Tel.: (919) 716-6000 / Fax: (919) 716-6050 Emails: lweaver@ncdoj,gov/[email protected]

Attorneys for Plaintiff the State of North Carolina

THE PEOPLE OF THE STATE OF CALIFORNIA MICHAEL N. FEUER, City Attorney (CA Bar No. 111529) MARY CLARE MOLIDOR, Chief Assistant City Attorney, (CA Bar No. 82404) CHRISTINA V. TUSAN, Supervising Deputy City Attorney (CA Bar No. 192203) WILLIAM PLETCHER, Deputy City Attorney (CA Bar No. 212664) REBECCA MORSE, Deputy City Attorney (CA Bar No. 314853) OFFICE OF THE CITY ATTORNEY 200 N. Main Street, 500 City Hall East Los Angeles, California 90012-4131 Tel: (213) 978-8707/Fax: (213) 978-8112 Emails: [email protected] / [email protected]

Attorneys for Plaintiff the People of the State of California

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 1 of 58 Page ID #:4946

Page 81

FIRST AMENDED COMPLAINT

UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT OF CALIFORNIA

Plaintiffs,

Defendants, and

Infinite Management Corp., f/k/a Infinite Management Solutions Inc.; Hold The Door, Corp.; TN Accounting Inc.; Mice and Men LLC; 1st Generation Holdings, LLC; Sarah Kim, and Anan Enterprise, Inc.,

Relief Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No: SACV 19-1998-MWF(KSx)

FIRST AMENDED COMPLAINT

INTRODUCTION 1.

Page 82

FIRST AMENDED COMPLAINT

Telemarketing and Consumer Fraud and Abuse Prevention Act (Telemarketing Act), 15 U.S.C. §§ 6101-6108, and its implementing regulation, the Telemarketing Sales Rule (TSR), 16 C.F.R. Part 310. The Bureau brings this action against the student-loan debtrelief operation involving Defendants Consumer Advocacy Center Inc., d/b/a Premier Student Loan Center; True Count Staffing Inc., d/b/a SL Account Management; Prime Consulting LLC, d/b/a Financial Preparation Services (collectively, Student Loan Debt Relief Companies); Defendants TAS 2019 LLC, d/b/a Trusted Account Services, Horizon Consultants LLC, and First Priority LLC (collectively, Payment Companies); and Defendants Albert Kim, Kaine Wen, and Tuong Nguyen (collectively, Individual Defendants) (Student Loan Debt Relief Companies, Payment Companies, and Individual Defendants are referred to, collectively, as Defendants). 2.

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 3 of 58 Page ID #:4948

Page 83

FIRST AMENDED COMPLAINT

The People of the State of California (collectively with the States of Minnesota and North Carolina, “the States”), by and through Michael N. Feuer, Los Angeles City Attorney, bring this enforcement action to, among other things, obtain temporary, preliminary, and permanent injunctive relief, restitution, and civil penalties for Defendants’ acts or practices in violation of California’s Business and Professions Code section 17200 et seq. (the “Unfair Competition Law,” or “UCL”) and the Telemarketing Act, 15 U.S.C. §§ 6101-6108, and its implementing regulation, the TSR, 16 C.F.R. Part 310, in connection with student-loan debt-relief operation. 5.

Defendants engaged in an unlawful student-loan debt-relief business that harmed consumers nationwide by charging consumers unlawful advance fees and misrepresenting the terms and conditions of their services. 6.

The Bureau and the States bring this action to stop Defendants’ unlawful conduct, obtain relief for harmed consumers, and impose civil money penalties on Defendants for their unlawful actions.

The Bureau and the States also bring this action against Infinite Management Corporation, Hold the Door, Corp., TN Accounting Inc., Mice and Men LLC, 1st Generation Holdings, LLC, Sarah Kim, and Anan Enterprise, Inc., as Relief Defendants. OVERVIEW 8.

From at least 2015 until the filing of this action, Defendants operated a debt-relief enterprise that deceived thousands of federal-student-loan borrowers and collected over $83 million in illegal advance fees, in violation of the TSR, the CFPA, the MNCFA, the MNDTPA, the NCDAA, the NCUDPA, the NCTSRA, and the UCL. Unless otherwise noted, all references to “borrowers” and “consumers” in this Complaint include California, Minnesota, and North Carolina borrowers and consumers. 9.

The Student Loan Debt Relief Companies, controlled by the Individual Defendants, purported to help federal-student-loan borrowers obtain loan forgiveness or lower monthly payments through programs administered by the U.S. Department of //

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 4 of 58 Page ID #:4949

Page 84

FIRST AMENDED COMPLAINT

Education (DOE).

10.

In fact, the Student Loan Debt Relief Companies deceived consumers, including by misrepresenting that consumers would qualify for loan forgiveness in a matter of months, when forgiveness takes at least 10 years of on-time payments and is determined by DOE; that consumers were approved for lower monthly payments on their student loans, when consumers had not yet been approved or when the new payment amount was approved based on false information; and that consumers’ lower payments would be permanent when in fact they are subject to change based on changes in the consumers’ family size, income, and marital status. 11.

The Student Loan Debt Relief Companies also falsely told consumers, or led consumers to believe, that the consumers’ payments to the companies would go toward paying consumers’ student loan balances.

12.

When describing the services offered to consumers, the Student Loan Debt Relief Companies failed to inform consumers that it was their practice to request that consumers’ loans be placed into forbearance or that interest would continue to accrue during the forbearance period, thereby increasing consumers’ overall loan balances. 13.

When describing the services offered to consumers, the Student Loan Debt Relief Companies failed to inform consumers that it was their practice to submit false information about consumers’ income, family size, and marital status on loan adjustment applications in order to try to qualify consumers for lower monthly payments. 14.

The Student Loan Debt Relief Companies charged consumers an initial fee of $900-$1,750 for their services. This initial fee was typically levied well before consumers had been accepted to and made a payment under their new loan agreement, in violation of the TSR.

15.

At no time did the Student Loan Debt Relief Companies hold consumer payments in independent third-party accounts.

16.

At no time did the Student Loan Debt Relief Companies use payments from consumers to make payments toward consumers’ student loan debts. Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 5 of 58 Page ID #:4950

Page 85

FIRST AMENDED COMPLAINT

17.

The Individual Defendants conducted this operation using a network of several interrelated companies and over a dozen unregistered and fictitious business names. The Student Loan Debt Relief Companies operated as a common enterprise controlled by the Individual Defendants, rendering each jointly and severally liable for the illegal acts of the Student Loan Debt Relief Companies. JURISDICTION AND VENUE 18.

19.

Venue is proper in this district pursuant to 12 U.S.C. § 5564(f) because Defendants are located, reside, or do business in this district. PARTIES 20.

21.

22.

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 6 of 58 Page ID #:4951

Page 86

FIRST AMENDED COMPLAINT

behalf of the State of Minnesota and its citizens to enforce Minnesota law. 23.

25.

Defendant Consumer Advocacy Center Inc. (CAC) is a California corporation formed on August 6, 2014, and it has held itself out as doing business at the following addresses: 173 Technology Drive, Suite 202, Irvine, CA 92618; 29901 Santa Margarita Pkwy, Suite 200F, Rancho Santa Margarita, CA 92688; 8 Hughes Parkway, Irvine, CA 92618; 5350 E Suncrest Rd., Anaheim, CA 92807; and 24852 Acropolis Dr., Mission Viejo, CA 92691.

26.

CAC has held itself out as doing business as Premier Student Loan Center. 27.

CAC transacted its student-loan debt-relief business in the Central District of California since at least November 2015.

28.

29.

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 7 of 58 Page ID #:4952

Page 87

FIRST AMENDED COMPLAINT

30.

True Count has held itself out as doing business as SL Account Management.

31.

Prime has held itself out as doing business as Financial Preparation Services. 33.

Defendant TAS 2019 LLC, d/b/a Trusted Account Services (TAS) is a Wyoming limited liability corporation that has held itself out as doing business at two locations affiliated with companies providing resident agent services in Wyoming, 109 E. 17th Street Suite 5656, Cheyenne, WY, 82001, and 30 N Gould Street, Suite R, Sheridan, WY 82801; a rented virtual office address at 17011 Beach Blvd., Suite 900, Huntington Beach, CA 92467; and a residential address affiliated with its purported owner, Kenny Huang, in Arcadia, CA.

34.

TAS 2019 LLC’s operations and principal place of business were located in the Central District of California.

35.

Defendant Horizon Consultants LLC (Horizon) is a Wyoming limited liability corporation that has been registered to operate in California since October 2018. It has held itself out as doing business at 2522 Chambers Rd Suite 100 Rm 209, Tustin, CA 92780.

36.

Defendant First Priority LLC d/b/a Priority Account Management (First Priority) is a Wyoming limited liability corporation that has been registered to operate in California since May 2018. It has held itself out as doing business at 1704 South Granada Ave, Alhambra, CA 91801.

37.

Defendant Albert Kim (a/k/a Albert King) is CAC’s primary owner and founder.

38.

Kim is a resident of the State of California and performed work for CAC while residing in this jurisdiction.

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 8 of 58 Page ID #:4953

Page 88

FIRST AMENDED COMPLAINT

39.

Kim exercised substantial control over CAC’s business practices. 40.

Kim exercised managerial responsibility for CAC and participated in the conduct of its affairs.

41.

42.

Wen is a resident of the State of California and performed work for CAC and True Count while residing in this jurisdiction. 43.

Wen exercised substantial control over True Count’s business practices. 44.

Wen exercised managerial responsibility for True Count and participated in the conduct of its affairs.

45.

Wen exercised managerial responsibility for CAC and participated in the conduct of its affairs.

46.

Defendant Tuong Nguyen (a/k/a Tom Nelson) served as CAC’s controller and as True Count’s secretary.

47.

Nguyen is a resident of the State of California and performed work for CAC and True Count while residing in this jurisdiction. 48.

Nguyen exercised managerial responsibility for CAC and participated in the conduct of its affairs.

49.

Nguyen exercised managerial responsibility for True Count and participated in the conduct of its affairs.

50.

51.

Kim served as Infinite Management’s registered agent and president, and he is the sole signatory on a bank account belonging to it. Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 9 of 58 Page ID #:4954

Page 89

FIRST AMENDED COMPLAINT

52.

Hold the Door was incorporated by Wen, and he has served as its sole corporate officer.

54.

Relief Defendant TN Accounting Inc. (TN Accounting) is a California corporation that filed its Articles of Incorporation with the California Secretary of State on February 8, 2017, and it has listed its principal place of business address of 1704 S. Granada Ave, Alhambra, CA 91801 in corporate filings with the Secretary of State. 55.

Nguyen has served as TN Accounting’s president and sole corporate officer. 56.

Relief Defendant Mice and Men LLC (Mice and Men) is a Wyoming corporation incorporated in December 2018 that has listed its principal place of business as 30 N. Gould St, Ste R, Sheridan, WY 82801.

57.

Registered Agents Inc., is Mice and Men’s registered agent in Wyoming, and is the company that filed the Wyoming articles of organization for Mice and Men. The address for Registered Agents, Inc., is 30 N. Gould St, Ste R, Sheridan, WY 82801. 58.

Mice and Men is purportedly owned by Judy Dai, Defendant Wen’s mother, who resides in Monterey Park, CA.

59.

Judy Dai was listed with Registered Agents Inc. as the contact person for Mice and Men, using her Monterey Park, CA residence as the mailing address. 60.

Invoices from Registered Agents Inc. for services rendered for Mice and Men were billed to Mice and Men, LLC, Judy Dai, at Judy Dai’s Monterey Park, CA residence.

61.

Relief Defendant 1st Generation Holdings, LLC (1st Generation) is a Wyoming corporation with its principal place of business in Downey, California. 62.

Relief Defendant Sarah Kim is Defendant Kim’s wife. She is a resident of the State of California.

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 10 of 58 Page ID #:4955

Page 90

FIRST AMENDED COMPLAINT

63.

Relief Defendant Anan Enterprise, Inc. (Anan Enterprise), is a California corporation that has listed its principal place of business as 2080 E. 25th Street, Vernon, CA 90058. Anan Enterprise is owned by Defendant Albert Kim’s brother-in-law and Relief Defendant Sarah Kim’s brother, Kyle Kim.

FACTS Student Loan Forgiveness and Repayment Programs 64.

66.

The Student Loan Debt Relief Companies 68.

CAC began offering student-loan debt-relief services purporting to lower consumers’ monthly loan payments and obtain loan forgiveness through enrollment in

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 11 of 58 Page ID #:4956

Page 91

FIRST AMENDED COMPLAINT

loan forgiveness or IDR plans as early as November 2015. 69.

Initially, CAC’s internal structure included sales, processing, and customerservice departments.

70.

In March 2018, Kim and Wen moved CAC’s processing and customerservice operations into a new entity, True Count. 73.

As part of this shift, CAC’s processing and customer-service departments physically moved to a new office location.

74.

As early as April 2018, CAC transferred its sales functions to a new entity, Prime, which ultimately assumed CAC’s role as the main sales company enrolling consumers for True Count’s services.

76.

The Individual Defendants, through True Count and Prime, set up First Priority, Horizon, and TAS to collect payments from consumers. Debt Relief Sales and Business Practices 77.

The Student Loan Debt Relief Companies marketed their debt-relief services through inbound and outbound calls, websites, social media, and direct mail. 78.

When consumers called the front-end sales company (CAC or Prime), the consumer first spoke with a sales representative. 79.

Sales representatives instructed consumers on how to create an ID and password for consumers’ online accounts with Federal Student Aid (FSA), an office of Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 12 of 58 Page ID #:4957

Page 92

FIRST AMENDED COMPLAINT

DOE, if the consumer had not previously done so. The sales representatives then instructed the consumer to provide the sales representative with the consumer’s FSA ID and password.

80.

Sales representatives downloaded student-loan data from the consumer’s online FSA account into the company’s customer–relationship-management system. 81.

Sales representatives often stated that there was an urgent need to sign up for the respective Student Loan Debt Relief Company’s services. 82.

For example, some sales representatives told consumers that they had a limited time in which they could apply for an IDR program. 83.

At times, sales representatives represented that the respective Student Loan Debt Relief Company was affiliated with DOE.

Representations about Fees 84.

During sales calls, sales representatives made affirmative representations or material omissions about the purpose of the fees paid by consumers to the Student Loan Debt Relief Companies.

85.

Sales representatives frequently represented that the fees would be applied to the balance of consumers’ student loans.

86.

In fact, the fees paid to the Student Loan Debt Relief Companies were in addition to, and did not relieve consumers of, their obligation to pay their student loans. 89.

Page 93

FIRST AMENDED COMPLAINT

90.

In fact, consumers can apply free of charge for loan forgiveness or IDR programs, either through their student-loan servicer or directly to the DOE. 91.

Moreover, consumers can recertify annually their eligibility to remain enrolled in their IDR plans through their student-loan servicer for free. Representations about Loan Forgiveness 92.

The Student Loan Debt Relief Companies’ sales representatives often told consumers that they were qualified or approved for loan forgiveness. 93.

Sales representatives frequently represented to consumers that they could get consumers’ student loans forgiven in whole or in part shortly after enrolling in the respective Student Loan Debt Relief Company’s services. 94.

The DOE’s loan forgiveness programs require anywhere from 10-25 years of qualifying payments, as well as satisfaction of other eligibility criteria, to qualify for loan forgiveness.

95.

Only the DOE can approve consumers for loan forgiveness. 96.

The Student Loan Debt Relief Companies’ sales representatives often told consumers that they qualified or were approved for a specific lower monthly payment. 98.

In fact, the new, lower monthly payment amount identified by sales representatives was often calculated based on an incorrect family size, income, or marital status.

99.

Sales representatives often represented that consumers’ lower monthly payment would be in place over the life of the loan. 100. In fact, monthly payment amounts are determined by student loan servicers and can fluctuate year to year depending on changes in consumers’ income, family size, Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 14 of 58 Page ID #:4959

Page 94

FIRST AMENDED COMPLAINT

or marital status, and it is therefore not possible to determine a set monthly payment for an IDR plan for the life of the loan.

Preparing and Submitting Forbearance Requests and IDR Plan Applications 101. Following an initial sales call, consumers who purchased the Student Loan Debt Relief Companies’ services were assigned to a company representative called a “processor.”

102. Processors conducted a “welcome call” during which they typically asked consumers for proof of income and, at times, verified certain information. 103. Following the welcome call, processors submitted forbearance requests to student-loan servicers on behalf of consumers.

104. Processors typically asked for a forbearance period of three months in the forbearance requests they submitted.

105. If a servicer approves a forbearance request, the consumer is excused from making his or her monthly student loan payments during the period of forbearance. But interest on the consumer’s student loan accrues during the period of forbearance and may be added to the principal balance.

106. Typically, consumers were not informed during sales calls or the welcome call that processors would submit forbearance requests on their behalf. 107. Typically, consumers were not informed during sales calls or the welcome call that interest on the consumer’s student loan accrues during the period of forbearance and may be added to the principal balance.

108. In fact, most consumers did not ask the Student Loan Debt Relief Companies for forbearance requests, and many consumers were not aware that the Student Loan Debt Relief Companies submitted forbearance requests to their student loan servicers on their behalf.

109. Processors signed the forbearance requests in the consumer’s name so that it appeared the request was submitted by the consumer. //

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 15 of 58 Page ID #:4960

Page 95

FIRST AMENDED COMPLAINT

110. Many consumers were unaware the fees they paid to the Student Loan Debt Relief Companies were not paying down their student loans. Submitting Consolidation and IDR Requests with False Information 111. Processors submitted IDR applications to servicers on behalf of consumers with false information about consumers’ income, family size, or marital status. 112. For consumers who did not provide proof of income to the Student Loan Debt Relief Companies, processors frequently listed those consumers as unemployed on their IDR applications, even when the consumers were employed at the time. 113. Processors frequently submitted IDR applications to consumers’ student loan servicers that listed consumers’ family sizes greater than the consumers’ actual family size.

114. Processors frequently submitted IDR applications to consumers’ student loan servicers that listed consumers as single, even if the consumer had informed the Student Loan Debt Relief Companies that he or she was married. 115. When submitting IDR applications to consumers’ student loan servicers, processors typically changed consumers’ email address to an email address created by the Student Loan Debt Relief Company in order to temporarily divert all email correspondence from the consumer’s student-loan servicer to the Student Loan Debt Relief Company.

116. When submitting IDR applications to consumers’ student-loan servicers, processors typically changed consumers’ mailing address to a mailing address used by the Student Loan Debt Relief Company in order to temporarily divert all postal mail from the consumer’s student-loan servicer to the Student Loan Debt Relief Company. 117. After receiving confirmation from a consumer’s student loan servicer that a consumer’s loan consolidation or IDR application had been approved, processors typically logged back into the consumer’s loan account and changed the consumers email and mailing address back to the consumer’s actual information. //

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 16 of 58 Page ID #:4961

Page 96

FIRST AMENDED COMPLAINT

118. The Student Loan Debt Relief Companies’ practice of diverting correspondence to consumers from the consumers’ student-loan servicers helped conceal the Student Loan Debt Relief Companies’ practice of submitting false information to student loan servicers.

Representations about and Collection of Fees from Consumers 119. The Student Loan Debt Relief Companies typically collected enrollment fees from consumers before consumers had been approved for a loan consolidation or an IDR plan.

120. The Student Loan Debt Relief Companies collected monthly fees, typically ranging from $10-$42, before submitting the consumer’s corresponding annual IDR plan recertification.

121. At all times material to this Complaint, the Student Loan Debt Relief Companies did not track whether consumers had made an initial payment on an adjusted loan.

122. As early as April 2018, the Student Loan Debt Relief Companies’ contracts began including a section entitled “No Advance Fees.” 123. The section of the Student Loan Debt Relief Companies’ contract entitled “No Advance Fees” states that the company “does not take any advance fees from Client” and further provides that consumer fees will be held in an independent third party “trust account” and not paid to the company until the consumer “has received a consolidation, adjustment, or otherwise satisfactory result” and makes one payment “towards such.” 124. At all times material to this Complaint, the Student Loan Debt Relief Companies did not use trust accounts to hold fees collected from consumers before placing consumers into loan repayment plans – at no time did the Student Loan Debt Relief Companies hold payments from consumers in accordance with Section 310.4(a)(5)(ii) of the TSR.

125. Rather, fees collected from consumers by the Student Loan Debt Relief Companies were directly deposited into the companies’ bank accounts and commingled

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 17 of 58 Page ID #:4962

Page 97

FIRST AMENDED COMPLAINT

with company assets.

126. The Defendants have collected over $83 million in illegal advance fees from thousands of consumers nationwide.

Roles of the Individual Defendants 127. Albert Kim (a/k/a Albert King) is CAC’s primary owner and manager. 128. Kim was in the office frequently and helped manage CAC’s and True Count’s day-to-day operations.

129. Kim oversaw CAC’s marketing.

130. Kim signed CAC’s merchant-account applications or agreements with at least three different payment processors.

131. At times, Kim personally responded to consumers’ complaints. 132. Kim controlled CAC’s bank accounts, and was an authorized user on CAC’s and True Count’s bank accounts.

133. When Kim applied for a merchant account on CAC’s behalf in or about July 2017, he agreed to maintain fraud and chargebacks below certain levels. 134. Monthly account statements sent to CAC’s corporate address for that merchant account identify tens of thousands of dollars in chargebacks and hundreds of thousands of dollars in consumer refunds between August 2017 and March 2019. 135. After CAC filed for bankruptcy, Kim personally generated marketing leads for Prime.

136. Kaine Wen served as CAC’s owner, managing partner, and general counsel. 137. CAC’s 2016 tax returns and U.K. registration documents list Wen as CAC’s 50% owner.

138. Wen made capital contributions to CAC in October 2015 that accounted for 75% of capital contributions by members at that time. 139. Wen participated in the decision to move CAC’s processing functions to True Count.

140. Wen personally guaranteed True Count’s lease agreement.

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 18 of 58 Page ID #:4963

Page 98

FIRST AMENDED COMPLAINT

141. Wen set up payment-processing agreements for True Count. 142. Wen corresponded with payment processors regarding True Count’s excessive chargeback rates.

143. Wen represented to a payment processor that True Count “understands, currently fully complies with, and during the term of the Agreement will fully comply with” the TSR, CFPA, and “all other applicable federal, state, and local laws, rules, and regulations.”

144. Wen has been an authorized user on CAC’s, Premier Student Loan Center’s, True Count’s, and Hold the Door’s bank accounts. 145. Wen was also a point of contact or signed for at least three merchant accounts for CAC and at least one merchant account for True Count. 146. Tuong Nguyen served as the controller and provided accounting services for CAC.

147. Nguyen was responsible for paying CAC’s bills, reviewed its bank statements, and was a signatory on several of CAC’s bank accounts. 148. At times, Nguyen also responded to consumer complaints, and was listed as a point of contact for CAC’s d/b/a, Premier Student Loan Center, in the Bureau’s consumer-complaint portal.

149. True Count identified Nguyen as its secretary in some communications with banks.

150. Nguyen was a point of contact for at least two of CAC’s merchant accounts and one of True Count’s merchant accounts.

151. In January 2018, Nguyen signed a letter to a payment processor acknowledging CAC had incurred “excessive chargebacks” during “December/2017.” 152. Nguyen also acknowledged that the top chargeback reasons included fraud. 153. Nguyen incorporated TN Accounting and served as its president and sole corporate officer.

154. Nguyen has been a signatory on a bank account held by TN Accounting. Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 19 of 58 Page ID #:4964

Page 99

FIRST AMENDED COMPLAINT

155. TN Accounting’s primary source of income is over $225,000 from CAC and True Count from March 2017 through December 2018. 156. Nguyen was also an authorized user on bank accounts held by CAC, Premier Student Loan Center, and True Count.

Roles of the Payment Companies 157. The Individual Defendants, True Count, and Prime used TAS, Horizon, and First Priority to obtain merchant accounts and to collect fees from consumers. 158. In September 2019, the Individual Defendants, True Count, and Prime transferred customer payment processing to TAS.

159. TAS held itself out as an “independent third party” in its contracts with consumers.

160. In fact, TAS was not independent of Defendants. 161. Rather, TAS was run from within True Count and Prime by the Individual Defendants.

162. TAS’s domain credentials (username and password) were stored in an account in Albert Kim’s name.

163. The Individual Defendants and the Student Loan Debt Relief Companies controlled TAS’s email system, and the Student Loan Debt Relief Companies’ employees reviewed and responded to consumers’ emails sent to TAS. Defendant Wen executed or acted as TAS’s agent to handle the application necessary for TAS to open a merchant account to process payments from the Student Loan Debt Relief Companies’ consumers. Wen and True Count’s Operations Manager created a fictional employee to interact with True Count’s and Prime’s software provider to promote the appearance of TAS as an entity independent of Defendants.

164. Since September 12, 2019, until the date of the temporary restraining order issued by this Court, TAS collected approximately $3 million in payments from consumers.

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 20 of 58 Page ID #:4965

Page 100

FIRST AMENDED COMPLAINT

165. The Individual Defendants, True Count, and Prime used Horizon to process consumers’ payments to the student-loan debt-relief enterprise. 166. Horizon’s incorporation documents list Keneth Hu, an IT professional employed by the Student Loan Debt Relief Companies, as its Chief Executive Officer and President.

167. Notwithstanding Mr. Hu’s nominal ownership, Defendants Wen, Nguyen, True Count, and Prime exercised substantial control over Horizon. 168. Defendant Nguyen was a signatory on a Horizon bank account. 169. Defendant Wen was Horizon’s designated contact on a merchant account. 170. Defendant True Count asserts that Horizon holds over $700,000 for its benefit.

171. Horizon’s stated business address was leased by Defendant Prime Consulting.

172. Horizon applied for at least two merchant accounts to process consumer payments (including any associated chargebacks or refunds) on behalf of the Student Loan Debt Relief Companies.

173. Defendants Wen and Nguyen received a finalized payment processor application for a merchant account with Quantum Electronic Payments on Horizon’s behalf.

174. Defendant Wen later instructed Hu to sign the application for a merchant account with Quantum Electronic Payments.

175. Horizon processed about $9 million in consumer payments through at least one of its payment processor accounts on behalf of the Student Loan Debt Relief Companies.

176. The Individual Defendants, True Count, and Prime used First Priority to open merchant accounts to receive consumer payments to the student loan debt relief enterprise.

// Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 21 of 58 Page ID #:4966

Page 101

FIRST AMENDED COMPLAINT

177. The Individual Defendants, True Count, and Prime used First Priority to obtain and then copy documents, such as agreements and contracts, for use by TAS in the student-loan debt-relief operation.

178. First Priority’s corporate registration identifies Defendant Nguyen as its president and sole owner.

179. Defendants Kim and Wen served as contacts on behalf of First Priority for a payment processor.

180. First Priority’s income in 2018 and 2019 consisted of approximately $400,000 in transfers from True Count and $150,000 in consumer fees collected through two payment processor accounts on behalf of Prime and True Count. The Student Loan Debt Relief Companies Operated as a Common Enterprise 181. CAC, True Count, and Prime shared employees, customers, scripts, and training materials, and they used the same database to store consumers’ information and track aspects of their business activity.

182. CAC, True Count, and Prime shared the proceeds of the debt-relief enterprise.

183. For example, since April 2018, True Count, acting as the purported “billing department” for CAC and Prime, has transferred at least $12 million to CAC and at least $25 million to Prime.

184. CAC lent hundreds of thousands of dollars to True Count without interest or any written agreement.

185. CAC stated in a lease guarantee that it had a “financial interest” in True Count.

186. CAC guaranteed at least one lease on behalf of Prime Consulting and two leases on behalf of True Count.

187. CAC, True Count, and Prime have used overlapping addresses to carry out the debt-relief operation.

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 22 of 58 Page ID #:4967

Page 102

FIRST AMENDED COMPLAINT

188. For example, addresses True Count identifies as its business addresses are also business addresses for CAC, Prime, and Hold the Door. 189. To market their debt-relief services to consumers, CAC, True Count, and Prime shared over a dozen fictitious names, including but not limited to South Coast Financial Center, Direct Account Services, Financial Loan Advisors, Account Preparation Services, Administrative Financial, Tangible Savings Solutions, Coastal Shores Financial Group, First Choice Financial Centre (a/k/a First Choice Financial Center), Administrative Account Services, Primary Account Solutions, Prime Document Services, Financial Accounting Center, Doc Management Solutions, First Priority LLC, ALW Loans Administrative Accounting Center, Best Choice Financial Center, First Document Services, Global Direct Accounting Solutions, Keystone Document Center, Pacific Palm Financial Group, Pacific Shores Advisory, Sequoia Account Management, Signature Loan Solutions, Yellowstone Account Services, ClearStudentLoanDebt, and Clear Student Loan Debt.

190. The websites for Doc Management Solutions, Financial Accounting Center, Prime Document Services, Primary Account Solutions, Administrative Account Services, South Coast Financial Center, First Choice Financial Center, Coastal Shores Financial Group, Tangible Savings Solutions, Administrative Financial, Account Preparation Services, Financial Loan Advisors, and Direct Account Services are nearly identical. Transfer of Assets to Relief Defendants 191. Defendants Wen, Kim, and Nguyen directed and controlled Relief Defendants Hold the Door, Infinite Management, and TN Accounting, respectively. 192. Wen, Kim, and Nguyen are the signatories on bank accounts for the respective companies and thus controlled the flow of money into and out of their corporate accounts.

193. From 2017 to 2019, payments from CAC or True Count made up most or almost all the income of Hold the Door, Infinite Management, and TN Accounting. // Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 23 of 58 Page ID #:4968

Page 103

FIRST AMENDED COMPLAINT

194. Monies were transferred from Hold the Door, Infinite Management, and TN Accounting to the respective individuals’ personal accounts or to pay their personal expenses.

195. Hold the Door made over $200,000 in direct transfers to Wen’s personal bank accounts, and it made payments for purchases of art and for Wen’s Tesla and Mercedes Benz automobiles.

196. Infinite Management made more than $300,000 in payments to pay Kim’s personal credit cards, wedding expenses, dental expenses, and to purchase luxury cars. 197. Infinite Management purchased approximately $87,500 in jewelry, paid over $200,000 to purchase a luxury vehicle, and spent approximately $60,000 as a down payment for a second luxury vehicle for Relief Defendant Sarah Kim. 198. Sarah Kim is not employed by Infinite Management, nor has she ever done business with Infinite Management.

199. TN Accounting transferred over $100,000 to Nguyen’s personal bank accounts and made payments on Nguyen’s personal credit cards and Tesla. 200. In December 2018, Mice and Men opened a banking account with Bank of America, listing Judy L Dai as the signor, and a related debit card was issued to Mice and Men LLC Judy L Dai.

201. In December 2018, a total of 14 deposits and credits were received in the Mice and Men account at Bank of America from Prime Consulting, totaling $5,041,039. Thirteen of the deposits and credits were for purported marketing expenses, and one was for purported residual expenses. During its existence, no other deposits were made into this account.

202. In January 2019, a bank account in the name of Mice and Men was opened with UBS, listing Judy L Dai as the signor.

203. In or around February 2019, Bank of America notified Mice and Men that Bank of America was closing the Mice and Men account. // Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 24 of 58 Page ID #:4969

Page 104

FIRST AMENDED COMPLAINT

204. In February 2019, a bank check from Bank of America in the amount of $5,041,039 was deposited into the Mice and Men account at UBS. This represented the entire balance in the Mice and Men Bank America account. 205. In April 2019, Defendant Wen was granted third party access to the Mice and Men account at UBS, which gave him the ability to view account information, balances, monthly statements and tax information. 206. In the Corporate Financial Statement submitted by True Count Staffing pursuant to the October 21, 2019 Temporary Restraining Order (TRO), True Count identified the Mice and Men UBS account, which contained approximately $4 million, as being held by True Count Staffing.

207. Defendant Wen is the 100% owner of True Count Staffing. 208. Prime transferred approximately $4 million to 1st Generation Holdings over the last three years.

209. True Count’s Corporate Financial Statement submitted pursuant to the TRO identified funds in 1st Generation Holdings accounts as held for the benefit of True Count.

210. Between 2017-2018, CAC paid Anan Enterprise approximately $3.6 million ostensibly for services, but Anan Enterprise never rendered those services. LEGAL BACKGROUND The TSR 211. 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).

212. The TSR defines a “seller” as “any person who, in connection with a //

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 25 of 58 Page ID #:4970

Page 105

FIRST AMENDED COMPLAINT

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). 213. 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).

214. 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).

215. The Student Loan Debt Relief Companies offered services to renegotiate, settle, or alter the terms of payments of consumers’ federal student loans by submitting requests for loan forgiveness or IDR plans to consumers’ student-loan servicers. 216. The Student Loan Debt Relief Companies offered and provided these services to consumers nationwide using the telephones and employed more than one interstate telephone call.

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

218. The Student Loan Debt Relief Companies are each a “telemarketer” or “seller” offering a “debt relief service” under the TSR. 219. Kim arranged for CAC to provide debt-relief services to consumers in exchange for consideration and personally generated marketing leads for Prime. Kim is a “telemarketer” or “seller” offering a “debt relief service” under the TSR. 16 C.F.R. § 310.2(dd), (ff), (o).

220. Wen arranged for CAC and True Count to provide debt-relief services to consumers in exchange for consideration. Wen is a “seller” offering a “debt relief service” under the TSR. 16 C.F.R. § 310.2(dd), (o). // Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 26 of 58 Page ID #:4971

Page 106

FIRST AMENDED COMPLAINT

221. Nguyen arranged for CAC and True Count to provide debt-relief services to consumers in exchange for consideration. Nguyen is a “seller” offering a “debt relief service” under the TSR. 16 C.F.R. § 310.2(dd), (o). 222. TAS is a “seller” because it provided, offered to provide, or arranged for others to provide third-party dedicated account services to consumers “in connection with a telemarketing transaction.” 16 C.F.R. § 310.2(dd). The CFPA 223. Sections 1031 and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531, 5536(a)(1)(B), prohibit “covered person[s]” and “service provider[s]” from engaging in any “unfair, deceptive, or abusive act or practice.” 224. The Student Loan Debt Relief Companies are each “covered persons” under the CFPA because they offer or provide 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).

225. TAS is a “covered person” under the CFPA because it offered or provided consumer-financial products or services, including by “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.” 12 U.S.C. § 5481(15)(iv).

226. The CFPA also defines “covered person” to include “(B) any affiliate of a person [that engages in offering or providing a consumer financial product or service] if such affiliate acts as a service provider to such person.” 12 U.S.C. § 5481(6). 227. Section 1002(1) of the CFPA defines the term “affiliate” to mean “any person that controls, is controlled by, or is under common control with another person.” 12 U.S.C. § 5481(1).

228. Section 1002(26)(A) of the CFPA defines the term “service provider” to mean “any person that provides a material service to a covered person in connection with

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 27 of 58 Page ID #:4972

Page 107

FIRST AMENDED COMPLAINT

the offering or provision by such covered person of a consumer financial product or service, including a person that-- … (ii) processes transactions relating to the consumer financial product or service ….” 12 U.S.C. § 5481(26)(A)(ii). 229. TAS, Horizon and First Priority are affiliates of the Student Loan Debt Relief Companies because they are controlled by the Student Loan Debt Relief Companies. Further, by processing consumer payments made to the Student Loan Debt Relief Companies, TAS, Horizon, and First Priority acted as service providers to the Student Loan Debt Relief Companies. TAS, Horizon, and First Priority are each “covered persons” under the CFPA.

230. 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 consumer-financial 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). 231. Kim is a “related person” and “covered person” under the CFPA because he is CAC’s owner and officer and had managerial responsibility for CAC. He controlled CAC’s bank accounts, oversaw CAC’s sales and marketing, entered into contractual relationships on CAC’s behalf with payment processors, and responded to certain consumer complaints.

232. Wen is a “related person” and “covered person” under the CFPA because he is True Count’s owner and officer, has been an owner and manager of CAC, and has had managerial responsibility for both companies. He was involved in making decisions for CAC, including the decision to shift CAC’s processing function to True Count, entered into contractual relationships on behalf of True Count with payment processors, and was a signatory on True Count’s bank accounts.

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 28 of 58 Page ID #:4973

Page 108

FIRST AMENDED COMPLAINT

233. Nguyen is a “related person” and “covered person” under the CFPA because he is an officer of CAC and True Count and has managerial responsibility for CAC, and because he materially participated in the conduct of the Student Loan Debt Relief Companies. He managed CAC’s finances and responded to consumers’ complaints on CAC’s behalf. He also was the point of contact for several of CAC’s and True Count’s merchant accounts.

COUNT I By the Bureau and the States (Advance Fees in Violation of the TSR – Enrollment Fees) (The Student Loan Debt Relief Companies and Individual Defendants)

234. The allegations in paragraphs 1-222 are incorporated by reference. 235. 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, debtmanagement 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, debt-management 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). 236. In the course of providing, offering to provide, or arranging for others to provide debt-relief services, the Student Loan Debt Relief Companies and Individual Defendants charged and collected from consumers enrollment fees before consumers had been approved for IDR plans and before consumers had made any payments toward such IDR plans, in violation of the TSR. 16 C.F.R. § 310. 4(a)(5)(i)(A)-(B). 237. Moreover, because the IDR plans in which consumers were placed often were based on false information about consumers’ family size, income, and marital status that the Student Loan Debt Relief Companies submitted to consumers’ student-loan servicers, none of the payments made by consumers in these plans were made pursuant to a “valid contractual agreement” within the meaning of the TSR and thus were collected in

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 29 of 58 Page ID #:4974

Page 109

FIRST AMENDED COMPLAINT

violation of the TSR. 16 C.F.R. § 310.4(a)(5)(i)(A)-(B). COUNT II By the Bureau and the States (Advance Fees in Violation of the TSR – Monthly Fees) (The Student Loan Debt Relief Companies and Individual Defendants)

238. The allegations in paragraphs 1-222 are incorporated by reference. 239. In the course of providing, offering to provide, or arranging for others to provide debt-relief services, the Student Loan Debt Relief Companies and Individual Defendants charged and collected from consumers monthly fees before consumers had completed their annual recertifications of eligibility for IDR plans and before consumers had made any payments toward such recertified IDR plans, in violation of the TSR. 16 C.F.R. § 310. 4(a)(5)(i)(A)-(B).

240. Moreover, because the IDR plans in which consumers were placed often were based on false information about consumers’ family size, income, and marital status that the Student Loan Debt Relief Companies submitted to consumers’ student-loan servicers, none of the payments made by consumers in these plans were made pursuant to a “valid contractual agreement” within the meaning of the TSR and thus were collected in violation of the TSR. 16 C.F.R. § 310.4(a)(5)(i)(A)-(B). COUNT III By the Bureau and the States (Misrepresentations About Material Aspects of Their Services in Violation of the TSR) (The Student Loan Debt Relief Companies and Individual Defendants)

241. The allegations in paragraphs 1-222 are incorporated by reference. 242. It is a deceptive practice under the TSR for a seller or telemarketer to misrepresent any material aspect of the efficacy of their services and to misrepresent any material aspect of a debt-relief service. 16 C.F.R. § 310.3(a)(2)(iii), (x). 243. Among other things, the Student Loan Debt Relief Companies and Individual Defendants misrepresented, directly or indirectly, expressly or by implication that:

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 30 of 58 Page ID #:4975

Page 110

FIRST AMENDED COMPLAINT

fees paid by consumers were payments toward the consumer’s outstanding loan debt;

fees paid by consumers reflected the adjusted amount of the consumers’ periodic payments toward their outstanding loan balance; c.

consumers’ loans would be forgiven in whole or in part shortly after enrolling in the Student Loan Debt Relief Companies’ services; d.

consumers were eligible or approved for lower monthly payments, including where such payment amounts had been calculated based on an incorrect family size, income, or marital status;

consumers’ monthly payment amount had been lowered for the life of the repayment plan; and f.

any fees collected would be held in trust accounts maintained by a third-party account provider until the Student Loan Debt Relief Companies had performed certain services.

244. The Student Loan Debt Relief Companies and Individual Defendants also failed to inform consumers that:

it was their practice to submit forbearance requests on behalf of consumers; and b.

it was their practice to falsify consumers’ family size, marital status, and income to consumers’ student-loan servicers. 245. The acts or practices of the Individual Defendants and Student Loan Debt Relief Companies, as set forth in this Count, are deceptive acts or practices that violate the TSR, 16 C.F.R. 310.3(a)(2)(iii), (x). COUNT IV By the Bureau and the States (Misrepresentations About Material Aspects of Their Services in Violation of the TSR) (True Count, Prime, and TAS)

246. The allegations in paragraphs 1-222 are incorporated by reference. Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 31 of 58 Page ID #:4976

Page 111

FIRST AMENDED COMPLAINT

247. It is a deceptive practice under the TSR for a seller or telemarketer to misrepresent any material aspect of the efficacy of their services and to misrepresent any material aspect of a debt-relief service. 16 C.F.R. § 310.3(a)(2)(iii), (x). 248. True Count, Prime, and TAS misrepresented, directly or indirectly, expressly or by implication, that TAS was an independent third-party provider of dedicated customer escrow accounts.

249. The misrepresentations relate to a material aspect of a debt-relief service. 250. The acts or practices of the Individual Defendants, Student Loan Debt Relief Companies, and TAS, as set forth in this paragraph, are deceptive acts or practices that violate the TSR, 16 C.F.R. 310.3(a)(2)(iii), (x).

COUNT V By the Bureau and the States (Substantial Assistance in Violation of the TSR) (Individual Defendants)

251. The allegations in paragraphs 1-222 are incorporated by reference. 252. 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). 253. Kim managed both CAC’s and True Count’s day-to-day operations. As CAC’s co-owner and president, Kim oversaw CAC’s marketing and approved its sales scripts.

254. Kim knew, or recklessly avoided knowing, the material misrepresentations and omissions that CAC’s and True Count’s sales representatives and processors made to consumers.

255. Kim knew, or recklessly avoided knowing, that the Student Loan Debt Relief Companies charged and collected enrollment and monthly fees from consumers before the companies had obtained loan-repayment plans for consumers and before consumers had made their first payments toward such repayment plans.

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 32 of 58 Page ID #:4977

Page 112

FIRST AMENDED COMPLAINT

256. Kim represented CAC in contractual relationships with payment processors. 257. As CAC’s point of contact on a merchant account where he agreed to keep chargebacks and fraud below a certain level, Kim knew, or recklessly avoided knowing, that the merchant’s monthly statements identified tens of thousands of dollars in chargebacks and hundreds of thousands of dollars in consumer refunds between August 2017 and March 2019.

258. As CAC’s co-owner and officer and True Count’s owner and officer, Wen entered into payment-processing agreements on CAC’s and True Count’s behalf, including at least one where he represented that True Count intended to fully comply with the TSR.

259. As a principal representative for CAC’s and True Count’s merchant accounts and a signatory on the bank accounts from which refunds and chargebacks to consumers were paid, Wen knew, or recklessly avoided knowing, CAC’s and True Count’s high chargeback and refund rates, including that during at least one period, the top chargeback reasons included “fraud.”

260. Wen knew, or recklessly avoided knowing, the material misrepresentations and omissions that CAC’s and True Count’s sales representatives and processors made to consumers.

261. Wen knew, or recklessly avoided knowing, that the Student Loan Debt Relief Companies charged and collected enrollment and monthly fees from consumers before the companies had obtained loan-repayment plans for consumers and before consumers had made their first payments toward such repayment plans. 262. As an officer of CAC and True Count, Nguyen managed CAC’s finances, served as a point of contact for several of CAC’s and True Count’s merchant accounts, and responded to consumer complaints on CAC’s behalf. 263. Because he signed a January 2018 letter from CAC to a payment processor in which he acknowledged that CAC had incurred excessive chargebacks and that fraud was one of the top reasons for such chargebacks, Nguyen knew, or recklessly avoided

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 33 of 58 Page ID #:4978

Page 113

FIRST AMENDED COMPLAINT

knowing, the material misrepresentations and omissions that CAC’s and True Count’s sales representatives and processors made to consumers. 264. Nguyen knew, or recklessly avoided knowing, that the Student Loan Debt Relief Companies charged and collected enrollment and monthly fees from consumers before the companies had obtained loan-repayment plans for consumers and before consumers had made their first payments toward such repayment plans. 265. Kim, Wen, and Nguyen provided substantial assistance to the Student Loan Debt Relief Companies in their violations of the TSR. COUNT VI By the Bureau and the States (Substantial Assistance in Violation of the TSR) (Payment Companies)

266. The allegations in paragraphs 1-222 are incorporated by reference. 267. 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 that [constitutes deceptive or abusive conduct]” under the Rule. 16 C.F.R. § 310.3(b). 268. The Payment Companies knew, or consciously avoided knowing, the material misrepresentations that the Student Loan Debt Relief Companies made to consumers.

269. The Payment Companies 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 loanforgiveness plans were approved, and before consumers had made the first payments under the altered terms of their student loans.

270. The Payment Companies provided substantial assistance to the Student Loan Debt Relief Companies in their violations of the TSR. 16 C.F.R. § 310.3(b) // //

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 34 of 58 Page ID #:4979

Page 114

FIRST AMENDED COMPLAINT

COUNT VII By the Bureau (CFPA – Deception) (The Student Loan Debt Relief Companies and Individual Defendants)

271. The allegations in paragraphs 1-210 and 223-233 are incorporated by reference.

272. Among other things, the Student Loan Debt Relief Companies and Individual Defendants misrepresented, directly or indirectly, expressly or by implication that:

fees paid by consumers were payments toward the consumer’s outstanding loan debt;

fees paid by consumers reflected the adjusted amount of the consumers’ periodic payments toward their outstanding loan balance; c.

consumers’ loans would be forgiven in whole or in part following payment of the initial enrollment fees;

consumers were eligible or approved for lower monthly payments, including where such payment amounts have been calculated based on an incorrect family size, income, or marital status; e.

consumers’ monthly payment amounts had been lowered for the life of the repayment plan; and f.

any fees collected would be held in trust accounts maintained by a third-party account provider until the Student Loan Debt Relief Companies had performed certain services.

273. The Student Loan Debt Relief Companies also failed to inform consumers that:

it was their practice to submit forbearance requests on behalf of consumers; and // //

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 35 of 58 Page ID #:4980

Page 115

FIRST AMENDED COMPLAINT

it was their practice to falsify consumers’ family size, marital status, and income to consumers’ student-loan servicers and the consequences for consumers of that practice.

274. The Student Loan Debt Relief Companies’ representations were material and likely to mislead consumers acting reasonably under the circumstances. 275. Among other things, Kim generated marketing leads for Prime, approved sales scripts for CAC, and managed day-to-day operations for CAC and True Count. He was also aware of CAC’s and True Count’s high chargeback and consumer-refund rates. He participated directly in these representations or had the authority to control them as CAC’s co-owner and president and had knowledge of these 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. 276. Among other things, Wen managed payment-processor relationships on behalf of True Count, was a signatory on True Count’s bank accounts, and was aware of CAC’s and True Count’s high chargeback and consumer-refund rates. He participated directly in these representations or had the authority to control them as CAC’s co-owner and president and True Count’s owner and president and had knowledge of these 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.

277. Among other things, Nguyen managed CAC’s finances, responded to consumer complaints, and served as point of contact on several of CAC’s and True Count’s merchant accounts. He was aware of CAC’s and True Count’s high chargeback and consumer-refund rates. He participated directly in these representations or had the authority to control them and had knowledge of these 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. // Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 36 of 58 Page ID #:4981

Page 116

FIRST AMENDED COMPLAINT

278. The Student Loan Debt Relief Companies and Individual Defendants 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 By the Bureau (CFPA – Deception) (True Count, Prime, and TAS)

279. The allegations in paragraphs 1-210 and 223-233 are incorporated by reference.

280. True Count, Prime, and TAS misrepresented, directly or indirectly, expressly or by implication, that TAS was an independent third-party provider of dedicated customer accounts.

281. The representations were material and likely to mislead consumers acting reasonably under the circumstances.

282. True Count, Prime, and TAS 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 By the Bureau (Substantial Assistance in Violation of the CFPA) (Individual Defendants)

283. The allegations in paragraphs 1-210 and 223-233 are incorporated by reference.

284. 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). 285. As CAC’s co-owner and president, and as someone who managed the dayto-day operations of CAC and True Count and who generated marketing leads for Prime, Kim knowingly or recklessly provided substantial assistance to the Student Loan Debt

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 37 of 58 Page ID #:4982

Page 117

FIRST AMENDED COMPLAINT

Relief Companies in their deceptive acts or practices. 286. As CAC’s co-owner and True Count’s owner and president who was aware that high chargeback and consumer refund rates were attributable at least in part to fraud, Wen knowingly or recklessly provided substantial assistance to the Student Loan Debt Relief Companies in their deceptive acts or practices. 287. As an individual responsible for managing CAC’s finances and responding to consumers’ complaints on behalf of CAC and who was aware that the Student Loan Debt Relief Companies’ high chargeback and consumer-refund rates were attributable at least in part to fraud, Nguyen knowingly or recklessly provided substantial assistance to the Student Loan Debt Relief Companies in their deceptive acts or practices. 288. The Individual Defendants thus 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 X By the Bureau (Substantial Assistance in Violation of the CFPA) (Payment Companies)

289. The allegations in paragraphs 1-210 and 223-233 are incorporated by reference.

290. 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). 291. The Payment Companies knew, or recklessly avoided knowing, the material misrepresentations that the Student Loan Debt Relief Companies made to consumers. 292. The Payment Companies 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 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 38 of 58 Page ID #:4983

Page 118

FIRST AMENDED COMPLAINT

COUNT XI By the Bureau CFPA Violation Based on Violation of TSR (All Defendants)

293. The allegations in paragraphs 1-233 are incorporated by reference. 294. The Bureau is authorized to enforce the Telemarketing Act with respect to the offering or provision of a consumer-financial product or service subject to the CFPA. 15 U.S.C. § 6105(d).

295. A violation of the TSR “committed by a person subject to the Consumer Financial Protection Act of 2010 shall be treated as a violation of a rule under Section 1031 of [the CFPA] regarding unfair, deceptive, or abusive acts or practices.” 15 U.S.C. § 6102.

296. Section 1031 of the CFPA provides that “[t]he Bureau may prescribe rules applicable to a covered person or service provider identifying as unlawful unfair, deceptive, or abusive acts or practices in connection with any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service.” 12 U.S.C. § 5531(b). 297. Defendants’ violations of the TSR are treated as violations of a rule under § 1031 of the CFPA. 15 U.S.C. § 6102(c).

298. Because Defendants are “covered persons” who violated the TSR by charging and collecting illegal advance fees from consumers and engaging in deceptive conduct, they violated § 1036(a)(1)(A) of the CFPA. 12 U.S.C. § 5536(a)(1)(A). COUNT XII By the Bureau and the States (Relief Defendants) 299. The allegations in paragraphs 1-233 are incorporated by reference. 300. Relief Defendants Hold the Door, Infinite Management, TN Accounting, Mice and Men, 1st Generation Holdings, Sarah Kim, and Anan Enterprise have received, directly or indirectly, funds or other assets from Defendants that are traceable to funds Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 39 of 58 Page ID #:4984

Page 119

FIRST AMENDED COMPLAINT

obtained from consumers through the deceptive and unlawful practices described herein. 301. The Relief Defendants are not bona fide purchasers with legal or equitable title to the funds or other assets received from Defendants. 302. The Relief Defendants would be unjustly enriched if not required to disgorge funds or the value of the benefits received as a result of Defendants’ unlawful acts or practices.

303. The Relief Defendants therefore hold funds and assets in constructive trust for the benefit of the Student Loan Debt Relief Companies’ customers. COUNT XIII By the State of Minnesota Prevention of Consumer Fraud Act Minn. Stat. § 325F.69, et seq.

(The Student Loan Debt Relief Companies and Individual Defendants)

304. The allegations in paragraphs 1-270 and 299-303 are incorporated by reference.

305. Minnesota Statutes section 325F.69, subdivision 1 reads: 306. The act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale of any merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby, is enjoinable as provided in section 325F.70.

307. The term “merchandise” within the meaning of Minnesota Statutes section 325F.69 includes services. See Minn. Stat. § 325F.68, subd. 2. 308. The term “person” includes “any natural person or legal representative, partnership, corporation (domestic and foreign), company, trust, business entity, or association, and any agent, employee, salesperson, partner, officer, director, member, stockholder, associate, trustee, or cestui que thereof.” Minn. Stat. § 325F.68, subd. 3. The Student Loan Debt Relief Companies and Individual Defendants are “persons” within the meaning of the statute.

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 40 of 58 Page ID #:4985

Page 120

FIRST AMENDED COMPLAINT

309. The Student Loan Debt Relief Companies and Individual Defendants repeatedly violated Minnesota Statutes section 325F.69, subdivision 1, by engaging in the deceptive and fraudulent practices described in this Complaint, with the intent that others rely thereon in connection with the sale of their student loan debt relief services. This conduct includes, but is not limited to:

Misrepresenting to consumers that the Student Loan Debt Relief Companies could forgive consumers’ loans and otherwise misrepresenting their ability to reduce or eliminate student loan debt; b.

Misrepresenting to consumers that the consumers were “approved” for student loan relief, and otherwise misrepresenting their ability to qualify borrowers for government programs;

Misrepresenting and falsely leading consumers to believe that the Student Loan Debt Relief Companies would apply payments made to it to consumers’ loans;

Misrepresenting and falsely leading consumers to believe that fees paid by consumers reflected the adjusted amount of the consumers’ periodic payments toward their outstanding loan balance; e.

Misrepresenting to consumers that the amount owed on their student loans would be reduced;

Misrepresenting to consumers that their loans would be forgiven in whole or in part following payment of the enrollment fees; g.

Misrepresenting to consumers that their monthly student loan payment amount had been lowered for the life of the repayment plan; h.

Misleading consumers to believe that the Student Loan Debt Relief Companies were tied to or had a relationship with the federal government

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 41 of 58 Page ID #:4986

Page 121

FIRST AMENDED COMPLAINT

or a particular federal debt relief plan;

Misrepresenting government programs and payment plan terms to consumers; and The other practices described in this Complaint. 310. Due to the deceptive and fraudulent conduct described in this Complaint, Minnesota consumers made payments to Defendants for services that they otherwise would not have purchased, thereby causing harm to those consumers. 311. Defendants’ conduct, practices, and actions described in this Complaint constitute multiple, separate violations of Minnesota Statutes section 325F.69. COUNT XIV By the State of Minnesota Uniform Deceptive Trade Practices Act Minn. Stat. § 325F.43, et seq.

(The Student Loan Debt Relief Companies and Individual Defendants)

312. The allegations in paragraphs 1-270 and 299-311 are incorporated by reference.

313. Minnesota Statutes section 325D.44, subdivision 1 provides, in part that: A person engages in a deceptive trade practice when, in the course of business, vocation, or occupation, the person:

*** (2) causes likelihood of confusion or of misunderstanding as to the source, sponsorship, approval, or certification of goods or services; *** (5) represents that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have or that a person has a sponsorship, approval, status, affiliation, or connection that the person does not have;

*** (7) represents that goods or services are of a particular standard [or] quality . . . if they are of another;

*** (9) advertises goods or services with intent not to sell them as advertised; [or] *** (13) engages in any other conduct which similarly creates a likelihood of

Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 42 of 58 Page ID #:4987

Page 122

FIRST AMENDED COMPLAINT

confusion or of misunderstanding.

314. The Student Loan Debt Relief Companies and Individual Defendants are “persons” within the meaning of the statute. 315. The Student Loan Debt Relief Companies and Individual Defendants repeatedly violated Minnesota Statutes section 325D.44, subdivision 1, by, in the course of business, engaging in the deceptive and fraudulent practices described in this Complaint that caused a likelihood of confusion or of misunderstanding among consumers in connection with the sale of Defendants’ student loan debt relief services, including by making false, deceptive, fraudulent, and/or misleading representations to consumers regarding its advertised services. These practices include but are not limited to:

Misrepresenting to consumers that the Student Loan Debt Relief Companies could forgive consumers’ loans and otherwise misrepresenting their ability to reduce or eliminate student loan debt; b.

Misrepresenting to consumers that the consumers were “approved” for student loan relief, and otherwise misrepresenting their ability to qualify borrowers for government programs;

Misrepresenting and falsely leading consumers to believe that the Student Loan Debt Relief Companies would apply payments made to it to consumers’ loans;

Misrepresenting and falsely leading consumers to believe that fees paid by consumers reflected the adjusted amount of the consumers’ periodic payments toward their outstanding loan balance; e.

Misrepresenting to consumers that the amount owed on their student loans would be reduced;

Misrepresenting to consumers that their loans would be forgiven in whole or in part following payment of the enrollment fees; // Case 8:19-cv-01998-MWF-KS Document 134 Filed 02/24/20 Page 43 of 58 Page ID #:4988

The rest of the text is omitted here to keep this page loading quickly; the full document is in the PDF.

Judgment (Jan. 2021)

PDF of this document (21 pages)

Page 138

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA Bureau of Consumer Financial Protection, et al.,

Plaintiffs,

Consumer Advocacy Center Inc., d/b/a Premier Student Loan Center, et al.,

Defendants.

CASE NO. 8:19-cv-01998 MWF (KS)

The Honorable Michael W. Fitzgerald

DEFAULT JUDGMENT AND ORDER AGAINST DEFENDANTS FIRST PRIORITY LLC AND TRUE COUNT STAFFING INC.

DEFAULT JUDGMENT AND ORDER AS TO DEFENDANTS FIRST PRIORITY LLC AND TRUE COUNT STAFFING INC.

Plaintiffs the Bureau of Consumer Financial Protection, the State of Minnesota, the State of North Carolina, and the People of the State of California commenced this civil action on October 21, 2019, alleging violations of state and federal law against multiple defendants, including True Count Staffing, Inc. (“True Count”) and First Priority LLC (“First Priority”) (collectively, “Default Defendants”), for their roles in an illegal student loan debt-relief scheme. (See Docket No. 2). On February 24, 2020, Plaintiffs filed the operative First Amended Complaint (“FAC”), naming, among others, Defendants True Count and First Priority. (Docket No. 134).

Plaintiffs’ filed their Application for Default Judgment Against Defendant First Priority LLC (the “First Priority Application”) on September 10, 2020. (Docket No. 219). Plaintiffs filed their Application for Default Judgment Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 1 of 21 Page ID #:6508

Page 139

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

Against Defendant True Count Staffing, Inc. (the “True Count Application”) on November 13, 2020. (Docket No. 233).

In a Minute Order dated December 1, 2020, and for the reasons stated therein, this Court granted the Applications in part. (Docket No. 243). Now, therefore, pursuant to Rules 54, 55(b), 58(b)(2), and 65(d) of the Federal Rules of Civil Procedure, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED as follows:

FINDINGS 1.

The 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. This Court has supplemental jurisdiction over the States’ claims pursuant to 28 U.S.C. § 1367. Venue is proper in this district pursuant to 12 U.S.C. § 5564(f), because Defendants are located, reside, or do business in this District.

Default Defendants have been properly served with the FAC. 3.

First Priority has not filed an answer to the FAC and is not an infant, incompetent, or serving in the military. (See generally Docket); (Declaration of Nathan Dimock (“Dimock Decl. 1”) ¶ 9 (Docket No. 219-2)). The Clerk entered default against First Priority on August 21, 2020. (See Docket No. 213).

True Count’s Answer to the FAC was stricken on November 3, 2020, for failure to retain counsel, and to date, True Count has not filed an answer to the FAC. (See Docket No. 230). True Count is not an infant, incompetent, or serving in the military. (See generally Docket); (Declaration of Nathan Dimock (“Dimock Decl. 2”) ¶ 10 (Docket No. 233-2)). The Clerk entered default against True Count on November 3, 2020. (Docket No. 231). Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 2 of 21 Page ID #:6509

Page 140

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

Plaintiffs have satisfied the procedural requirements for obtaining default judgment against Default Defendants.

Plaintiffs have stated claims on which they can recover. 7.

Because Default Defendants are in default, the allegations in the First Amended Complaint are taken as true as against Default Defendants. 8.

With the exception of the strong policy favoring a decision on the merits, which is not dispositive, the 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 Default Defendants.

Because damages are capable of ascertainment from definite figures contained in the documentary evidence and affidavits submitted by Plaintiffs, the Court need not hold a hearing prior to entering judgment by default. See Davis v. Fendler, 650 F.2d 1154, 1161 (9th Cir. 1981). 10.

Judgment is entered against First Priority, in favor of Plaintiffs, as to First Priority’s violation of: (1) the Telemarketing Sales Rule (“TSR”), 16 C.F.R. § 310.3(b) (Count VI); (2) Section 1036(a)(3) the Consumer Financial Protection Act (“CFPA”), 12 U.S.C. § 5536(a)(3) (Count X); (3) the CFPA based on its violations of the TSR, 15 U.S.C. § 6102 (Count IX); (4) the North Carolina Unfair and Deceptive Practices Act (“NCUDPA”), N.C. Gen. Stat. § 75-1.1 (Count XVI); and (5) the California Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200 et seq. (Count XVIII). 11.

Judgment is entered against True Count, in favor of Plaintiffs, as to the following violations and counts: (1) the CFPA, 12 U.S.C. §§ 5531, 5536(a), 5564 & 5565; (2) the Telemarketing and Consumer Fraud and Abuse Prevention Act (“TCFAPA”), 15 U.S.C. §§ 6101-6108, and the TSR (Counts I- IV, VII-VIII, & XI); (3) the Minnesota Prevention of Consumer Fraud Act (“MNCFA”), Minn. Stat. § 325F.69, et seq. (Count XIII), and Uniform Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 3 of 21 Page ID #:6510

Page 141

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

Deceptive Trade Practices Act (“MNDTPA”), Minn. Stat. § 325D.43, et seq. (Count XIV); (4) the North Carolina Debt Adjusting Act (“NCDAA”), N.C. Gen. Stat. § 14-423, et seq. (Count XV), the NCUDPA (Count XVI), and Telephonic Seller Registration Act (NCTSRA), N.C. Gen. Stat. § 66-260, et seq. (Count XVII); and (5) the UCL (Count XVIII). 12.

Plaintiffs seek: (1) a permanent injunction to prevent future violations of the relevant federal and state statutes; (2) monetary relief to redress injury to consumers; and (3) civil money penalties. (First Priority Application at 18); (True Count Application at 20). These requests are proper because they do not “differ in kind from, or exceed in amount, what is demanded in the pleadings.” Craigslist, Inc. v. Naturemarket, Inc., 694 F. Supp. 2d 1039, 1051 (N.D. Cal. 2010) (quoting Fed. R. Civ. P. 54(c)); (see FAC ¶ 352). The Court determines that a permanent injunction is warranted here. 13.

With respect to First Priority, Plaintiffs request disgorgement and restitution in the net amount of fees paid by consumers, $165,848.05, which Plaintiffs calculated by totaling the amount in fees charged to consumers that were transferred to First Priority by third-party payment processors, plus the total net deposits from accounts controlled by True Count that were retained by First Priority. (First Priority Application at 20-22) (citing Declaration of Mansour Heidari (“Heidari Decl. 1”) ¶¶ 4-5, 13 (Docket No. 219-3)). 14.

With respect to True Count, Plaintiffs request disgorgement and restitution in the amount of True Count’s net revenues, $55,360,817.14, which Plaintiffs calculated by analyzing True Count’s profit and loss statements, general ledger, and bank records. (True Count Application at 22-23) (citing Declaration of Mansour Heidari (“Heidari Decl. 2”) ¶¶ 3-6, Ex. 1 (Docket No. 233-3)). Plaintiffs indicate that this amount excludes fees taken by third parties and refunds to consumers. (Id. at 22).

Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 4 of 21 Page ID #:6511

Page 142

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

15.

The Court determines that it need not hold a hearing to enter default judgment against First Priority and True Count because the monetary relief is capable of mathematical calculation. Moreover, the Court determines that the evidence submitted by Plaintiffs supports a judgment of $165,848.05 against First Priority, a reasonable calculation of the amount of money lost by consumers, and $55,360,817.14 against True Count, a reasonable calculation of True Count’s net revenues.

16.

Plaintiffs also request civil money penalties against First Priority and True Count under the CFPA and UCL (Cal. Bus. Prof. Code § 17206). Civil money penalties are also authorized against True Count under Minn. Stat. § 8.31 and N.C. Gen. Stat. § 75-15.2.

17.

Considering the size of First Priority’s financial resources and the gravity of its violations, the Court determines that $2,500,000 is an appropriate penalty under the CFPA. With respect to the UCL penalties, the Court determines that a $1,250,000 penalty is appropriate. Accordingly, the Court imposes a total of $3,750,000 in statutory penalties against First Priority. 18.

True Count’s potential monetary penalties total $70,716,064 for reckless violations of the CFPA, and at least $1,502,500 for UCL violations, which total amounts that exceed True Count’s present financial resources. Taking into account True Count’s current assets, the Court determines that ordering True Count to pay a penalty of $30,000,000 for violations of the CFPA and UCL is appropriate. Accordingly, the Court imposes a total of $30,000,000 in statutory penalties against True Count.

19.

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.

20. Entry of this Order is in the public interest. Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 5 of 21 Page ID #:6512

Page 143

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

DEFINITIONS The following definitions apply to this Order: 1.

“Affected Consumers” includes any consumer who paid any of the Defendants or their officers, agents, servants, employees, or attorneys for any Debt-Relief Service from November 2, 2015, to October 23, 2019. 2.

“Assets” means any legal or equitable interest in, right to, or claim to any real, personal, or intellectual property owned or controlled by, or held, in whole or in part for the benefit of, or subject to access by any Defendant or Relief Defendant, wherever located, whether in the United States or abroad. This includes, but is not limited to, chattel, goods, instruments, equipment, fixtures, general intangibles, effects, leaseholds, contracts, mail or other deliverables, shares of stock, commodities, futures, inventory, checks, notes, accounts, credits, receivables (as those terms are defined in the Uniform Commercial Code), funds, cash, and trusts, including but not limited to any trust held for the benefit of First Priority and True Count. 3.

“Assist[ing] Others” includes, but is not limited to: a.

consulting in any form whatsoever;

providing paralegal or administrative support services; c.

performing customer service functions, including but not limited to, receiving or responding to consumer complaints; d.

formulating or providing, or arranging for the formulation or provision of, any marketing support material or service, including Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 6 of 21 Page ID #:6513

Page 144

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

but not limited to, web or Internet Protocol addresses or domain name registration for any Internet websites, affiliate marketing services, or media placement services; f.

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

performing marketing, billing, or payment services of any kind; and h.

acting or serving as an owner, officer, director, manager, or principal of any entity.

“Bureau” means the Bureau of Consumer Financial Protection. 5.

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. 6.

“Defendants” means Corporate Defendants and Individual Defendants, individually, collectively, or in any combination, and each of them by whatever names each might be known; Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 7 of 21 Page ID #:6514

Page 145

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

“Corporate Defendants” means Consumer Advocacy Center Inc., True Count, Prime Consulting LLC, TAS 2019 LLC, Horizon Consultants LLC, and First Priority, collectively, or in any combination, and their successors and assigns, and each of them by any other names by which they might be known, including South Coast Financial Center, Direct Account Services, Financial Loan Advisors, Account Preparation Services, Administrative Financial, Tangible Savings Solutions, Coastal Shores Financial Group, First Choice Financial Centre (a/k/a First Choice Financial Center), Administrative Account Services, Primary Account Solutions, Prime Document Services, Financial Accounting Center, Doc Management Solutions, First Priority LLC, ALW Loans, Administrative Accounting Center, Best Choice Financial Center, First Document Services, Global Direct Accounting Solutions, Keystone Document Center, Pacific Palm Financial Group, Pacific Shores Advisory, Sequoia Account Management, Signature Loan Solutions, Yellowstone Account Services, ClearStudentLoanDebt, Clear Student Loan Debt, Trusted Account Services, Premier Student Loan Center, and Priority Account Management; b.

“Receivership Defendants” means True Count, Prime Consulting LLC, TAS 2019 LLC, Horizon Consultants LLC, and Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 8 of 21 Page ID #:6515

Page 146

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

First Priority, collectively, or in any combination, and their successors and assigns;

“Relief Defendants” means:

Sarah Kim, and any other names by which she might be known.

“Default Defendants” means Defendants True Count and First Priority, and their successors and assigns, and any other names by which they might be known.

“Effective Date” means the date on which this Order is entered by the Court.

“Enforcement Director” means the Assistant Director of the Office of Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 9 of 21 Page ID #:6516

Page 147

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

10.

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

11.

“Receiver” means Thomas W. McNamara and his successors or assigns.

13.

“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 either of the Default Defendants based on substantially the same facts as described in the Amended Complaint. 14.

“States” means the State of Minnesota, the State of North Carolina, and the People of the State of California.

15.

“Service Provider” means any person that provides a material service to a covered person, in connection with the offering or provision by such covered person of a Consumer Financial Product or Service, including a person that: (i) participates in designing, operating, or maintaining the Consumer Financial Product or Service; or (ii) processes transactions relating to the Consumer Financial Product or Service (other than unknowingly or incidentally transmitting or processing financial data in a manner that such data is undifferentiated from other types of data of the same form as the person transmits or processes). “Service provider” does not include a person solely by virtue of such person offering or providing to a covered person: (i) a support service of a type provided to businesses generally or a similar ministerial service; or (ii) time or space for an advertisement for Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 10 of 21 Page ID #:6517

Page 148

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

a Consumer Financial Product or Service through print, newspaper, or electronic media.

ORDER I Permanent Ban on Telemarketing and Offering or Selling Debt-Relief Services It is ORDERED that:

16.

Default Defendants, whether acting directly or indirectly, are permanently restrained from any of the following: a.

participating in telemarketing or Assisting Others engaged in telemarketing any Consumer Financial Product or Service; b.

participating in or Assisting Others in advertising, marketing, promoting, offering for sale, selling, or providing any Debt-Relief Service; and c.

Nothing in this Order shall be read as an exception to this Paragraph. II Prohibited Misrepresentations and Other Conduct It is FURTHER ORDERED that:

17.

Default Defendants and their officers, agents, servants, employees, and attorneys, and all other Persons in active concert or participation with them, who have actual notice of this Order by personal service or otherwise, whether acting directly or indirectly, in connection with the advertising, marketing, Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 11 of 21 Page ID #:6518

Page 149

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

promotion, offering for sale, sale, or performance of any Consumer Financial Product or Service, may not misrepresent, or Assist Others in misrepresenting, expressly or impliedly:

the time required to achieve benefits from the Consumer Financial Product or Service;

the total costs or any other material term, fact, restriction, limitation, or condition of the Consumer Financial Product or Service.

III State Injunctive Provisions It is FURTHER ORDERED that:

18.

Default 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 by personal service or otherwise, shall be permanently restrained and enjoined from violating the North Carolina Debt Adjusting Act, N.C. Gen. Stat. § 14-423, et seq., Unfair and Deceptive Practices Act, N.C. Gen. Stat. § 75-1.1, and Telephonic Seller Registration Act, N.C. Gen. Stat. § 66-260, et seq.

Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 12 of 21 Page ID #:6519

Page 150

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

19.

True Count and its officers, agents, servants, employees, and attorneys, and all other Persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, shall be permanently restrained and enjoined from violating the Minnesota Prevention of Consumer Fraud Act, Minn. Stat. § 325F.69, et seq., and Uniform Deceptive Trade Practices Act, Minn. Stat. § 325D.43, et seq. 20.

Under the Court’s inherent equitable powers and as authorized by California Business and Professions Code section 17203, this Court is empowered to “make such orders or judgments . . . as may be necessary to prevent the use or employment by any person of any practice which constitutes unfair competition[.]” Cal. Bus & Prof Code § 17203. Accordingly, Default Defendants and their officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them, whether acting directly or indirectly, are permanently restrained from violating California Business and Professions Code section 17200, et seq., through unlawful, fraudulent and/or unfair acts or practices including but not limited to: a.

Violating California Financial Code section 12000, et seq., by acting as a bill payer or prorater within the State of California without first obtaining a license from the California Commissioner of Business Oversight; and/or b.

Violating California Financial Code section 28100, et seq., the California Student Loan Servicing Act, by engaging in the business of servicing student loans in California without first obtaining a license as required under the Act. /// /// /// Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 13 of 21 Page ID #:6520

Page 151

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

IV Customer Information It is FURTHER ORDERED that:

21.

Default Defendants and their officers, agents, servants, employees, and attorneys, and all other Persons in active concert or participation with any of them, who receive actual notice of this Order by personal service or otherwise, whether acting directly or indirectly, may not: a.

attempt to collect, sell, assign, or otherwise transfer any right to collect payment from any consumer who purchased or agreed to purchase a Debt-Relief Service from any Defendant. 22.

23.

A judgment for monetary relief is entered in favor of Plaintiffs and against True Count. True Count is liable in the amount of $55,360,817.14. The monetary judgment set forth in this paragraph 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 True Count. Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 14 of 21 Page ID #:6521

Page 152

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

24.

A judgment for monetary relief is entered in favor of Plaintiffs and against First Priority. First Priority is liable in the amount of $165,848.05. The monetary judgment set forth in this paragraph 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 First Priority. 25.

This Order grants to the Bureau all rights and claims that Default Defendants have to Default Defendants’ frozen assets currently in the possession, custody, or control of the Receiver or in the receivership estate, and Default Defendants shall forfeit any rights to the funds in the receivership estate.

26.

Any financial or brokerage institution, escrow agent, title company, commodity trading company, business entity, or person, whether located within the United States or outside the United States, that holds, controls or maintains accounts or assets of, on behalf of, or for the benefit of, either of the Default Defendants shall turn over such account or asset to the Bureau or its designated agent within ten (10) business days of receiving notice of this Order by any means, including but not limited to via facsimile or email. Any such funds must be paid to the Bureau, by wire transfer to the Bureau or to the Bureau’s agent, and according to the Bureau’s wiring instructions. 27.

Subject to paragraph 28, 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. 28.

If the Bureau determines, in its sole discretion, that redress is wholly or partially impracticable or otherwise inappropriate, or if funds remain Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 15 of 21 Page ID #:6522

Page 153

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

after the redress is completed, the Bureau will deposit any remaining funds in the U.S. Treasury as disgorgement. Default Defendants will have no right to challenge any actions that the Bureau or its representatives may take under this Section.

29.

Payment of redress to any Affected Consumer under this Order may not be conditioned on that Affected Consumer waiving any right. VI Order to Pay Civil Money Penalty to Plaintiffs It is FURTHER ORDERED that:

30.

Under sections 1042(a) 1055(c) of the CFPA, 12 U.S.C. §§ 5552(a) & 5565(c), UCL (Cal. Bus. Prof. Code § 17206), Minn. Stat. § 8.31, and N.C. Gen. Stat. § 75-15.2, by reason of the violations of law alleged in the Amended Complaint and taking into account the factors in 12 U.S.C. § 5565(c)(3), True Count must pay a civil money penalty of $30 million to Plaintiffs.

31.

Within 10 days of the Effective Date, True Count must pay $50,000 of the civil money penalty to each of the States by wire transfer to each of the States or to each of the States’ agents in compliance with each of the States’ wiring instructions.

32.

Within 10 days of the Effective Date, True Count must pay the remaining civil money penalty of $29,850,000 by wire transfer to the Bureau or to the Bureau’s agent in compliance with the Bureau’s wiring instructions. 33.

Under sections 1042(a) 1055(c) of the CFPA, 12 U.S.C. §§ 5552(a) & 5565(c), by reason of the violations of law alleged in the Amended Complaint and taking into account the factors in 12 U.S.C. § 5565(c)(3), First Priority must pay a civil money penalty of $2,500,000 to Plaintiffs. 34.

First Priority must pay civil penalties under California Business Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 16 of 21 Page ID #:6523

Page 154

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

and Professions Code section 17206 in the total amount of $1,250,000 to the People of the State of California.

35.

Within 10 days of the Effective Date, First Priority must pay $10,000 of the civil money penalty to each of the States by wire transfer to each of the States or to each of the States’ agents in compliance with each of the States’ wiring instructions.

36.

Within 10 days of the Effective Date, First Priority must pay the remaining CFPA civil money penalty of $2,470,000 by wire transfer to the Bureau or the Bureau’s agent in compliance with the Bureau’s wiring instructions.

37.

The civil money penalties paid to the Bureau 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).

38.

The civil money penalty paid to Minnesota under this Order will be remitted to the general fund of the State of Minnesota pursuant to Minn. Stat. §§ 8.31 and 16A.151.

VII Additional Monetary Provisions It is FURTHER ORDERED that:

39.

In the event of any default on either of Default 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.

40.

Default Defendants must relinquish all dominion, control, and title to the funds and all other Assets transferred or paid under this Order to the fullest extent permitted by law and no part of the funds or other Assets may be Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 17 of 21 Page ID #:6524

Page 155

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

returned to Default Defendants.

41.

The facts alleged in the First Amended Complaint 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 Plaintiffs, including in a proceeding to enforce their rights to any payment or monetary judgment under this Order, such as a nondischargeability complaint in any bankruptcy case. 42.

The facts alleged in the First Amended Complaint establish all elements necessary to sustain an action by the Plaintiffs 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 Default Defendants, even in such Default Defendants’ capacity as debtor-in-possession. 43.

Under 31 U.S.C. § 7701, Default Defendants, unless either of them has already done so, must furnish to Plaintiffs any taxpayer-identifying numbers associated with it or its Assets, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. 44.

Within 30 days of the entry of a final judgment, order, or settlement in a Related Consumer Action, Default 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 either of the Default Defendants 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.

45.

Default Defendants 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, Default Defendants may not: a.

claim, assert, or apply for a tax deduction, tax credit, or any Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 18 of 21 Page ID #:6525

Page 156

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

other tax benefit for any civil money penalty paid under this Order; or b.

VIII Lifting of Asset Freeze It is FURTHER ORDERED that:

46.

The freeze on the Assets of Default Defendants is modified to permit the payments and other transfers of Assets identified in Sections V, VI, VII and XVII of this Order.

IX Receivership It is FURTHER ORDERED that:

47.

The receivership imposed by this Court shall continue in the manner set forth in the Preliminary Injunction issued on November 15, 2019 (Docket No. 103), as to all Defendants and Relief Defendants, except as modified by this Section and Section V, and the Receiver shall continue to have the full powers of an equity receiver, as an agent of the Court, pursuant to Sections XIV and XV of the Preliminary Injunction, which shall remain in effect until further order of the Court.

48.

Within 14 days of liquidating True Count’s Assets, the Receiver shall transfer $50,000 to the State of Minnesota, $50,000 to the North Carolina Attorney General, and $50,000 to the People of the State of California from the True Count’s Assets maintained in the Receiver’s account. These transfers shall be made to satisfy the civil money penalties to the States as set forth in Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 19 of 21 Page ID #:6526

Page 157

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

Section VI. Any remaining Assets of True Count maintained in the Receiver’s account shall be transferred to the Bureau.

49.

Within 14 days of liquidating First Priority’s Assets, the Receiver shall transfer $10,000 to the State of Minnesota, $10,000 to the North Carolina Attorney General, and $10,000 to the People of the State of California from First Priority’s Assets maintained in the Receiver’s account. These transfers shall be made to satisfy the civil money penalties to each State as set forth in Section VI. Any remaining Assets of First Priority maintained in the Receiver’s account shall be transferred to the Bureau.

50.

The Receiver shall take any and all steps that the Receiver concludes are appropriate to wind down Default Defendants. 51.

The Receiver shall promptly take all steps necessary to liquidate the Default Defendants’ Assets using any commercially reasonable means, including auction and/or private sale, and all such sales shall be deemed authorized and approved under 28 U.S.C. § 2004 without further notice, hearing, or court order. After such liquidations, the Receiver shall remit the net proceeds to the Bureau or its designated representative as payment toward the monetary judgments entered against the Default Defendants. 52.

The Receiver shall continue to perform all acts necessary or advisable to complete an accounting of the receivership Assets, and prevent unauthorized transfer, withdrawal, or misapplication of Assets. 53.

/// Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 20 of 21 Page ID #:6527

Page 158

DEFAULT JUDGMENT AND ORDER AGAINST FIRST PRIORITY & TRUE COUNT

X Retention of Jurisdiction It is FURTHER ORDERED that:

48.

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

It is SO ORDERED, this 15th day of December, 2020.

____________________________

MICHAEL W. FITZGERALD United States District Judge Case 8:19-cv-01998-MWF-KS Document 248 Filed 12/15/20 Page 21 of 21 Page ID #:6528

Judgment (Jan. 2021)

PDF of this document (21 pages)

Page 159

STIPULATED FINAL JUDGMENT AND ORDER UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA Bureau of Consumer Financial Protection, et al., Plaintiffs, v.

Consumer Advocacy Center Inc., d/b/a Premier Student Loan Center, et al., Defendants.

CASE NO. 8:19-cv-01998 MWF (KS) STIPULATED FINAL JUDGMENT AND ORDER AS TO RELIEF DEFENDANTS HOLD THE DOOR, CORP. AND MICE AND MEN LLC Court: Hon. Michael W. Fitzgerald Courtroom 5A STIPULATED FINAL JUDGMENT AND ORDER AS TO RELIEF DEFENDANTS HOLD THE DOOR, CORP. AND MICE AND MEN LLC Plaintiffs the Bureau of Consumer Financial Protection (Bureau), the State of Minnesota, the State of North Carolina, and the People of the State of California (collectively, Plaintiffs) commenced this civil action on October 21, 2019, and filed an amended complaint on February 24, 2020 (Amended Complaint), to obtain permanent injunctive relief, damages, rescission or reformation of contracts, Case 8:19-cv-01998-MWF-KS Document 218 Filed 09/08/20 Page 1 of 21 Page ID #:6099

Page 160

STIPULATED FINAL JUDGMENT AND ORDER refunds of moneys paid, restitution, disgorgement or compensation for unjust enrichment, civil money penalties, and other monetary and equitable relief from: (1) Defendants Consumer Advocacy Center Inc. d/b/a Premier Student Loan Center; True Count Staffing Inc. d/b/a SL Account Management; Prime Consulting LLC d/b/a Financial Preparation Services; TAS 2019 LLC d/b/a Trusted Account Services; Horizon Consultants LLC; First Priority LLC d/b/a Priority Account Management; Albert Kim; Kaine Wen; and Tuong Nguyen; and (2) Relief Defendants Infinite Management Corp., f/k/a Infinite Management Solutions Inc.; Hold the Door, Corp.; TN Accounting Inc.; Mice and Men LLC; Sarah Kim; 1st Generation Holdings, LLC; and Anan Enterprise, Inc. The Amended Complaint alleges violations of sections 1031(a) and 1036(a) of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a); the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. § 6102(c)(2) (Telemarketing Act), based on alleged violations of the Telemarketing Sales Rule (TSR), 16 C.F.R. pt. 310; the Minnesota Prevention of Consumer Fraud Act (MNCFA), Minn. Stat. §§ 325F.68-.694; the Minnesota Uniform Deceptive Trade Practices Act (MNDTPA), Minn. Stat. §§ 325D.43-.48; the North Carolina Debt Adjusting Act (NCDAA), N.C. Gen. Stat. § 14-423 et seq.; the North Carolina Telephonic Seller Registration Act (NCTSRA), N.C. Gen. Stat. § 66-260 et seq.; the North Carolina Unfair and Deceptive Practices Act (NCUDPA), N.C. Gen. Stat. § 75-1.1; and the California Business and Professions Code 17200 et seq. (the Unfair Competition Law or UCL) in connection with the above-named defendants’ marketing and sale of debt-relief services. The (1) Plaintiffs and (2) Relief Defendants Hold the Door, Corp. and Mice and Men LLC (Settling Relief Defendants) agree to entry of this Stipulated Final Judgment and Order (Order), without adjudication of any issue of fact or law, to Case 8:19-cv-01998-MWF-KS Document 218 Filed 09/08/20 Page 2 of 21 Page ID #:6100

Page 161

STIPULATED FINAL JUDGMENT AND ORDER settle and resolve all matters in dispute between them arising from the conduct alleged in the Amended Complaint.

THEREFORE, IT IS ORDERED:

FINDINGS 1.

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

Settling Relief Defendants neither admit nor deny the allegations in the Amended Complaint, except as specifically stated herein. For purposes of this Order, Settling Relief Defendants admit the facts necessary to establish the Court’s jurisdiction over them and the subject matter of this action. 3.

Settling 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. 4.

Entry of this Order is in the public interest. DEFINITIONS The following definitions apply to this Order: 5.

Page 162

STIPULATED FINAL JUDGMENT AND ORDER leaseholds, contracts, mail or other deliverables, shares of stock, commodities, futures, inventory, checks, notes, accounts, credits, receivables (as those terms are defined in the Uniform Commercial Code), funds, cash, and trusts. 7.

“Bureau” means the Bureau of Consumer Financial Protection. 8.

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

“Corporate Defendants” means Consumer Advocacy Center Inc., True Count Staffing Inc., Prime Consulting LLC, TAS 2019 LLC, Horizon Consultants LLC, and First Priority LLC, collectively, or in any combination, and their successors and assigns, and each of them by any other names by which they might be known, including South Coast Financial Center, Direct Account Services, Financial Loan Advisors, Account Preparation Services, Administrative Financial, Tangible Savings Solutions, Coastal Shores Financial Group, First Choice Financial Centre (a/k/a First Choice Financial Center), Administrative Account Services, Primary Account Solutions, Prime Document Services, Financial Accounting Center, Doc Management Solutions, First Priority LLC, ALW Loans, Administrative Accounting Center, Best Choice Financial Center, First Document Services, Global Direct Accounting Solutions, Keystone Document Center, Pacific Palm Financial Group, Pacific Shores Advisory, Sequoia Account Management, Signature Loan Solutions, Yellowstone Account Services, ClearStudentLoanDebt, Clear Student Loan Debt, Trusted Account Services, Premier Student Loan Center, and Priority Account Management; Case 8:19-cv-01998-MWF-KS Document 218 Filed 09/08/20 Page 4 of 21 Page ID #:6102

Page 163

STIPULATED FINAL JUDGMENT AND ORDER b.

“Relief Defendants” means:

Infinite Management Corp., f/k/a Infinite Management Solutions Inc.; Hold the Door, Corp.; TN Accounting Inc.; Mice and Men LLC; 1st Generation Holdings, LLC; and Anan Enterprise, Inc., collectively, or in any combination, and their successors and assigns, and each of them by any other names by which they might be known; and ii.

Sarah Kim, and any other names by which she might be known.

“Settling Relief Defendants” means Hold the Door, Corp. and Mice and Men LLC, and their successors and assigns, and each of them by any other names by which they might be known. 9.

Page 164

STIPULATED FINAL JUDGMENT AND ORDER 10.

“Effective Date” means the date on which this Order is entered by the Court.

11.

“Enforcement Director” means the Assistant Director of the Office of Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

12.

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

13.

“Receiver” means Thomas W. McNamara.

15.

“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 Settling Relief Defendant based on substantially the same facts as described in the Amended Complaint.

16.

“States” means the State of Minnesota, the State of North Carolina, and the People of the State of California. MONETARY PROVISIONS I Order to Pay Redress It is FURTHER ORDERED that:

17.

A judgment for monetary relief is entered in favor of Plaintiffs and against Settling Relief Defendants as set forth below: Case 8:19-cv-01998-MWF-KS Document 218 Filed 09/08/20 Page 6 of 21 Page ID #:6104

Page 165

STIPULATED FINAL JUDGMENT AND ORDER a.

Settling Relief Defendant Hold the Door, Corp. shall be jointly and severally liable for the amount of $1,638,687, such amount being for the purpose of providing redress to Affected Consumers; and b.

Settling Relief Defendant Mice and Men LLC shall be jointly and severally liable for the amount of $5,041,069, such amount being for the purpose of providing redress to Affected Consumers. 18.

However, full payment of each Settling Relief Defendant’s portion of this judgment set forth in Paragraph 17 will be suspended, based on each Settling Relief Defendant’s inability to pay, upon each Settling Relief Defendant’s satisfaction of the obligations in Paragraphs 19-22 of this Section, Paragraph 33 of Section III, and subject to Section II of this Order. 19.

Settling Relief Defendants hereby grant to the Bureau all rights and claims they have to all Assets subject to the asset freeze imposed by the Preliminary Injunction entered on November 15, 2019 (ECF 103), and all Assets identified in Attachment A and Attachment B. Within 10 business days from receipt of a copy of this Order by any means, including but not limited to via facsimile or email, the financial institutions identified in Attachment A shall transfer to the Bureau or its designated agent all funds held in the accounts listed in Attachment A by wire transfer to the Bureau or the Bureau’s agent according to the Bureau’s wiring instructions.

20.

To the extent they have not already done so, Settling Relief Defendants are ordered to transfer and relinquish to the Receiver, or to its designated agent, possession, custody, and control of the following Assets within 7 days of entry of this Order, unless otherwise stated: dominion and all legal and equitable right, title, and interest in, as well as any accounts receivable from, the following entities: Settling Relief Defendants, including their successors, assigns, Case 8:19-cv-01998-MWF-KS Document 218 Filed 09/08/20 Page 7 of 21 Page ID #:6105

Page 166

STIPULATED FINAL JUDGMENT AND ORDER affiliates, or subsidiaries, and each of them by whatever names each might be known.

21.

Settling Relief Defendants shall cooperate fully with the Receiver and shall execute any instrument or document presented by the Receiver, and take any other actions the Receiver deems necessary or appropriate to effect the transfers required by Paragraph 20. All property set forth in Paragraph 20 shall constitute Assets of the receivership estate.

22.

Settling Relief Defendants hereby grant to the Bureau all rights and claims they have to any Assets not subject to Paragraph 19 that are currently in the possession, custody, or control of the Receiver, including but not limited to any such Assets identified in Paragraph 20, and shall forfeit any rights and claims to the funds in the receivership estate, including but not limited to: all funds held, obtained, or to be obtained by the Receiver since the inception of the receivership whether through this Order or otherwise.

23.

The suspension of the monetary judgment in Paragraph 18 shall not affect the Receiver’s ability to pursue recovery of funds from any third parties, including family members of Defendants, to satisfy all or a portion of the full monetary judgment entered in Paragraph 17. Settling Relief Defendants shall remain jointly and severally liable for full payment of this judgment to the extent that funds to satisfy all or a portion of this judgment are able to be recovered from third parties by the Receiver acting on behalf of the Receivership Defendants. 24.

Page 167

STIPULATED FINAL JUDGMENT AND ORDER Relief Defendants must: (a) immediately notify the Enforcement Director and States in writing, and (b) within 10 days of receiving the funds or monetary benefit, Settling Relief Defendants must transfer 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 18 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 17.

25.

26.

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. Settling Relief Defendants 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. 27.

Payment of redress to any Affected Consumer under this Order may not be conditioned on that Affected Consumer waiving any right. Case 8:19-cv-01998-MWF-KS Document 218 Filed 09/08/20 Page 9 of 21 Page ID #:6107

Page 168

STIPULATED FINAL JUDGMENT AND ORDER II Misrepresentation or Omission Regarding Financial Condition or Non- Compliance with Order to Pay Redress It is FURTHER ORDERED that:

28.

The suspension of the monetary judgment entered in Section I of this Order is expressly premised on the truthfulness, accuracy, and completeness of Settling Relief Defendants’ sworn financial statements and supporting documents, which each Settling Relief Defendant asserts are truthful, accurate, and complete, and which include:

Financial Statement of Hold the Door, Corp., including all attachments, signed on November 1, 2019, and submitted to the Bureau on or about November 4, 2019, and supplemented on December 5, 2019, and August 20, 2020; and b.

Financial Statement of Mice and Men LLC, including all attachments, signed on June 22, 2020, and submitted to the Bureau on or about June 25, 2020.

29.

If upon motion by any Plaintiff, the Court determines that any Settling Relief Defendant has failed to disclose any material Asset or that any of their financial statements contain any material misrepresentation or omission, including materially misstating the value of any Asset, the Court shall terminate the suspension of the monetary judgment for that Settling Relief Defendant entered in Section I and without further adjudication, shall reinstate the judgment entered in Section I of this Order and the full judgment set forth in that Section with respect to that Settling Relief Defendant shall be immediately due and payable, less any amounts paid to the Bureau under Section I of this Order by that Settling Relief Defendant.

Case 8:19-cv-01998-MWF-KS Document 218 Filed 09/08/20 Page 10 of 21 Page ID #:6108

Page 169

STIPULATED FINAL JUDGMENT AND ORDER 30.

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 Section 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 Plaintiffs may initiate to enforce this Order. III Additional Monetary Provisions It is FURTHER ORDERED that:

32.

In the event of any default on Settling 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 by the defaulting Settling Relief Defendant.

33.

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

34.

Page 170

STIPULATED FINAL JUDGMENT AND ORDER any bankruptcy case.

35.

The facts alleged in the Amended Complaint establish all elements necessary to sustain an action by the Plaintiffs 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 each Settling Relief Defendant, even in such Defendant’s capacity as debtor-in-possession.

36.

Under 31 U.S.C. § 7701, Settling Relief Defendants, unless they already have done so, must furnish to Plaintiffs any taxpayer-identifying numbers associated with them or their Assets, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. 37.

Within 30 days of the entry of a final judgment, order, or settlement in a Related Consumer Action, Settling 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 the Settling Relief 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. IV Lifting of Asset Freeze It is FURTHER ORDERED that:

38.

The freeze on the Assets of Settling Relief Defendants is modified to permit the payments and other transfers of Assets identified in Sections I and III of this Order. Upon completion of all payments and other obligations identified in Sections I and III of this Order, the freeze of the Settling Relief Defendants’ Assets pursuant to the Preliminary Injunction entered on November 15, 2019 (ECF 103), shall be dissolved.

Case 8:19-cv-01998-MWF-KS Document 218 Filed 09/08/20 Page 12 of 21 Page ID #:6110

Page 171

STIPULATED FINAL JUDGMENT AND ORDER COMPLIANCE PROVISIONS V Notices It is FURTHER ORDERED that:

39.

Unless otherwise directed in writing by the Bureau, Settling Relief Defendants must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “CFPB, et al., v. CAC, et al., Case No. 8:19-cv-01998-MWF-KS” 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 40.

Unless otherwise directed by a representative of the State of North Carolina in writing, all submissions to the State of North Carolina pursuant to this Case 8:19-cv-01998-MWF-KS Document 218 Filed 09/08/20 Page 13 of 21 Page ID #:6111

Page 172

STIPULATED FINAL JUDGMENT AND ORDER Order must be sent by overnight courier or first-class mail to the below address and contemporaneously by email to [email protected]: M. Lynne Weaver, Special Deputy Attorney General North Carolina Department of Justice 114 W. Edenton Street Raleigh, North Carolina 27603 42.

Christina Tusan Supervising Deputy City Attorney Los Angeles City Attorney’s Office 200 N. Main Street, 5th Floor Los Angeles, CA 90012 43.

VI Cooperation with Plaintiffs It is FURTHER ORDERED that:

44.

Settling Relief Defendants must cooperate fully to help Plaintiffs determine the identity, location, and contact information of any Defendant and any Person who might have contact information for any Defendant. Settling Relief Case 8:19-cv-01998-MWF-KS Document 218 Filed 09/08/20 Page 14 of 21 Page ID #:6112

Page 173

STIPULATED FINAL JUDGMENT AND ORDER Defendants must provide such information in their or their agents’ possession or control within 14 days of receiving a written request from any Plaintiff. 45.

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

VII Compliance Monitoring It is FURTHER ORDERED that, to monitor Settling Relief Defendants’ 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 any Plaintiff, each Settling Relief Defendant must submit additional Compliance Reports or other requested information, which must be made under penalty of perjury; provide sworn testimony; or produce documents.

47.

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

48.

Each Settling Relief Defendant must permit Plaintiffs’ representatives to interview any employee or other Person affiliated with the Settling Relief Defendant who has agreed to such an interview. The Person interviewed may have counsel present. Nothing in this Order will limit the Bureau’s lawful use of civil investigative demands under 12 C.F.R. § 1080.6 or any Plaintiff’s use of other compulsory process.

/// Case 8:19-cv-01998-MWF-KS Document 218 Filed 09/08/20 Page 15 of 21 Page ID #:6113

Page 174

STIPULATED FINAL JUDGMENT AND ORDER VIII Receivership It is FURTHER ORDERED that:

49.

The receivership imposed by this Court shall continue in the manner set forth in the Preliminary Injunction issued on November 15, 2019 (ECF 103), as to all Defendants and Relief Defendants, except as modified by this Section and Section IV, and the Receiver shall continue to have the full powers of an equity receiver, as an agent of the Court, pursuant to Sections XIV and XV of the Preliminary Injunction, which shall remain in effect until further order of the Court.

50.

The Receiver shall promptly take all steps necessary to liquidate any of Settling Relief Defendants’ Assets transferred under Paragraph 20 using any commercially reasonable means, including auction and/or private sale, and all such sales shall be deemed authorized and approved under 28 U.S.C. § 2004 without further notice, hearing, or court order. After such liquidation, the Receiver shall remit the net proceeds to the Bureau or its designated representative as payment toward the monetary judgments entered against Settling Relief Defendants within 21 days of each such sale or liquidation.

51.

/// /// /// Case 8:19-cv-01998-MWF-KS Document 218 Filed 09/08/20 Page 16 of 21 Page ID #:6114

Page 175

STIPULATED FINAL JUDGMENT AND ORDER IX 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, this eighth day of September, 2020. ____________________________________

Michael W. Fitzgerald United States District Judge Case 8:19-cv-01998-MWF-KS Document 218 Filed 09/08/20 Page 17 of 21 Page ID #:6115

Page 176

Attachment A to Order ATTACHMENT A Case 8:19-cv-01998-MWF-KS Document 218 Filed 09/08/20 Page 18 of 21 Page ID #:6116

Page 177

Attachment A to Order List of Assets Transferred Pursuant to Paragraph 19 of the Order Any and all Assets at the following financial institutions and in the following accounts:

1. UBS Financial Services Inc.:

a. account number ending in 5783 in the name of Mice and Men, LLC; and 2. Wells Fargo Bank, N.A.:

a. account number ending in 7284 in the name of Hold the Door Corp. Case 8:19-cv-01998-MWF-KS Document 218 Filed 09/08/20 Page 19 of 21 Page ID #:6117

Page 178

Attachment B to Order ATTACHMENT B Case 8:19-cv-01998-MWF-KS Document 218 Filed 09/08/20 Page 20 of 21 Page ID #:6118

Page 179

Attachment B to Order Relief Defendant Hold the Door, Corp. grants to the Bureau all rights and claims it has to the following Assets pursuant to Paragraph 19 of the Order: 1.

The following vehicle:

a. 2017 Lexus GS-F, white, VIN ending in 2471, owned by Hold the Door, Corp. and Defendant Kaine Wen, and registered to Judy Dai. 2.

The following Assets:

a. All Assets identified at item no. 23 on the Financial Statement of Hold the Door, Corp., including all attachments, signed on November 1, 2019, and submitted to the Bureau on or about November 4, 2019, and supplemented on December 5, 2019, and August 20, 2020, including but not limited to the following items: i. Audemars Piguet Royal Oak Offshore watch in black ($28,500 acquisition cost), owned by Hold the Door, Corp. and Defendant Kaine Wen;

ii. Audemars Piguet Royal Oak Offshore watch in white ($58,000 acquisition cost), owned by Hold the Door, Corp. and Defendant Kaine Wen;

iii. 3.584 carats round brilliant diamond AGS 104098736001 ($240,000 acquisition cost), owned by Hold the Door, Corp. and Defendant Kaine Wen;

iv. Three Maurits Cornelis Escher prints (acquisition value of about $32,500, $32,500, and $39,500, respectively), owned by Hold the Door, Corp. and Defendant Kaine Wen; and v. All furniture, electronics, and artwork owned by Hold the Door, Corp. and Defendant Kaine Wen.

Case 8:19-cv-01998-MWF-KS Document 218 Filed 09/08/20 Page 21 of 21 Page ID #:6119

Judgment (Jan. 2021)

PDF of this document (35 pages)

Page 180

STIPULATED FINAL JUDGMENT AND ORDER UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA Bureau of Consumer Financial Protection, et al., Plaintiffs, v.

Consumer Advocacy Center Inc., d/b/a Premier Student Loan Center, et al., Defendants.

CASE NO. 8:19-cv-01998 MWF (KS) STIPULATED FINAL JUDGMENT AND ORDER AS TO DEFENDANT TUONG NGUYEN AND RELIEF DEFENDANT TN ACCOUNTING INC.

Court: Hon. Michael W. Fitzgerald Courtroom 5A STIPULATED FINAL JUDGMENT AND ORDER AS TO DEFENDANT TUONG NGUYEN AND RELIEF DEFENDANT TN ACCOUNTING INC. Plaintiffs the Bureau of Consumer Financial Protection (Bureau), the State of Minnesota, the State of North Carolina, and the People of the State of California (collectively, Plaintiffs) commenced this civil action on October 21, 2019, and Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 1 of 35 Page ID #:5973

Page 181

STIPULATED FINAL JUDGMENT AND ORDER filed an amended complaint on February 24, 2020 (Amended Complaint), to obtain permanent injunctive relief, damages, rescission or reformation of contracts, refunds of moneys paid, restitution, disgorgement or compensation for unjust enrichment, civil money penalties, and other monetary and equitable relief from: (1) Defendants Consumer Advocacy Center Inc. d/b/a Premier Student Loan Center; True Count Staffing Inc. d/b/a SL Account Management; Prime Consulting LLC d/b/a Financial Preparation Services; TAS 2019 LLC d/b/a Trusted Account Services; Horizon Consultants LLC; First Priority LLC d/b/a Priority Account Management; Albert Kim; Kaine Wen; and Tuong Nguyen; and (2) Relief Defendants Infinite Management Corp., f/k/a Infinite Management Solutions Inc.; Hold The Door, Corp.; TN Accounting Inc.; Mice and Men LLC; Sarah Kim; 1st Generation Holdings, LLC; and Anan Enterprise, Inc. The Amended Complaint alleges violations of sections 1031(a) and 1036(a) of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a); the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. § 6102(c)(2) (Telemarketing Act), based on alleged violations of the Telemarketing Sales Rule (TSR), 16 C.F.R. pt. 310; the Minnesota Prevention of Consumer Fraud Act (MNCFA), Minn. Stat. §§ 325F.68-.694; the Minnesota Uniform Deceptive Trade Practices Act (MNDTPA), Minn. Stat. §§ 325D.43-.48; the North Carolina Debt Adjusting Act (NCDAA), N.C. Gen. Stat. § 14-423 et seq.; the North Carolina Telephonic Seller Registration Act (NCTSRA), N.C. Gen. Stat. § 66-260 et seq.; the North Carolina Unfair and Deceptive Practices Act (NCUDPA), N.C. Gen. Stat. § 75-1.1; and the California Business and Professions Code 17200 et seq. (the Unfair Competition Law or UCL) in connection with the above-named defendants’ marketing and sale of debt-relief services. The (1) Plaintiffs, (2) Defendant Tuong Nguyen (Settling Defendant), and Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 2 of 35 Page ID #:5974

Page 182

STIPULATED FINAL JUDGMENT AND ORDER (3) Relief Defendant TN Accounting Inc. (Settling Relief Defendant) 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 them arising from the conduct alleged in the Amended Complaint. THEREFORE, IT IS ORDERED:

FINDINGS 1.

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

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

Settling Defendant and Settling Relief Defendant 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 The following definitions apply to this Order:

Page 183

STIPULATED FINAL JUDGMENT AND ORDER 6.

“Assets” means any legal or equitable interest in, right to, or claim to any real, personal, or intellectual property owned or controlled by, or held, in whole or in part for the benefit of, or subject to access by any Defendant, wherever located, whether in the United States or abroad. This includes, but is not limited to, chattel, goods, instruments, equipment, fixtures, general intangibles, effects, leaseholds, contracts, mail or other deliverables, shares of stock, commodities, futures, inventory, checks, notes, accounts, credits, receivables (as those terms are defined in the Uniform Commercial Code), funds, cash, and trusts, including but not limited to any trust held for the benefit of Settling Defendant’s minor children, or any of Settling Defendant’s spouses.

“Assist[ing] Others” includes, but is not limited to: a.

consulting in any form whatsoever;

providing paralegal or administrative support services; c.

performing customer service functions, including but not limited to, receiving or responding to consumer complaints; d.

Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 4 of 35 Page ID #:5976

Page 184

STIPULATED FINAL JUDGMENT AND ORDER f.

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

performing marketing, billing, or payment services of any kind; and h.

acting or serving as an owner, officer, director, manager, or principal of any entity.

“Bureau” means the Bureau of Consumer Financial Protection. 10.

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. 11.

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

Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 5 of 35 Page ID #:5977

Page 185

STIPULATED FINAL JUDGMENT AND ORDER a.

“Corporate Defendants” means Consumer Advocacy Center Inc., True Count Staffing Inc., Prime Consulting LLC, TAS 2019 LLC, Horizon Consultants LLC, and First Priority LLC, collectively, or in any combination, and their successors and assigns, and each of them by any other names by which they might be known, including South Coast Financial Center, Direct Account Services, Financial Loan Advisors, Account Preparation Services, Administrative Financial, Tangible Savings Solutions, Coastal Shores Financial Group, First Choice Financial Centre (a/k/a First Choice Financial Center), Administrative Account Services, Primary Account Solutions, Prime Document Services, Financial Accounting Center, Doc Management Solutions, First Priority LLC, ALW Loans Administrative Accounting Center, Best Choice Financial Center, First Document Services, Global Direct Accounting Solutions, Keystone Document Center, Pacific Palm Financial Group, Pacific Shores Advisory, Sequoia Account Management, Signature Loan Solutions, Yellowstone Account Services, ClearStudentLoanDebt, Clear Student Loan Debt, Trusted Account Services, Premier Student Loan Center, and Priority Account Management; b.

“Receivership Defendants” means True Count Staffing Inc., Prime Consulting LLC, TAS 2019 LLC, Horizon Consultants LLC, Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 6 of 35 Page ID #:5978

Page 186

STIPULATED FINAL JUDGMENT AND ORDER and First Priority LLC, collectively, or in any combination, and their successors and assigns;

“Relief Defendants” means:

Sarah Kim, and any other names by which she might be known.

“Settling Defendant” means Tuong Nguyen, and any other names by which he might be known;

“Settling Relief Defendant” means TN Accounting Inc., and its successors and assigns, and each of them by any other names by which they might be known.

12.

“Effective Date” means the date on which this Order is entered by the Court.

14.

“Enforcement Director” means the Assistant Director of the Office of Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 7 of 35 Page ID #:5979

Page 187

STIPULATED FINAL JUDGMENT AND ORDER 15.

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

16.

“Receiver” means Thomas W. McNamara.

18.

“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 Settling Defendant or Settling Relief Defendant based on substantially the same facts as described in the Amended Complaint. 19.

“States” means the State of Minnesota, the State of North Carolina, and the People of the State of California.

20.

Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 8 of 35 Page ID #:5980

Page 188

STIPULATED FINAL JUDGMENT AND ORDER CONDUCT RELIEF I Permanent Ban on Telemarketing and Offering or Selling Debt-Relief Services It is ORDERED that:

21.

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

participating in telemarketing or Assisting Others engaged in telemarketing any Consumer Financial Product or Service; b.

participating in or Assisting Others in advertising, marketing, promoting, offering for sale, selling, or providing any Debt-Relief Service;

Nothing in this Order shall be read as an exception to this Paragraph. II Prohibited Misrepresentations and Other Conduct It is FURTHER ORDERED that:

22.

Settling Defendant and his officers, agents, servants, employees, and attorneys, and all other Persons in active concert or participation with them, who have actual notice of this Order, whether acting directly or indirectly, in connection with the advertising, marketing, promotion, offering for sale, sale, or performance Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 9 of 35 Page ID #:5981

Page 189

STIPULATED FINAL JUDGMENT AND ORDER of any Consumer Financial Product or Service, may not misrepresent, or Assist Others in misrepresenting, expressly or impliedly: a.

the time required to achieve benefits from the Consumer Financial Product or Service;

the total costs or any other material term, fact, restriction, limitation, or condition of the Consumer Financial Product or Service. III State Injunctive Provisions It is FURTHER ORDERED that:

23.

Settling 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, shall be permanently restrained and enjoined from violating:

the Minnesota Uniform Deceptive Trade Practices Act, Minn. Stat. § 325D.44;

the Minnesota Consumer Fraud Act, Minn. Stat. § 325F.69; and c.

the Minnesota Debt Settlement Services Act, Minn. Stat. § Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 10 of 35 Page ID #:5982

Page 190

STIPULATED FINAL JUDGMENT AND ORDER 332B.

24.

Settling Defendant and his officers, agents, servants, employees and attorneys, and those Persons in active concert or participation with any of them who receive actual notice of this Order, shall be permanently restrained and enjoined from violating:

the North Carolina Debt Adjusting Act, N.C. Gen. Stat. § 14- 423, et seq.;

the North Carolina Unfair and Deceptive Practices Act, N.C. Gen. Stat. § 75-1.1; and c.

the North Carolina Telephonic Seller Registration Act, N.C. Gen. Stat. § 66-260, et seq.

25.

Under the Court’s inherent equitable powers and as authorized by California Business and Professions Code section 17203, this Court is empowered to “make such orders or judgments . . . as may be necessary to prevent the use or employment by any person of any practice which constitutes unfair competition . . .” Cal. Bus & Prof Code § 17203. Accordingly, Settling Defendant and his officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them, whether acting directly or indirectly, are permanently restrained from any of the following: a.

violating California Business and Professions Code section 17200, et seq., through unlawful, fraudulent and/or unfair acts or practices including but not limited to:

Violating California Financial Code section 12000, et seq., the California Check Sellers, Bill Payers and Proraters Law, by acting as a check seller, bill payer, or prorater within the State of California without first obtaining a license from the Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 11 of 35 Page ID #:5983

Page 191

STIPULATED FINAL JUDGMENT AND ORDER California Commissioner of Business Oversight; ii.

26.

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

disclose, use, or benefit from customer information, including the name, address, telephone number, email address, social security number, other identifying information, or any data that enables access to a customer’s account (including a credit card, bank account, or other financial account), that Defendants obtained before the Effective Date in connection with the offering or providing of Debt- Relief Services;

attempt to collect, sell, assign, or otherwise transfer any right to collect payment from any consumer who purchased or agreed to purchase a Debt-Relief Service from any Defendant. 27.

However, customer information may be disclosed if requested by a government agency or required by law, regulation, or court order. Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 12 of 35 Page ID #:5984

Page 192

STIPULATED FINAL JUDGMENT AND ORDER MONETARY PROVISIONS V Order to Pay Redress It is FURTHER ORDERED that:

28.

A judgment for monetary relief is entered in favor of Plaintiffs and against Settling Defendant and Settling Relief Defendant as set forth below. Settling Defendant Tuong Nguyen is liable, jointly and severally, in the amount of $95,057,757, for the purpose of providing redress to Affected Consumers. Of this judgment for monetary relief:

Settling Relief Defendant TN Accounting Inc. shall be jointly and severally liable for the amount of $444,563, such amount also being for the purpose of providing redress to Affected Consumers. 29.

However, full payment of Settling Defendant’s and Settling Relief Defendant’s portion of this judgment set forth in Paragraph 28 will be suspended, based on Settling Defendant’s and Settling Relief Defendant’s inability to pay, upon Settling Defendant’s and Settling Relief Defendant’s satisfaction of the obligations in Paragraphs 30-33 of this Section, Section VI, Paragraphs 42 and 44- 45 of Section VII, Paragraph 51 of Section IX, and subject to Section VIII of this Order.

30.

Except as necessary to effectuate the transfers required by Paragraph 85, Settling Defendant and Settling Relief Defendant hereby grant to the Bureau all rights and claims they have to all Assets subject to the asset freeze imposed by the Preliminary Injunction entered on November 15, 2019 (ECF 103), and all Assets identified in Attachment A and Attachment B, except as set forth in Attachment B. Within 10 business days from receipt of a copy of this Order by any means, including but not limited to via facsimile or email, the financial institutions Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 13 of 35 Page ID #:5985

Page 193

STIPULATED FINAL JUDGMENT AND ORDER identified in Attachment A shall transfer to the Bureau or its designated agent all funds held in the accounts listed in Attachment A by wire transfer to the Bureau or the Bureau’s agent according to the Bureau’s wiring instructions. 31.

To the extent they have not already done so, Settling Defendant and Settling Relief Defendant are ordered to transfer and relinquish to the Receiver, or to its designated agent, possession, custody, and control of the following Assets within 7 days of entry of this Order, unless otherwise stated: a.

dominion and all legal and equitable right, title, and interest in, as well as any accounts receivable from, the following entity: Settling Relief Defendant, including its successors, assigns, affiliates, or subsidiaries, and each of them by whatever names each might be known;

all Assets listed on Attachment B.

32.

Settling Defendant and Settling Relief Defendant shall cooperate fully with the Receiver and shall execute any instrument or document presented by the Receiver, and take any other actions the Receiver deems necessary or appropriate to effect the transfers required by Paragraph 31. All property set forth in Paragraph 31 shall constitute Assets of the receivership estate. 33.

Except as necessary to effectuate the transfers required by Paragraph 85, Settling Defendant and Settling Relief Defendant hereby grant to the Bureau all rights and claims they have to any Assets not subject to Paragraph 30 that are currently in the possession, custody, or control of the Receiver, including but not limited to any such Assets identified in Paragraph 31, and shall forfeit any rights and claims to the funds in the receivership estate, including but not limited to: all funds held, obtained, or to be obtained by the Receiver since the inception of the receivership whether through this Order or otherwise. Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 14 of 35 Page ID #:5986

Page 194

STIPULATED FINAL JUDGMENT AND ORDER 34.

The suspension of the monetary judgment in Paragraph 29 shall not affect the Receiver’s ability to pursue recovery of funds from any third parties, including family members of Settling Defendant and Settling Relief Defendant, to satisfy all or a portion of the full monetary judgment entered in Paragraph 28. Settling Defendant and Settling Relief Defendant shall remain jointly and severally liable for full payment of this judgment to the extent that funds to satisfy all or a portion of this judgment are able to be recovered from third parties by the Receiver acting on behalf of the Receivership Defendants.

35.

With regard to any redress that Settling Defendant and Settling Relief Defendant pay under this Section, if Settling Defendant or Settling Relief Defendant receive, directly or indirectly, any reimbursement or indemnification from any source, including but not limited to payment made under any insurance policy, or if Settling Defendant or Settling Relief Defendant secure a tax deduction or tax credit with regard to any federal, state, or local tax, Settling Defendant or Settling Relief Defendant must: (a) immediately notify the Enforcement Director and States in writing, and (b) within 10 days of receiving the funds or monetary benefit, Settling Defendant or Settling Relief Defendant must transfer 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 29 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 28.

36.

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 Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 15 of 35 Page ID #:5987

Page 195

STIPULATED FINAL JUDGMENT AND ORDER 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.

37.

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. Settling Defendant and Settling Relief 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.

38.

39.

Under section 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged in the Amended Complaint and taking into account the factors in 12 U.S.C. § 5565(c)(3), Settling Defendant must pay a civil money penalty of $1 to the Bureau. This nominal civil penalty is based on Settling Defendant’s limited ability to pay as attested to in all financial statements and supporting documents listed in Section VIII.

40.

Within 10 days of the Effective Date, Settling Defendant must pay the civil money penalty by wire transfer to the Bureau or to the Bureau’s agent in compliance with the Bureau’s wiring instructions. 41.

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, Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 16 of 35 Page ID #:5988

Page 196

STIPULATED FINAL JUDGMENT AND ORDER 12 U.S.C. § 5497(d).

VII Order to Pay Civil Money Penalties to the States It is FURTHER ORDERED that:

42.

Settling Defendant is liable to pay civil penalties in this Enforcement Action under Minn. Stat. § 8.31 in the total amount of $5,000 to the State of Minnesota, as provided in Paragraph 85.

43.

The Minnesota Attorney General will remit these funds to the general fund of the State of Minnesota pursuant to Minn. Stat. §§ 8.31 and 16A.151. 44.

Settling Defendant is liable to pay civil penalties in this Enforcement Action under N.C. Gen. Stat. § 75-15.2 in the total amount of $5,000 to the State of North Carolina, as provided in Paragraph 85.

45.

Settling Defendant is liable to pay civil penalties in this Enforcement Action under California Business and Professions Code section 17206 in the total amount of $5,000 to the People of the State of California, as provided in Paragraph 85.

VIII Misrepresentation or Omission Regarding Financial Condition or Non- Compliance with Order to Pay Redress or Civil Money Penalty It is FURTHER ORDERED that:

46.

The suspension of the monetary judgment entered in Section V of this Order is expressly premised on the truthfulness, accuracy, and completeness of Settling Defendant’s and Settling Relief Defendant’s sworn financial statements and supporting documents, which Settling Defendant and Settling Relief Defendant assert are truthful, accurate, and complete, and which include: a.

Financial Statement of Tuong Nguyen, including all Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 17 of 35 Page ID #:5989

Page 197

STIPULATED FINAL JUDGMENT AND ORDER attachments, signed on July 30, 2020, and submitted to the Bureau on or about July 30, 2020; and b.

Financial Statement of TN Accounting Inc., including all attachments, signed on October 31, 2019, and submitted to the Bureau on or about November 5, 2019, and supplemented on November 7, 2019, December 19, 2019, July 14, 2020, and July 30, 2020. 47.

If upon motion by any Plaintiff, the Court determines that Settling Defendant or Settling Relief Defendant has failed to disclose any material Asset or that any of their financial statements contain any material misrepresentation or omission, including materially misstating the value of any Asset, the Court shall terminate the suspension of the monetary judgment for that Settling Defendant or Settling Relief Defendant entered in Section V and without further adjudication, shall reinstate the judgment entered in Section V of this Order and the full judgment set forth in that Section with respect to that Settling Defendant or Settling Relief Defendant shall be immediately due and payable, less any amounts paid to the Bureau under Section V of this Order by that Settling Defendant or Settling Relief Defendant.

48.

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 Section 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 Plaintiffs may initiate to enforce this Order. Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 18 of 35 Page ID #:5990

Page 198

STIPULATED FINAL JUDGMENT AND ORDER IX Additional Monetary Provisions It is FURTHER ORDERED that:

50.

In the event of any default on Settling Defendant’s and Settling Relief 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 by the defaulting Settling Defendant or Settling Relief Defendant. 51.

Settling Defendant and Settling Relief Defendant relinquish all dominion, control, and title to the funds and all other Assets transferred or paid under this Order to the fullest extent permitted by law and no part of the funds or other Assets may be returned to Settling Defendant or Settling Relief Defendant. 52.

53.

The facts alleged in the Amended Complaint establish all elements necessary to sustain an action by the Plaintiffs 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 Settling Defendant and Settling Relief Defendant, even in such Defendant’s capacity as debtor-in-possession. 54.

Under 31 U.S.C. § 7701, Settling Defendant and Settling Relief Defendant, unless they already have done so, must furnish to Plaintiffs any taxpayer-identifying numbers associated with them or their Assets, which may be Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 19 of 35 Page ID #:5991

Page 199

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

55.

Within 30 days of the entry of a final judgment, order, or settlement in a Related Consumer Action, Settling Defendant and Settling Relief 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 the Settling Defendant or Settling Relief 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, Settling Defendant and Settling Relief Defendant may not argue that they are entitled to, nor may Settling Defendant or Settling Relief 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 Settling Defendant or Settling 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, the Settling Defendant or Settling 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. 56.

Upon written request, any consumer reporting agency may furnish consumer reports to any Plaintiff concerning Settling Defendant under section 604(a)(1) of the Fair Credit Reporting Act, 15 U.S.C.§ 1681b(a)(1), which may be Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 20 of 35 Page ID #:5992

Page 200

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

57.

Settling 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, Settling Defendant may not:

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.

58.

Settling Defendant agrees that the civil penalties imposed by the Order under Sections VI and VII represent penalties paid to the Bureau and the States, respectively, not compensation for actual pecuniary loss, and, thus, as to the Settling Defendant, are not subject to discharge under the Bankruptcy Code under 11 U.S.C. § 523(a)(7).

X Lifting of Asset Freeze It is FURTHER ORDERED that:

59.

The freeze on the Assets of Settling Defendant and Settling Relief Defendant is modified to permit the payments and other transfers of Assets identified in Sections V, VI, VII and IX of this Order. Upon completion of all payments and other obligations identified in Sections V, VI, VII and IX of this Order, the freeze of the Settling Defendant’s and Settling Relief Defendant’s Assets pursuant to the Preliminary Injunction entered on November 15, 2019 (ECF 103), shall be dissolved.

Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 21 of 35 Page ID #:5993

Page 201

STIPULATED FINAL JUDGMENT AND ORDER COMPLIANCE PROVISIONS XI Reporting Requirements It is FURTHER ORDERED that:

60.

Settling Defendant must notify Plaintiffs 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 Settling Defendant; or a change in Settling Defendant’s name or address. Settling Defendant must provide this notice at least 30 days before the development or as soon as practicable after learning about the development, whichever is sooner. 61.

Within 7 days of the Effective Date, Settling Defendant must: a.

designate at least one telephone number and email, physical, and postal address as points of contact, which Plaintiffs may use to communicate with Settling Defendant;

identify all businesses for which Settling Defendant is the majority owner, or that such Settling Defendant directly or indirectly controls, by all of their names, telephone numbers, and physical, postal, email, and Internet addresses;

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

identify Settling Defendant’s telephone numbers and all email, Internet, physical, and postal addresses, including all residences; and Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 22 of 35 Page ID #:5994

Page 202

STIPULATED FINAL JUDGMENT AND ORDER e.

describe in detail Settling 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. 62.

Settling Defendant must report any change in the information required to be submitted under Paragraph 61 above at least 30 days before the change or as soon as practicable after learning about the change, whichever is sooner. 63.

Within 90 days of the Effective Date, and again one year after the Effective Date, 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:

lists each applicable paragraph and subparagraph of this Order and describes in detail the manner and form in which Settling Defendant has complied with each such paragraph and subparagraph of this Order; and b.

attaches a copy of each Order Acknowledgment obtained under Section XII, unless previously submitted to the Bureau. XII Order Distribution and Acknowledgment It is FURTHER ORDERED that:

64.

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

65.

Within 30 days of the Effective Date, Settling 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 board members and Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 23 of 35 Page ID #:5995

Page 203

STIPULATED FINAL JUDGMENT AND ORDER executive officers, as well as to any managers, employees, Service Providers, or other agents and representatives who have responsibilities related to the subject matter of the Order.

66.

For 5 years from the Effective Date, Settling 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 XI, any future board members and executive officers, as well as to any managers, employees, Service Providers, or other agents and representatives who will have responsibilities related to the subject matter of the Order before they assume their responsibilities. 67.

Settling 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.

68.

Within 90 days of the Effective Date, Settling 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 65-66 and a copy of all signed and dated statements acknowledging receipt of this Order under Paragraph 67. XIII Recordkeeping It is FURTHER ORDERED that:

69.

Page 204

STIPULATED FINAL JUDGMENT AND ORDER and records necessary to demonstrate full compliance with each provision of this Order, including all submissions to any Plaintiff. Settling Defendant must retain these documents for at least 10 years after creation and make them available to Plaintiffs upon any Plaintiff’s request. 70.

Settling Defendant must maintain, for at least 10 years from the Effective Date or 5 years after creation, whichever is longer: a.

copies of all sales scripts; training materials; advertisements; websites; and other marketing materials, including any such materials used by a third party on Settling Defendant’s behalf, relating to any Consumer Financial Product or Service;

for each individual Affected Consumer and his or her enrollment in that Consumer Financial Product or Service: the consumer’s name, address, phone number, email address; amount paid, quantity of Consumer Financial Products or Services purchased, description of the Consumer Financial Product or Service purchased, the date on which the Consumer Financial Product or Service was purchased, a copy of any promotional or welcome materials provided, and, if applicable, the date and reason the consumer left the program; c.

for all Consumer Financial Products or Services, accounting records showing the gross and net revenues generated by the Consumer Financial Product or Service;

records showing, for each employee providing services related Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 25 of 35 Page ID #:5997

Page 205

STIPULATED FINAL JUDGMENT AND ORDER to a Consumer Financial Product or Service, 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 f.

71.

Settling Defendant must make these materials available to Plaintiffs upon any Plaintiff’s request.

XIV Notices It is FURTHER ORDERED that:

72.

Unless otherwise directed in writing by the Bureau, Settling Defendant and Settling Relief Defendant must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “CFPB, et al., v. CAC, et al., Case No. 8:19-cv-01998-MWF-KS” 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 73.

Unless otherwise directed by a representative of the State of Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 26 of 35 Page ID #:5998

Page 206

STIPULATED FINAL JUDGMENT AND ORDER Minnesota in writing, all submissions to the State of Minnesota pursuant to this Order must be sent by overnight courier or first-class mail to the below address and contemporaneously by email to [email protected]: Evan Romanoff, Assistant Attorney General Office of the Minnesota Attorney General 445 Minnesota Street, Suite 1200 St. Paul, Minnesota 55101 74.

Unless otherwise directed by a representative of the State of North Carolina in writing, all submissions to the State of North Carolina pursuant to this Order must be sent by overnight courier or first-class mail to the below address and contemporaneously by email to [email protected]: M. Lynne Weaver, Special Deputy Attorney General North Carolina Department of Justice 114 W. Edenton Street Raleigh, North Carolina 27603 75.

Unless otherwise directed by the State of California in writing, all submissions to the State of California pursuant to this Order must be sent by overnight courier or first-class mail to the below address and contemporaneously by email to [email protected]: Christina Tusan Supervising Deputy City Attorney Los Angeles City Attorney’s Office 200 N. Main Street, 5th Floor Los Angeles, CA 90012 76.

The Enforcement Director may, in his or her discretion, modify any non-material requirements of this Order (e.g., reasonable extensions of time and Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 27 of 35 Page ID #:5999

Page 207

STIPULATED FINAL JUDGMENT AND ORDER 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.

XV Cooperation with Plaintiffs It is FURTHER ORDERED that:

77.

Settling Defendant must cooperate fully with Plaintiffs in this matter and in any investigation or litigation related to or associated with the conduct described in the Amended Complaint, including related to the Bankruptcy Proceeding. Settling Defendant must provide truthful and complete information, evidence, and testimony. Settling Defendant must appear for interviews, discovery, hearings, trials, and any other proceedings that any Plaintiff may reasonably request upon 10 days written notice, or other reasonable notice, at such places and times as Plaintiff may designate, without the service of compulsory process. 78.

Settling Defendant and Settling Relief Defendant must cooperate fully to help Plaintiffs determine the identity, location, and contact information of any Defendant and any Person who might have contact information for any Defendant. Settling Defendant and Settling Relief Defendant must provide such information in their or their agents’ possession or control within 14 days of receiving a written request from any Plaintiff.

79.

Settling Defendant and Settling Relief Defendant must cooperate fully to help Plaintiffs determine the identity and location of, and the amount of injury sustained by, each Affected Consumer. Settling Defendant and Settling Relief Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 28 of 35 Page ID #:6000

Page 208

STIPULATED FINAL JUDGMENT AND ORDER Defendant must provide such information in their or their agents’ possession or control within 14 days of receiving a written request from any Plaintiff. XVI Compliance Monitoring It is FURTHER ORDERED that, to monitor Settling Defendant’s and Settling Relief Defendant’s compliance with this Order, including the financial representations upon which part of the judgment was suspended: 80.

Within 14 days of receipt of a written request from any Plaintiff, Settling Defendant or Settling Relief Defendant must submit additional Compliance Reports or other requested information, which must be made under penalty of perjury; provide sworn testimony; or produce documents. 81.

For purposes of this Section, Plaintiffs may communicate directly with Settling Defendant or Settling Relief Defendant, unless the Settling Defendant or Settling Relief Defendant retains counsel related to these communications. 82.

Settling Defendant and Settling Relief Defendant must permit Plaintiffs’ representatives to interview any employee or other Person affiliated with Settling Defendant who has agreed to such an interview. The Person interviewed may have counsel present. Nothing in this Order will limit the Bureau’s lawful use of civil investigative demands under 12 C.F.R. § 1080.6 or any Plaintiff’s use of other compulsory process.

83.

Plaintiffs are authorized by this Order to use all other lawful means, including posing, through representatives, as consumers, suppliers, or other individuals or entities, to the Settling Defendant or any individual or entity affiliated with Settling Defendant, without the necessity of identification or prior notice, and may record any communications that occur in the course of such contacts.

Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 29 of 35 Page ID #:6001

Page 209

STIPULATED FINAL JUDGMENT AND ORDER XVII Receivership It is FURTHER ORDERED that:

84.

85.

Within 14 days of liquidating Settling Defendant’s Assets transferred pursuant to Paragraph 31, the Receiver shall transfer $5,000 to the State of Minnesota, $5,000 to the North Carolina Attorney General, and $5,000 to the People of the State of California from the Settling Defendant’s Assets maintained in the Receiver’s account. These transfers shall be made to satisfy the civil money penalties to each State as set forth in Section VII. 86.

The Receiver shall promptly take all steps necessary to liquidate the Settling Defendant’s and Settling Relief Defendant’s Assets using any commercially reasonable means, including auction and/or private sale, and all such sales shall be deemed authorized and approved under 28 U.S.C. § 2004 without further notice, hearing, or court order. After such liquidation, the Receiver shall remit the net proceeds to the Bureau or its designated representative as payment toward the monetary judgments entered against Settling Relief Defendant and Settling Relief Defendant within 21 days of each such sale or liquidation, subject to Paragraph 85.

Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 30 of 35 Page ID #:6002

Page 210

STIPULATED FINAL JUDGMENT AND ORDER 87.

XVIII 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 28th day of August, 2020. ____________________________

Michael W. Fitzgerald United States District Judge Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 31 of 35 Page ID #:6003

Page 211

Attachment A to [Proposed] Order ATTACHMENT A Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 32 of 35 Page ID #:6004

Page 212

Attachment A to [Proposed] Order List of Assets Transferred Pursuant to Paragraph 30 of the Order Any and all Assets at the following financial institutions and in the following accounts:

1. Charles Schwab & Co., Inc. and Charles Schwab Bank: a. account number ending in 7450 in the name of Tuong Nguyen; 2. JP Morgan Chase Bank, N.A.:

a. account number ending in 7163 in the name of TN Accounting Inc.; 3. Preferred Bank:

a. account number ending in 1184 in the name of Tuong T. Nguyen or Thi My Tien Nguyen;

4. Wells Fargo Bank, N.A.:

a. account number ending in 0206 in the name of Mytien T. Nguyen or Tuong Nguyen; and b. account number ending in 9982 in the name of Mytien T. Nguyen or Tuong Nguyen.

Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 33 of 35 Page ID #:6005

Page 213

Attachment B to [Proposed] Order ATTACHMENT B Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 34 of 35 Page ID #:6006

Page 214

Attachment B to [Proposed] Order List of Assets Transferred Pursuant to Paragraphs 30-31 of the Order 1.

The following vehicle and, for the vehicle, the certificate of title and all documents evidencing purchase and ownership: a. 2018 Tesla Model 3, VIN ending in 3912, in the name of Tuong Nguyen.

The following Assets and, for each Asset, all documents evidencing purchase and ownership, including all original packaging: a. All Assets identified at item nos. 20 and 23 on the Financial Statement of Tuong Nguyen, including all attachments, signed on July 30, 2020, and submitted to the Bureau on or about July 30, 2020, including the following items:

i. Chanel J12 watch;

ii. 8.26 Bitcoin, 10.9 Ethereum, 1.39 Bitcoin, and 1.28 Bitcoin Cash.

Provided that the following Assets shall be released to Mr. Nguyen: all Assets not identified above or on Attachment A that are listed at item nos. 10, 12, 20, 21, and 23 of the above-referenced Financial Disclosure. b. All Assets identified at item no. 23 on the Financial Statement of TN Accounting Inc., including all attachments, signed on October 31, 2019, and submitted to the Bureau on or about November 5, 2019, and resubmitted and supplemented on November 7, 2019, December 19, 2019, July 14, 2020, and July 30, 2020:

i. Rolex Datejust Watch, serial number 930002E7, acquisition cost $10,400.

Provided that the following Assets shall be released to TN Accounting Inc.: all electronics as identified on the above-referenced Financial Statement. Case 8:19-cv-01998-MWF-KS Document 210 Filed 08/28/20 Page 35 of 35 Page ID #:6007

Amended complaint (Apr. 2021)

PDF of this document (78 pages)

Page 215

REDACTED SECOND AMENDED COMPLAINT BUREAU OF CONSUMER FINANCIAL PROTECTION NATHAN DIMOCK (D.C. Bar No. 487743) (Admitted pro hac vice) Tel.: (202) 435-9198 / Email: [email protected] SARAH PREIS (D.C. Bar No. 997387) (admitted Pro Hac Vice) Tel.: (202)-435-9318 / Email: [email protected] JESSE STEWART (N.Y. Bar No. 5145495) (admitted Pro Hac Vice) Tel: (202)-435-9641 / Email: [email protected] 1700 G Street, NW Washington, DC 20552 Fax: (202) 435-5471 LEANNE E. HARTMANN (CA Bar No. 264787) (Local Counsel for the Bureau of Consumer Financial Protection) 301 Howard Street, Suite 1200 San Francisco, CA 94105 Email: [email protected]/Fax: (415) 844-9788 Attorneys for Plaintiff the Bureau of Consumer Financial Protection THE STATE OF MINNESOTA EVAN ROMANOFF (Attorney Reg. No. 0398223) (admitted Pro Hac Vice) Assistant Attorney General 445 Minnesota Street, Suite 1200 St. Paul, MN 55101-2130 Tel.: (651) 757-1454/Email: [email protected] Attorneys for Plaintiff the State of Minnesota THE STATE OF NORTH CAROLINA M. LYNNE WEAVER (N.C. Bar No. 19397) (admitted Pro Hac Vice) MICHAEL T. HENRY (N.C. Bar No. 35338) (admitted Pro Hac Vice) North Carolina Department of Justice 114 W. Edenton Street Raleigh, NC 27602 Tel.: (919) 716-6000 / Fax: (919) 716-6050 Emails: lweaver@ncdoj,gov/[email protected] Attorneys for Plaintiff the State of North Carolina THE PEOPLE OF THE STATE OF CALIFORNIA MICHAEL N. FEUER, City Attorney (CA Bar No. 111529) CHRISTINA V. TUSAN, Supvr. Deputy City Attorney (CA Bar No. 192203) WILLIAM PLETCHER, Deputy City Attorney (CA Bar No. 212664) MIGUEL RUIZ, Deputy City Attorney (CA Bar No. 240387) OFFICE OF THE CITY ATTORNEY 200 N. Main Street, 500 City Hall East Los Angeles, California 90012-4131 Tel: (213) 473-6908/Fax: (213) 978-8112 Emails: [email protected] / [email protected] Attorneys for Plaintiff the People of the State of California Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 1 of 78 Page ID #:8369

Page 216

REDACTED SECOND AMENDED COMPLAINT UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA Bureau of Consumer Financial Protection; State of Minnesota, by its Attorney General, Keith Ellison; State of North Carolina, ex rel. Joshua H. Stein, Attorney General; and The People of The State of California, Michael N. Feuer, Los Angeles City Attorney, Plaintiffs, v.

Consumer Advocacy Center Inc., d/b/a Premier Student Loan Center; True Count Staffing Inc., d/b/a SL Account Management; Prime Consulting LLC, d/b/a Financial Preparation Services; TAS 2019 LLC d/b/a Trusted Account Services; Horizon Consultants LLC; First Priority LLC d/b/a Priority Account Management; Albert Kim, a/k/a Albert King; Kaine Wen, a/k/a Wenting Kaine Dai, Wen Ting Dai, and Kaine Wen Dai in his individual capacity and as trustee of the Kaine Wen 2017 Trust; and Tuong Nguyen, a/k/a Tom Nelson, Defendants, and Infinite Management Corp., f/k/a Infinite Management Solutions Inc.; Hold The Door, Corp.; TN Accounting Inc.; Mice and Men LLC; 1st Generation Holdings, LLC; Sarah Kim; Anan Enterprise, Inc.; and Judy Dai in her individual capacity and as trustee of the Judy Dai 2017 Trust,

Relief Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No: SACV 19-1998-MWF(KSx) SECOND AMENDED COMPLAINT INTRODUCTION 1.

The Bureau of Consumer Financial Protection (Bureau) brings this action under §§ 1031, 1036(a), 1054, and 1055 of the Consumer Financial Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 2 of 78 Page ID #:8370

Page 217

REDACTED SECOND AMENDED COMPLAINT

Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531, 5536(a), 5564 & 5565; under and the Telemarketing and Consumer Fraud and Abuse Prevention Act (Telemarketing Act), 15 U.S.C. §§ 6101-6108, and its implementing regulation, the Telemarketing Sales Rule (TSR), 16 C.F.R. Part 310; under § 3304(b)(1) of the Federal Debt Collection Procedures Act (FDCPA), 28 U.S.C. §§ 3001- 3308; under § 3439.04(a) of the California Uniform Voidable Transactions Act (UVTA), Cal Civ. Code §§ 3439-3439.14; and under the Court’s ancillary enforcement jurisdiction. The Bureau brings this action against the student-loan debt-relief operation involving Defendants Consumer Advocacy Center Inc., d/b/a Premier Student Loan Center; True Count Staffing Inc., d/b/a SL Account Management; Prime Consulting LLC, d/b/a Financial Preparation Services (collectively, Student Loan Debt Relief Companies); Defendants TAS 2019 LLC, d/b/a Trusted Account Services, Horizon Consultants LLC, and First Priority LLC (collectively, Payment Companies); and Defendants Albert Kim; Kaine Wen, in his individual capacity and as trustee of the Kaine Wen 2017 Trust; and Tuong Nguyen (collectively, Individual Defendants). (Student Loan Debt Relief Companies, Payment Companies, and Individual Defendants are referred to, collectively, as Defendants.) 2.

The State of Minnesota, by its Attorney General, brings this enforcement action to, among other things, obtain temporary, preliminary, and permanent injunctive relief, restitution, and civil penalties for Defendants’ acts or practices in violation of the Minnesota Prevention of Consumer Fraud Act (MNCFA), Minn. Stat. §§ 325F.68-.694; the Minnesota Uniform Deceptive Trade Practices Act (MNDTPA), Minn. Stat. §§ 325D.43-.48; and the Telemarketing Act, 15 U.S.C. §§ 6101-6108, and its implementing regulation, Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 3 of 78 Page ID #:8371

Page 218

REDACTED SECOND AMENDED COMPLAINT

the TSR, 16 C.F.R. Part 310, in connection with Defendants’ student-loan debtrelief operation.

The State of North Carolina, by its Attorney General, brings this enforcement action to, among other things, obtain temporary, preliminary, and permanent injunctive relief, restitution, and civil penalties for Defendants’ acts or practices in violation of North Carolina’s Debt Adjusting Act, N.C. Gen. Stat. § 14-423, et seq., (NCDAA); North Carolina’s Unfair and Deceptive Practices Act, N.C. Gen. Stat. § 75-1.1 (NCUDPA); North Carolina’s Telephonic Seller Registration Act, N.C. Gen. Stat. § 66-260, et seq. (NCTSRA); and the Telemarketing Act, 15 U.S.C. §§ 6101-6108, and its implementing regulation, the TSR, 16 C.F.R. Part 310, in connection with Defendants’ student-loan debt-relief operation. 4.

The People of the State of California (collectively with the States of Minnesota and North Carolina, “the States”), by and through Michael N. Feuer, Los Angeles City Attorney, bring this enforcement action to, among other things, obtain temporary, preliminary, and permanent injunctive relief, restitution, and civil penalties for Defendants’ acts or practices in violation of California’s Business and Professions Code section 17200 et seq. (the “Unfair Competition Law,” or “UCL”), the UVTA, Cal. Civil Code sections 3439 through 3439.14, and the Telemarketing Act, 15 U.S.C. §§ 6101-6108, and its implementing regulation, the TSR, 16 C.F.R. Part 310, in connection with student-loan debt-relief operation.

The Bureau and the States bring this action to stop Defendants’ unlawful conduct, obtain relief for harmed consumers, avoid certain fraudulent transfers to satisfy any judgment in favor of the Bureau and the People of the Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 4 of 78 Page ID #:8372

Page 219

REDACTED SECOND AMENDED COMPLAINT

State of California against Defendant Kaine Wen, and impose civil money penalties on Defendants for their unlawful actions. 7.

The Bureau and the States also bring this action against Infinite Management Corporation; Hold the Door, Corp.; TN Accounting Inc.; Mice and Men LLC; 1st Generation Holdings, LLC; Sarah Kim; Anan Enterprise, Inc.; and Judy Dai in her individual capacity and as trustee of the Judy Dai 2017 Trust, as Relief Defendants.

OVERVIEW 8.

From at least 2015 until the filing of this action, Defendants operated a debt-relief enterprise that deceived thousands of federal-student-loan borrowers and collected over $95 million in illegal advance fees, in violation of the TSR, the CFPA, the MNCFA, the MNDTPA, the NCDAA, the NCUDPA, the NCTSRA, and the UCL. Unless otherwise noted, all references to “borrowers” and “consumers” in this Complaint include California, Minnesota, and North Carolina borrowers and consumers.

10.

Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 5 of 78 Page ID #:8373

Page 220

REDACTED SECOND AMENDED COMPLAINT

11.

13.

14.

15.

At no time did the Student Loan Debt Relief Companies hold consumer payments in independent third-party accounts. 16.

At no time did the Student Loan Debt Relief Companies use payments from consumers to make payments toward consumers’ student-loan debts.

17.

Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 6 of 78 Page ID #:8374

Page 221

REDACTED SECOND AMENDED COMPLAINT

JURISDICTION AND VENUE 18.

Venue is proper in this district pursuant to 12 U.S.C. § 5564(f) because Defendants are located, reside, or do business in this district. PARTIES 20.

The Bureau is an independent agency charged with enforcing violations of 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 the CFPA’s prohibitions on unfair, deceptive, and abusive acts or practices, 12 U.S.C. §§ 1031, 1036, the TSR as it applies to persons subject to the CFPA, 15 U.S.C. §§6102(c), 6105(d), the FDCPA as to a debt owed to the Bureau, and therefore the United States, 28 U.S.C. §§ 3001, 3002(1)(A), (3), (15)(B), and any judgment it obtains, including by invoking the court’s ancillary jurisdiction.

21.

22.

Page 222

REDACTED SECOND AMENDED COMPLAINT

23.

24.

Michael N. Feuer, City Attorney for the City of Los Angeles, is authorized under the UCL, UVTA, and the Telemarketing Act, 15 U.S.C. § 6103(a) and (f)(2), to bring this civil law enforcement action on behalf of the People of the State of California.

25.

CAC has held itself out as doing business as Premier Student Loan Center.

27.

CAC transacted its student-loan debt-relief business in the Central District of California since at least November 2015. 28.

29.

Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 8 of 78 Page ID #:8376

Page 223

REDACTED SECOND AMENDED COMPLAINT

30.

True Count has held itself out as doing business as SL Account Management.

31.

Defendant Prime Consulting LLC (Prime) is a Wyoming limitedliability company that registered with the California Secretary of State on April 25, 2018, and it has held itself out as doing business at 11932 Klingerman Street, Suite 3, El Monte, CA, 91732 and 7545 Irvine Center Drive, Suite 200, Room 108, Irvine, CA, 92618.

32.

Prime has held itself out as doing business as Financial Preparation Services.

33.

34.

TAS 2019 LLC’s operations and principal place of business were located in the Central District of California. 35.

36.

Page 224

REDACTED SECOND AMENDED COMPLAINT

37.

Defendant Albert Kim (a/k/a Albert King) is CAC’s primary owner and founder.

38.

Kim is a resident of the State of California and performed work for CAC while residing in this jurisdiction. 39.

Kim exercised substantial control over CAC’s business practices. 40.

Kim exercised managerial responsibility for CAC and participated in the conduct of its affairs.

41.

Wen is a resident of the State of California and performed work for CAC and True Count while residing in this jurisdiction. 43.

Wen exercised substantial control over True Count’s business practices.

44.

Wen exercised managerial responsibility for True Count and participated in the conduct of its affairs. 45.

Wen exercised managerial responsibility for CAC and participated in the conduct of its affairs.

46.

Wen is the sole trustee, settlor, and named beneficiary (during his lifetime) of the Kaine Wen 2017 Trust, a revocable trust created on or about September 7, 2017, under the laws of the State of California.

47.

Defendant Tuong Nguyen (a/k/a Tom Nelson) served as CAC’s controller and as True Count’s secretary. 48.

Nguyen is a resident of the State of California and performed work for CAC and True Count while residing in this jurisdiction. 49.

Nguyen exercised managerial responsibility for CAC and participated in the conduct of its affairs. Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 10 of 78 Page ID #:8378

Page 225

REDACTED SECOND AMENDED COMPLAINT

50.

Nguyen exercised managerial responsibility for True Count and participated in the conduct of its affairs. 51.

Kim served as Infinite Management’s registered agent and president, and he is the sole signatory on a bank account belonging to it. 53.

Hold the Door was incorporated by Wen, and he has served as its sole corporate officer.

55.

56.

Nguyen has served as TN Accounting’s president and sole corporate officer.

57.

Relief Defendant Mice and Men LLC (Mice and Men) is a Wyoming corporation incorporated in December 2018 that has listed its principal place of business as 30 N. Gould St, Ste R, Sheridan, WY 82801. 58.

Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 11 of 78 Page ID #:8379

Page 226

REDACTED SECOND AMENDED COMPLAINT

59.

Mice and Men is purportedly owned by Relief Defendant Judy Dai, Defendant Wen’s mother, who resides in Monterey Park, CA. 60.

Judy Dai was listed with Registered Agents Inc. as the contact person for Mice and Men, using her Monterey Park, CA residence as the mailing address.

61.

Invoices from Registered Agents Inc. for services rendered for Mice and Men were billed to Mice and Men, LLC, Judy Dai, at Judy Dai’s Monterey Park, CA residence.

62.

Relief Defendant 1st Generation Holdings, LLC (1st Generation) is a Wyoming corporation with its principal place of business in Downey, California.

63.

Relief Defendant Sarah Kim is Defendant Kim’s wife. She is a resident of the State of California.

64.

Relief Defendant Judy Dai is Defendant Wen’s mother. She is a resident of the State of California and this District. 66.

Judy Dai is and has been the sole trustee, settlor, and named beneficiary (during her lifetime) of the Judy Dai 2017 Trust, a revocable trust created on or about September 7, 2017, under the laws of the State of California.

FACTS Student Loan Forgiveness and Repayment Programs 67.

DOE administers several federal student-loan repayment programs. Some potentially offer lower monthly loan payments. Others allow consumers Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 12 of 78 Page ID #:8380

Page 227

REDACTED SECOND AMENDED COMPLAINT

who make the requisite qualifying payments over a period ranging from 10 to 25 years (and who meet other eligibility criteria) to obtain loan forgiveness. 68.

70.

CAC began offering student-loan debt-relief services purporting to lower consumers’ monthly loan payments and obtain loan forgiveness through enrollment in loan forgiveness or IDR plans as early as November 2015. 72.

Initially, CAC’s internal structure included sales, processing, and customer-service departments.

73.

Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 13 of 78 Page ID #:8381

Page 228

REDACTED SECOND AMENDED COMPLAINT

74.

75.

In March 2018, Kim and Wen moved CAC’s processing and customer-service operations into a new entity, True Count. 76.

As part of this shift, CAC’s processing and customer-service departments physically moved to a new office location. 77.

78.

As early as April 2018, CAC transferred its sales functions to a new entity, Prime, which ultimately assumed CAC’s role as the main sales company enrolling consumers for True Count’s services. 79.

The Individual Defendants, through True Count and Prime, set up First Priority, Horizon, and TAS to collect payments from consumers. Debt Relief Sales and Business Practices 80.

The Student Loan Debt Relief Companies marketed their debtrelief services through inbound and outbound calls, websites, social media, and direct mail.

81.

When consumers called the front-end sales company (CAC or Prime), the consumer first spoke with a sales representative. 82.

Page 229

REDACTED SECOND AMENDED COMPLAINT

83.

Sales representatives downloaded student-loan data from the consumer’s online FSA account into the company’s customer–relationshipmanagement system.

84.

Sales representatives often stated that there was an urgent need to sign up for the respective Student Loan Debt Relief Company’s services. 85.

For example, some sales representatives told consumers that they had a limited time in which they could apply for an IDR program. 86.

At times, sales representatives represented that the respective Student Loan Debt Relief Company was affiliated with DOE. Representations about Fees 87.

During sales calls, sales representatives made affirmative representations or material omissions about the purpose of the fees paid by consumers to the Student Loan Debt Relief Companies. 88.

Sales representatives frequently represented that the fees would be applied to the balance of consumers’ student loans. 89.

91.

In fact, the fees paid to the Student Loan Debt Relief Companies were in addition to, and did not relieve consumers of, their obligation to pay their student loans.

92.

Page 230

REDACTED SECOND AMENDED COMPLAINT

93.

In fact, consumers can apply free of charge for loan forgiveness or IDR programs, either through their student-loan servicer or directly to the DOE. 94.

Moreover, consumers can recertify annually their eligibility to remain enrolled in their IDR plans through their student-loan servicer for free. Representations about Loan Forgiveness 95.

The Student Loan Debt Relief Companies’ sales representatives often told consumers that they were qualified or approved for loan forgiveness. 96.

The DOE’s loan forgiveness programs require anywhere from 10- 25 years of qualifying payments, as well as satisfaction of other eligibility criteria, to qualify for loan forgiveness. 98.

Only the DOE can approve consumers for loan forgiveness. 99.

101. In fact, the new, lower monthly payment amount identified by sales representatives was often calculated based on an incorrect family size, income, or marital status.

102. Sales representatives often represented that consumers’ lower monthly payment would be in place over the life of the loan. Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 16 of 78 Page ID #:8384

Page 231

REDACTED SECOND AMENDED COMPLAINT

103. In fact, monthly payment amounts are determined by student loan servicers and can fluctuate year to year depending on changes in consumers’ income, family size, or marital status, and it is therefore not possible to determine a set monthly payment for an IDR plan for the life of the loan. Preparing and Submitting Forbearance Requests and IDR Plan Applications 104. Following an initial sales call, consumers who purchased the Student Loan Debt Relief Companies’ services were assigned to a company representative called a “processor.”

105. Processors conducted a “welcome call” during which they typically asked consumers for proof of income and, at times, verified certain information.

106. Following the welcome call, processors submitted forbearance requests to student-loan servicers on behalf of consumers. 107. Processors typically asked for a forbearance period of three months in the forbearance requests they submitted. 108. If a servicer approves a forbearance request, the consumer is excused from making his or her monthly student loan payments during the period of forbearance. But interest on the consumer’s student loan accrues during the period of forbearance and may be added to the principal balance. 109. Typically, consumers were not informed during sales calls or the welcome call that processors would submit forbearance requests on their behalf. 110. Typically, consumers were not informed during sales calls or the welcome call that interest on the consumer’s student loan accrues during the period of forbearance and may be added to the principal balance. 111. In fact, most consumers did not ask the Student Loan Debt Relief Companies for forbearance requests, and many consumers were not aware that Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 17 of 78 Page ID #:8385

Page 232

REDACTED SECOND AMENDED COMPLAINT

the Student Loan Debt Relief Companies submitted forbearance requests to their student loan servicers on their behalf. 112. Processors signed the forbearance requests in the consumer’s name so that it appeared the request was submitted by the consumer. 113. Many consumers were unaware the fees they paid to the Student Loan Debt Relief Companies were not paying down their student loans. Submitting Consolidation and IDR Requests with False Information 114. Processors submitted IDR applications to servicers on behalf of consumers with false information about consumers’ income, family size, or marital status.

115. For consumers who did not provide proof of income to the Student Loan Debt Relief Companies, processors frequently listed those consumers as unemployed on their IDR applications, even when the consumers were employed at the time.

116. Processors frequently submitted IDR applications to consumers’ student loan servicers that listed consumers’ family sizes greater than the consumers’ actual family size.

117. Processors frequently submitted IDR applications to consumers’ student loan servicers that listed consumers as single, even if the consumer had informed the Student Loan Debt Relief Companies that he or she was married. 118. When submitting IDR applications to consumers’ student loan servicers, processors typically changed consumers’ email address to an email address created by the Student Loan Debt Relief Company in order to temporarily divert all email correspondence from the consumer’s student-loan servicer to the Student Loan Debt Relief Company. 119. When submitting IDR applications to consumers’ student-loan servicers, processors typically changed consumers’ mailing address to a mailing address used by the Student Loan Debt Relief Company in order to temporarily Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 18 of 78 Page ID #:8386

Page 233

REDACTED SECOND AMENDED COMPLAINT

divert all postal mail from the consumer’s student-loan servicer to the Student Loan Debt Relief Company.

120. After receiving confirmation from a consumer’s student loan servicer that a consumer’s loan consolidation or IDR application had been approved, processors typically logged back into the consumer’s loan account and changed the consumers email and mailing address back to the consumer’s actual information.

121. The Student Loan Debt Relief Companies’ practice of diverting correspondence to consumers from the consumers’ student-loan servicers helped conceal the Student Loan Debt Relief Companies’ practice of submitting false information to student loan servicers. Representations about and Collection of Fees from Consumers 122. The Student Loan Debt Relief Companies typically collected enrollment fees from consumers before consumers had been approved for a loan consolidation or an IDR plan.

123. The Student Loan Debt Relief Companies collected monthly fees, typically ranging from $10-$42, before submitting the consumer’s corresponding annual IDR plan recertification. 124. At all times material to this Complaint, the Student Loan Debt Relief Companies did not track whether consumers had made an initial payment on an adjusted loan.

125. As early as April 2018, the Student Loan Debt Relief Companies’ contracts began including a section entitled “No Advance Fees.” 126. The section of the Student Loan Debt Relief Companies’ contract entitled “No Advance Fees” states that the company “does not take any advance fees from Client” and further provides that consumer fees will be held in an independent third party “trust account” and not paid to the company until the Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 19 of 78 Page ID #:8387

Page 234

REDACTED SECOND AMENDED COMPLAINT

consumer “has received a consolidation, adjustment, or otherwise satisfactory result” and makes one payment “towards such.” 127. At all times material to this Complaint, the Student Loan Debt Relief Companies did not use trust accounts to hold fees collected from consumers before placing consumers into loan repayment plans – at no time did the Student Loan Debt Relief Companies hold payments from consumers in accordance with Section 310.4(a)(5)(ii) of the TSR. 128. Rather, fees collected from consumers by the Student Loan Debt Relief Companies were directly deposited into the companies’ bank accounts and commingled with company assets.

129. The Defendants have collected over $95 million in illegal advance fees from thousands of consumers nationwide. Roles of the Individual Defendants 130. Albert Kim (a/k/a Albert King) is CAC’s primary owner and manager.

131. Kim was in the office frequently and helped manage CAC’s and True Count’s day-to-day operations.

132. Kim oversaw CAC’s marketing.

133. Kim signed CAC’s merchant-account applications or agreements with at least three different payment processors. 134. At times, Kim personally responded to consumers’ complaints. 135. Kim controlled CAC’s bank accounts, and was an authorized user on CAC’s and True Count’s bank accounts.

136. When Kim applied for a merchant account on CAC’s behalf in or about July 2017, he agreed to maintain fraud and chargebacks below certain levels.

137. Monthly account statements sent to CAC’s corporate address for that merchant account identify tens of thousands of dollars in chargebacks and Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 20 of 78 Page ID #:8388

Page 235

REDACTED SECOND AMENDED COMPLAINT

hundreds of thousands of dollars in consumer refunds between August 2017 and March 2019.

138. After CAC filed for bankruptcy, Kim personally generated marketing leads for Prime.

139. Kaine Wen served as CAC’s owner, managing partner, and general counsel.

140. CAC’s 2016 tax returns and U.K. registration documents list Wen as CAC’s 50% owner.

141. Wen made capital contributions to CAC in October 2015 that accounted for 75% of capital contributions by members at that time. 142. Wen participated in the decision to move CAC’s processing functions to True Count.

143. Wen personally guaranteed True Count’s lease agreement. 144. Wen set up payment-processing agreements for True Count. 145. Wen corresponded with payment processors regarding True Count’s excessive chargeback rates.

146. Wen represented to a payment processor that True Count “understands, currently fully complies with, and during the term of the Agreement will fully comply with” the TSR, CFPA, and “all other applicable federal, state, and local laws, rules, and regulations.” 147. Wen has been an authorized user on CAC’s, Premier Student Loan Center’s, True Count’s, and Hold the Door’s bank accounts. 148. Wen was also a point of contact or signed for at least three merchant accounts for CAC and at least one merchant account for True Count. 149. Wen has been a successor trustee of the Judy Dai 2017 Trust. 150. Wen has held power of attorney over the Judy Dai 2017 Trust bank account at UBS Financial Services Inc. (Judy Dai 2017 Trust UBS Account) since on or about August 23, 2018.

Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 21 of 78 Page ID #:8389

Page 236

REDACTED SECOND AMENDED COMPLAINT

151. Wen’s power of attorney over the Judy Dai 2017 Trust UBS Account has included authorizing Wen to order the purchase and sale of securities and similar property and to transfer assets to accounts held in the name of the Judy Dai 2017 Trust.

152. Tuong Nguyen served as the controller and provided accounting services for CAC.

153. Nguyen was responsible for paying CAC’s bills, reviewed its bank statements, and was a signatory on several of CAC’s bank accounts. 154. At times, Nguyen also responded to consumer complaints, and was listed as a point of contact for CAC’s d/b/a, Premier Student Loan Center, in the Bureau’s consumer-complaint portal.

155. True Count identified Nguyen as its secretary in some communications with banks.

156. Nguyen was a point of contact for at least two of CAC’s merchant accounts and one of True Count’s merchant accounts. 157. In January 2018, Nguyen signed a letter to a payment processor acknowledging CAC had incurred “excessive chargebacks” during “December/2017.”

158. Nguyen also acknowledged that the top chargeback reasons included fraud.

159. Nguyen incorporated TN Accounting and served as its president and sole corporate officer.

160. Nguyen has been a signatory on a bank account held by TN Accounting.

161. TN Accounting’s primary source of income is over $225,000 from CAC and True Count from March 2017 through December 2018. 162. Nguyen was also an authorized user on bank accounts held by CAC, Premier Student Loan Center, and True Count. Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 22 of 78 Page ID #:8390

Page 237

REDACTED SECOND AMENDED COMPLAINT

Roles of the Payment Companies 163. The Individual Defendants, True Count, and Prime used TAS, Horizon, and First Priority to obtain merchant accounts and to collect fees from consumers.

164. In September 2019, the Individual Defendants, True Count, and Prime transferred customer payment processing to TAS. 165. TAS held itself out as an “independent third party” in its contracts with consumers.

166. In fact, TAS was not independent of Defendants. 167. Rather, TAS was run from within True Count and Prime by the Individual Defendants.

168. TAS’s domain credentials (username and password) were stored in an account in Albert Kim’s name.

169. The Individual Defendants and the Student Loan Debt Relief Companies controlled TAS’s email system, and the Student Loan Debt Relief Companies’ employees reviewed and responded to consumers’ emails sent to TAS. Defendant Wen executed or acted as TAS’s agent to handle the application necessary for TAS to open a merchant account to process payments from the Student Loan Debt Relief Companies’ consumers. Wen and True Count’s Operations Manager created a fictional employee to interact with True Count’s and Prime’s software provider to promote the appearance of TAS as an entity independent of Defendants.

170. Since September 12, 2019, until the date of the temporary restraining order issued by this Court, TAS collected approximately $3 million in payments from consumers.

171. The Individual Defendants, True Count, and Prime used Horizon to process consumers’ payments to the student-loan debt-relief enterprise. Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 23 of 78 Page ID #:8391

Page 238

REDACTED SECOND AMENDED COMPLAINT

172. Horizon’s incorporation documents list Keneth Hu, an IT professional employed by the Student Loan Debt Relief Companies, as its Chief Executive Officer and President.

173. Notwithstanding Mr. Hu’s nominal ownership, Defendants Wen, Nguyen, True Count, and Prime exercised substantial control over Horizon. 174. Defendant Nguyen was a signatory on a Horizon bank account. 175. Defendant Wen was Horizon’s designated contact on a merchant account.

176. Defendant True Count asserts that Horizon holds over $700,000 for its benefit.

177. Horizon’s stated business address was leased by Defendant Prime Consulting.

178. Horizon applied for at least two merchant accounts to process consumer payments (including any associated chargebacks or refunds) on behalf of the Student Loan Debt Relief Companies. 179. Defendants Wen and Nguyen received a finalized payment processor application for a merchant account with Quantum Electronic Payments on Horizon’s behalf.

180. Defendant Wen later instructed Hu to sign the application for a merchant account with Quantum Electronic Payments. 181. Horizon processed about $9 million in consumer payments through at least one of its payment processors accounts on behalf of the Student Loan Debt Relief Companies.

182. The Individual Defendants, True Count, and Prime used First Priority to open merchant accounts to receive consumer payments to the student loan debt relief enterprise.

Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 24 of 78 Page ID #:8392

Page 239

REDACTED SECOND AMENDED COMPLAINT

183. The Individual Defendants, True Count, and Prime used First Priority to obtain and then copy documents, such as agreements and contracts, for use by TAS in the student-loan debt-relief operation. 184. First Priority’s corporate registration identifies Defendant Nguyen as its president and sole owner.

185. Defendants Kim and Wen served as contacts on behalf of First Priority for a payment processor.

186. First Priority’s income in 2018 and 2019 consisted of approximately $400,000 in transfers from True Count and $150,000 in consumer fees collected through two payment processor accounts on behalf of Prime and True Count.

The Student Loan Debt Relief Companies Operated as a Common Enterprise 187. CAC, True Count, and Prime shared employees, customers, scripts, and training materials, and they used the same database to store consumers’ information and track aspects of their business activity. 188. CAC, True Count, and Prime shared the proceeds of the debt-relief enterprise.

189. For example, since April 2018, True Count, acting as the purported “billing department” for CAC and Prime, has transferred at least $12 million to CAC and at least $25 million to Prime.

190. CAC lent hundreds of thousands of dollars to True Count without interest or any written agreement.

191. CAC stated in a lease guarantee that it had a “financial interest” in True Count.

192. CAC guaranteed at least one lease on behalf of Prime Consulting and two leases on behalf of True Count.

Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 25 of 78 Page ID #:8393

Page 240

REDACTED SECOND AMENDED COMPLAINT

193. CAC, True Count, and Prime have used overlapping addresses to carry out the debt-relief operation.

194. For example, addresses True Count identifies as its business addresses are also business addresses for CAC, Prime, and Hold the Door. 195. To market their debt-relief services to consumers, CAC, True Count, and Prime shared over a dozen fictitious names, including but not limited to South Coast Financial Center, Direct Account Services, Financial Loan Advisors, Account Preparation Services, Administrative Financial, Tangible Savings Solutions, Coastal Shores Financial Group, First Choice Financial Centre (a/k/a First Choice Financial Center), Administrative Account Services, Primary Account Solutions, Prime Document Services, Financial Accounting Center, Doc Management Solutions, First Priority LLC, ALW Loans Administrative Accounting Center, Best Choice Financial Center, First Document Services, Global Direct Accounting Solutions, Keystone Document Center, Pacific Palm Financial Group, Pacific Shores Advisory, Sequoia Account Management, Signature Loan Solutions, Yellowstone Account Services, ClearStudentLoanDebt, and Clear Student Loan Debt. 196. The websites for Doc Management Solutions, Financial Accounting Center, Prime Document Services, Primary Account Solutions, Administrative Account Services, South Coast Financial Center, First Choice Financial Center, Coastal Shores Financial Group, Tangible Savings Solutions, Administrative Financial, Account Preparation Services, Financial Loan Advisors, and Direct Account Services are nearly identical. Transfer of Assets to Relief Defendants 197. Defendants Wen, Kim, and Nguyen directed and controlled Relief Defendants Hold the Door, Infinite Management, and TN Accounting, respectively.

Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 26 of 78 Page ID #:8394

Page 241

REDACTED SECOND AMENDED COMPLAINT

198. Wen, Kim, and Nguyen are the signatories on bank accounts for the respective companies and thus controlled the flow of money into and out of their corporate accounts.

199. From 2017 to 2019, payments from CAC or True Count made up most or almost all the income of Hold the Door, Infinite Management, and TN Accounting.

200. Monies were transferred from Hold the Door, Infinite Management, and TN Accounting to the respective individuals’ personal accounts or to pay their personal expenses. 201. Hold the Door made over $200,000 in direct transfers to Wen’s personal bank accounts, and it made payments for purchases of art and for Wen’s Tesla and Mercedes Benz automobiles. 202. Infinite Management made more than $300,000 in payments to pay Kim’s personal credit cards, wedding expenses, dental expenses, and to purchase luxury cars.

203. Infinite Management purchased approximately $87,500 in jewelry, paid over $200,000 to purchase a luxury vehicle, and spent approximately $60,000 as a down payment for a second luxury vehicle for Relief Defendant Sarah Kim.

204. Sarah Kim is not employed by Infinite Management, nor has she ever done business with Infinite Management. 205. TN Accounting transferred over $100,000 to Nguyen’s personal bank accounts and made payments on Nguyen’s personal credit cards and Tesla.

206. In December 2018, Mice and Men opened a banking account with Bank of America, listing Relief Defendant Judy L Dai as the signor, and a related debit card was issued to Mice and Men LLC Judy L Dai. Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 27 of 78 Page ID #:8395

Page 242

REDACTED SECOND AMENDED COMPLAINT

207. In December 2018, a total of 14 deposits and credits were received in the Mice and Men account at Bank of America from Prime Consulting, totaling $5,041,039. Thirteen of the deposits and credits were for purported marketing expenses, and one was for purported residual expenses. During its existence, no other deposits were made into this account. 208. In January 2019, a bank account in the name of Mice and Men was opened with UBS, listing Judy L Dai as the signor. 209. In or around February 2019, Bank of America notified Mice and Men that Bank of America was closing the Mice and Men account. 210. In February 2019, a bank check from Bank of America in the amount of $5,041,039 was deposited into the Mice and Men account at UBS. This represented the entire balance in the Mice and Men Bank America account.

211. In April 2019, Defendant Wen was granted third party access to the Mice and Men account at UBS, which gave him the ability to view account information, balances, monthly statements and tax information. 212. In the Corporate Financial Statement submitted by True Count Staffing pursuant to the October 21, 2019 Temporary Restraining Order (TRO), True Count identified the Mice and Men UBS account, which contained approximately $4 million, as being held by True Count Staffing. 213. Defendant Wen is the 100% owner of True Count Staffing. 214. Prime transferred approximately $4 million to 1st Generation Holdings over the last three years.

215. True Count’s Corporate Financial Statement submitted pursuant to the TRO identified funds in 1st Generation Holdings accounts as held for the benefit of True Count.

Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 28 of 78 Page ID #:8396

Page 243

REDACTED SECOND AMENDED COMPLAINT

216. Between 2017-2018, CAC paid Anan Enterprise approximately $3.6 million ostensibly for services, but Anan Enterprise never rendered those services.

217. From 2016 through 2018, Wen transferred, or caused companies he controlled to pay, more than $ to or for the benefit of Relief Defendant Judy Dai or the Judy Dai 2017 Trust. 218. The funds that Wen transferred or caused to be transferred to or for the benefit of Judy Dai or the Judy Dai 2017 Trust include funds he obtained from, or commingled with funds from, the Student Loan Debt Relief Companies.

219. For example, from on or about April 16, 2018, through June 5, 2018, in the name of the Kaine Wen 2017 Trust received a total of about $ in deposits, of which at least $ were from Hold the Door.

220. From on or about June 1 through June 5, 2018, Wen transferred $ from the same Kaine Wen 2017 Trust identified in the preceding paragraph to a held by Judy Dai or the Judy Dai 2017 Trust.

221. As another example, Hold the Door paid over $ to lease a Mercedes-Benz automobile for Judy Dai’s use from at least 2017 through 2019. 222. As another example, in or about April 2019, Hold the Door paid about $ for a Lexus automobile that has been registered to Judy Dai. 223. As another example, in 2019, True Count made over $ in payments on a name that has been secured by a personal residence in Arcadia, CA (Arcadia Residence). 224. The Arcadia Residence has been owned in part by the Judy Dai 2017 Trust.

REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 29 of 78 Page ID #:8397

Page 244

REDACTED SECOND AMENDED COMPLAINT

225. Judy Dai has no legitimate claim to the funds that Hold the Door, True Count, and Wen transferred to her or for her benefit as described in paragraphs 217-225.

226. Judy Dai and the Judy Dai 2017 Trust were never employed by Hold the Door or True Count and provided no contemporaneous consideration for the transfers and payments described at paragraphs 217-225. Avoidable Transfers First Transfer 227. On or about February 5, 2018, Defendant Wen or the Kaine Wen 2017 Trust transferred about $ owned by the Judy Dai 2017 Trust (First Transfer).

228. Judy Dai and the Judy Dai 2017 Trust did not provide any reasonably equivalent consideration in exchange for the First Transfer. 229. At the time of the First Transfer, the Student Loan Debt Relief Companies had unlawfully collected millions of dollars in fees from consumers in violation of the CFPA and the TSR.

230. At the time of the First Transfer, Wen was liable for, jointly and severally with other defendants in this action, millions of dollars to the Bureau and the States based on violations of the CFPA and TSR, including for damages, restitution, or disgorgement, but not including liability for civil money penalties.

231. Based on the civil money penalty amounts set forth in 12 U.S.C. § 5565(c)(1) & (2), Wen was subject to millions of dollars in penalties per unlawful practice alleged at Counts I-III, V, VII, IX, and XI as of February 5, 2018, before considering the statutory mitigating factors set forth in section 5565(c)(3) and upward penalty adjustments for inflation under 12 C.F.R. § 1083.1. Wen was also subject to potential joint and several liability for millions REDACTED Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 30 of 78 Page ID #:8398

Page 245

REDACTED SECOND AMENDED COMPLAINT

of dollars in statutory restitution orders and mandatory civil penalties per unlawful act or practice under the UCL, as alleged in Count XXII. 232. Wen’s remaining assets immediately after the First Transfer were worth less than his then-existing liabilities to the Bureau and the States as set forth in paragraphs 229-232.

233. Wen failed to disclose the First Transfer as a gift on

234. At the time of the first Transfer, Wen had been named in his individual capacity in at least two lawsuits by consumers asserting that he and other defendants violated the Telephone Consumer Protection Act, 47 U.S.C. § 227, and related claims.

235. At the time of the First Transfer, Defendant CAC had received inquiries from at least six state law enforcement agencies, including four state attorneys general, regarding consumer complaints or potential violations of state consumer protection laws.

236. For example, a state attorney general’s office issued a letter to CAC in or about March 2017, attaching a consumer complaint that asserts that CAC falsified the consumer’s marital status and family size to the Department of Education by listing her as single with six children when in fact she was married with two children.

237. As purported general counsel for CAC, Wen was aware of and responded to each of the six state law enforcement inquiries on behalf of CAC. 238. In or about April 2017, the Better Business Bureau (BBB) contacted CAC to inform it that “multiple sources” had alleged that CAC charged upfront fees and that “[s]ome consumers allege that their information was falsified on their [student-loan repayment] application by [listing] more members in their household than they actually had.” REDACTED REDACTED Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 31 of 78 Page ID #:8399

Page 246

REDACTED SECOND AMENDED COMPLAINT

239. Wen responded to BBB within a week, presenting himself as general counsel for CAC.

240. On or about February 12, 2018, just days after the First Transfer, Wen signed a “Credit Repair Merchant Agreement Addendum” with a payment processor, falsely warranting that True Count complied with numerous consumer protection laws, including the TSR and the CFPA, and shortly thereafter, he signed a “Debt Relief Service Merchant Agreement Addendum” with similar provisions.

241. Before the First Transfer, Wen personally guaranteed at least two of CAC’s payment processor accounts that received millions of dollars in unlawfully obtained consumer fees.

242. As the sole corporate officer of True Count, Wen also assumed increased liability risk when True Count took over some of CAC’s operations in 2018.

243. In or about February 2018, just days after the First Transfer, Kaine Wen personally guaranteed at least three of True Count’s payment processor accounts that received tens of millions of dollars in unlawfully obtained consumer fees.

244. Wen’s personal guarantee of True Count’s merchant accounts made him liable for consumer refund requests and chargebacks due to True Count’s unlawful acts and practices.

245. In or about April 2018, Wen participated in an internal email chain that included an email from a True Count manager who stated that “in most cases” the Student Loan Debt Relief Companies “incorrectly” submit studentloan-adjustment applications to servicers, including by always listing consumers as single (whether married or not) and inaccurately inflating family size.

Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 32 of 78 Page ID #:8400

Page 247

REDACTED SECOND AMENDED COMPLAINT

246. After the First Transfer, Wen retained control over the proceeds of the First Transfer by directing in wire transfers from a held by the Judy Dai 2017 Trust, including directing an over $ from the Judy Dai 2017 Trust that was used as a down payment on the Arcadia Residence 247. Since in or about August 2018, the Judy Dai 2017 Trust UBS Account has held significant proceeds of the First Transfer. Second Transfer 248. In or about July 2019, the Bureau, the State of North Carolina, and the State of Minnesota filed proofs of claim seeking to recover tens of millions of dollars in CAC’s bankruptcy proceeding in United States Bankruptcy Court in the Southern District of Florida.

249. The Bureau’s proof of claim was for at least $31 million in unliquidated damages and undetermined civil money penalties based on CAC’s violations of the CFPA and TSR.

250. On or about August 20, 2019, the Kaine Wen 2017 Trust transferred from

to the Judy Dai 2017 Trust UBS Account (Second Transfer).

251. Before the Second Transfer, the Kaine Wen 2017 Trust had held the funds traceable to the Second Transfer in that simultaneously held at least $ that is traceable to the Student Loan Debt Relief Companies’ unlawful conduct.

252. Judy Dai and the Judy Dai 2017 Trust did not provide any reasonably equivalent consideration in exchange for the Second Transfer. 253. At the time of the Second Transfer, the Student Loan Debt Relief Companies had unlawfully collected tens of millions of dollars in fees from consumers in violation of the CFPA and the TSR. REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 33 of 78 Page ID #:8401

Page 248

REDACTED SECOND AMENDED COMPLAINT

254. At the time of the Second Transfer, Wen was liable for, jointly and severally with other defendants in this action, tens of millions of dollars to the Bureau and the States based on violations of the CFPA and TSR, including for damages, restitution, or disgorgement, but not including liability for civil money penalties.

255. Based on the civil money penalty amounts set forth in 12 U.S.C. § 5565(c)(1) & (2), Wen was subject to millions of dollars in penalties per unlawful practice alleged at Counts I-III, V, VII, IX, and XI as of August 20, 2019, before considering the statutory mitigating factors set forth in section 5565(c)(3) and upward penalty adjustments for inflation under 12 C.F.R. § 1083.1. Wen was also subject to potential joint and several liability for millions of dollars in statutory restitution orders and mandatory civil penalties per unlawful act or practice under the UCL, as alleged in Count XXII. 256. Wen’s remaining assets after the Second Transfer were worth less than his then-existing liability to the Bureau and the States as set forth in paragraphs 253-255.

257. At the time of Second Transfer, Wen was aware of the Bureau’s investigation of the SLDR Companies and had retained counsel for True Count related to the Bureau’s investigation.

258. Around the time of the Second Transfer, Wen was aware that the news media was inquiring about the SLDR Companies’ business practices. 259. On the eve of the Second Transfer, Wen directed a Human Resources manager for the SLDR Companies to instruct employees that the press may try to contact them and that employees were not to speak with the press.

260. Several days after the Second Transfer, the Wall Street Journal published a story critical of the SLDR Companies. 261. Since at least November 1, 2019, Wen has concealed assets. Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 34 of 78 Page ID #:8402

Page 249

REDACTED SECOND AMENDED COMPLAINT

262. For example, for over a year after receiving service of the TRO on October 25, 2019, Wen concealed from the Bureau estimated to be worth contrary to the requirements of Section VIII, paragraph A, of the TRO.

LEGAL BACKGROUND The TSR 263. 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). 264. 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).

265. 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).

266. 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). 267. The Student Loan Debt Relief Companies offered services to renegotiate, settle, or alter the terms of payments of consumers’ federal student loans by submitting requests for loan forgiveness or IDR plans to consumers’ student-loan servicers.

REDACTED REDACTED Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 35 of 78 Page ID #:8403

Page 250

REDACTED SECOND AMENDED COMPLAINT

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

269. The Student Loan Debt Relief Companies offered and provided these services to consumers in exchange for payment of enrollment and monthly fees in connection with a telemarketing transaction. 270. The Student Loan Debt Relief Companies are each a “telemarketer” or “seller” offering a “debt relief service” under the TSR. 271. Kim arranged for CAC to provide debt-relief services to consumers in exchange for consideration and personally generated marketing leads for Prime. Kim is a “telemarketer” or “seller” offering a “debt relief service” under the TSR. 16 C.F.R. § 310.2(dd), (ff), (o). 272. Wen arranged for CAC and True Count to provide debt-relief services to consumers in exchange for consideration. Wen is a “seller” offering a “debt relief service” under the TSR. 16 C.F.R. § 310.2(dd), (o). 273. Nguyen arranged for CAC and True Count to provide debt-relief services to consumers in exchange for consideration. Nguyen is a “seller” offering a “debt relief service” under the TSR. 16 C.F.R. § 310.2(dd), (o). 274. TAS is a “seller” because it provided, offered to provide, or arranged for others to provide third-party dedicated account services to consumers “in connection with a telemarketing transaction.” 16 C.F.R. § 310.2(dd).

The CFPA 275. Sections 1031 and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531, 5536(a)(1)(B), prohibit “covered person[s]” and “service provider[s]” from engaging in any “unfair, deceptive, or abusive act or practice.” 276. The Student Loan Debt Relief Companies are each “covered persons” under the CFPA because they offer or provide consumer-financial Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 36 of 78 Page ID #:8404

Page 251

REDACTED 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). 277. TAS is a “covered person” under the CFPA because it offered or provided consumer-financial products or services, including by “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.” 12 U.S.C. § 5481(15)(iv).

278. The CFPA also defines “covered person” to include “(B) any affiliate of a person [that engages in offering or providing a consumer financial product or service] if such affiliate acts as a service provider to such person.” 12 U.S.C. § 5481(6).

279. Section 1002(1) of the CFPA defines the term “affiliate” to mean “any person that controls, is controlled by, or is under common control with another person.” 12 U.S.C. § 5481(1).

280. Section 1002(26)(A) of the CFPA defines the term “service provider” to mean “any person that provides a material service to a covered person in connection with the offering or provision by such covered person of a consumer financial product or service, including a person that-- … (ii) processes transactions relating to the consumer financial product or service …” 12 U.S.C. § 5481(26)(A)(ii).

281. TAS, Horizon and First Priority are affiliates of the Student Loan Debt Relief Companies because they are controlled by the Student Loan Debt Relief Companies. Further, by processing consumer payments made to the Student Loan Debt Relief Companies, TAS, Horizon, and First Priority acted as service providers to the Student Loan Debt Relief Companies. TAS, Horizon, and First Priority are each “covered persons” under the CFPA. Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 37 of 78 Page ID #:8405

Page 252

REDACTED SECOND AMENDED COMPLAINT

282. 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).

283. Kim is a “related person” and “covered person” under the CFPA because he is CAC’s owner and officer and had managerial responsibility for CAC. He controlled CAC’s bank accounts, oversaw CAC’s sales and marketing, entered into contractual relationships on CAC’s behalf with payment processors, and responded to certain consumer complaints. 284. Wen is a “related person” and “covered person” under the CFPA because he is True Count’s owner and officer, has been an owner and manager of CAC, and has had managerial responsibility for both companies. He was involved in making decisions for CAC, including the decision to shift CAC’s processing function to True Count, entered into contractual relationships on behalf of True Count with payment processors, and was a signatory on True Count’s bank accounts.

285. Nguyen is a “related person” and “covered person” under the CFPA because he is an officer of CAC and True Count and has managerial responsibility for CAC, and because he materially participated in the conduct of the Student Loan Debt Relief Companies. He managed CAC’s finances and responded to consumers’ complaints on CAC’s behalf. He also was the point of contact for several of CAC’s and True Count’s merchant accounts.

Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 38 of 78 Page ID #:8406

Page 253

REDACTED SECOND AMENDED COMPLAINT

COUNT I By the Bureau and the States (Advance Fees in Violation of the TSR – Enrollment Fees) (The Student Loan Debt Relief Companies and Individual Defendants) 286. The allegations in paragraphs 1-274 are incorporated by reference. 287. 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). 288. In the course of providing, offering to provide, or arranging for others to provide debt-relief services, the Student Loan Debt Relief Companies and Individual Defendants charged and collected from consumers enrollment fees before consumers had been approved for IDR plans and before consumers had made any payments toward such IDR plans, in violation of the TSR. 16 C.F.R. § 310. 4(a)(5)(i)(A)-(B).

289. Moreover, because the IDR plans in which consumers were placed often were based on false information about consumers’ family size, income, and marital status that the Student Loan Debt Relief Companies submitted to consumers’ student-loan servicers, none of the payments made by consumers in these plans were made pursuant to a “valid contractual agreement” within the meaning of the TSR and thus were collected in violation of the TSR. 16 C.F.R. § 310.4(a)(5)(i)(A)-(B).

Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 39 of 78 Page ID #:8407

Page 254

REDACTED SECOND AMENDED COMPLAINT

COUNT II By the Bureau and the States (Advance Fees in Violation of the TSR – Monthly Fees) (The Student Loan Debt Relief Companies and Individual Defendants) 290. The allegations in paragraphs 1-274 are incorporated by reference. 291. In the course of providing, offering to provide, or arranging for others to provide debt-relief services, the Student Loan Debt Relief Companies and Individual Defendants charged and collected from consumers monthly fees before consumers had completed their annual recertifications of eligibility for IDR plans and before consumers had made any payments toward such recertified IDR plans, in violation of the TSR. 16 C.F.R. § 310. 4(a)(5)(i)(A)- (B).

292. Moreover, because the IDR plans in which consumers were placed often were based on false information about consumers’ family size, income, and marital status that the Student Loan Debt Relief Companies submitted to consumers’ student-loan servicers, none of the payments made by consumers in these plans were made pursuant to a “valid contractual agreement” within the meaning of the TSR and thus were collected in violation of the TSR. 16 C.F.R. § 310.4(a)(5)(i)(A)-(B).

COUNT III By the Bureau and the States (Misrepresentations About Material Aspects of Their Services in Violation of the TSR) (The Student Loan Debt Relief Companies and Individual Defendants) 293. The allegations in paragraphs 1-274 are incorporated by reference. 294. It is a deceptive practice under the TSR for a seller or telemarketer to misrepresent any material aspect of the efficacy of their services and to Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 40 of 78 Page ID #:8408

Page 255

REDACTED SECOND AMENDED COMPLAINT

misrepresent any material aspect of a debt-relief service. 16 C.F.R. § 310.3(a)(2)(iii), (x).

295. Among other things, the Student Loan Debt Relief Companies and Individual Defendants misrepresented, directly or indirectly, expressly or by implication that:

fees paid by consumers were payments toward the consumer’s outstanding loan debt;

fees paid by consumers reflected the adjusted amount of the consumers’ periodic payments toward their outstanding loan balance; c.

consumers’ loans would be forgiven in whole or in part shortly after enrolling in the Student Loan Debt Relief Companies’ services;

consumers were eligible or approved for lower monthly payments, including where such payment amounts had been calculated based on an incorrect family size, income, or marital status; e.

consumers’ monthly payment amount had been lowered for the life of the repayment plan; and f.

any fees collected would be held in trust accounts maintained by a third-party account provider until the Student Loan Debt Relief Companies had performed certain services. 296. The Student Loan Debt Relief Companies and Individual Defendants also failed to inform consumers that: a.

it was their practice to submit forbearance requests on behalf of consumers; and b.

it was their practice to falsify consumers’ family size, marital status, and income to consumers’ student-loan servicers. Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 41 of 78 Page ID #:8409

Page 256

REDACTED SECOND AMENDED COMPLAINT

297. The acts or practices of the Individual Defendants and Student Loan Debt Relief Companies, as set forth in this Count, are deceptive acts or practices that violate the TSR, 16 C.F.R. 310.3(a)(2)(iii), (x). COUNT IV By the Bureau and the States (Misrepresentations About Material Aspects of Their Services in Violation of the TSR) (True Count, Prime, and TAS) 298. The allegations in paragraphs 1-274 are incorporated by reference. 299. It is a deceptive practice under the TSR for a seller or telemarketer to misrepresent any material aspect of the efficacy of their services and to misrepresent any material aspect of a debt-relief service. 16 C.F.R. § 310.3(a)(2)(iii), (x).

300. True Count, Prime, and TAS misrepresented, directly or indirectly, expressly or by implication, that TAS was an independent third-party provider of dedicated customer escrow accounts.

301. The misrepresentations relate to a material aspect of a debt-relief service.

302. The acts or practices of the Individual Defendants, Student Loan Debt Relief Companies, and TAS, as set forth in this paragraph, are deceptive acts or practices that violate the TSR, 16 C.F.R. 310.3(a)(2)(iii), (x). COUNT V By the Bureau and the States (Substantial Assistance in Violation of the TSR) (Individual Defendants) 303. The allegations in paragraphs 1-274 are incorporated by reference. 304. The TSR prohibits any person from providing “substantial assistance or support to any seller or telemarketer when that person knows or Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 42 of 78 Page ID #:8410

Page 257

REDACTED SECOND AMENDED COMPLAINT

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).

305. Kim managed both CAC’s and True Count’s day-to-day operations. As CAC’s co-owner and president, Kim oversaw CAC’s marketing and approved its sales scripts.

306. Kim knew, or recklessly avoided knowing, the material misrepresentations and omissions that CAC’s and True Count’s sales representatives and processors made to consumers. 307. Kim knew, or recklessly avoided knowing, that the Student Loan Debt Relief Companies charged and collected enrollment and monthly fees from consumers before the companies had obtained loan-repayment plans for consumers and before consumers had made their first payments toward such repayment plans.

308. Kim represented CAC in contractual relationships with payment processors.

309. As CAC’s point of contact on a merchant account where he agreed to keep chargebacks and fraud below a certain level, Kim knew, or recklessly avoided knowing, that the merchant’s monthly statements identified tens of thousands of dollars in chargebacks and hundreds of thousands of dollars in consumer refunds between August 2017 and March 2019. 310. As CAC’s co-owner and officer and True Count’s owner and officer, Wen entered into payment-processing agreements on CAC’s and True Count’s behalf, including at least one where he represented that True Count intended to fully comply with the TSR.

311. As a principal representative for CAC’s and True Count’s merchant accounts and a signatory on the bank accounts from which refunds and chargebacks to consumers were paid, Wen knew, or recklessly avoided Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 43 of 78 Page ID #:8411

Page 258

REDACTED SECOND AMENDED COMPLAINT

knowing, CAC’s and True Count’s high chargeback and refund rates, including that during at least one period, the top chargeback reasons included “fraud.” 312. Wen knew, or recklessly avoided knowing, the material misrepresentations and omissions that CAC’s and True Count’s sales representatives and processors made to consumers. 313. Wen knew, or recklessly avoided knowing, that the Student Loan Debt Relief Companies charged and collected enrollment and monthly fees from consumers before the companies had obtained loan-repayment plans for consumers and before consumers had made their first payments toward such repayment plans.

314. As an officer of CAC and True Count, Nguyen managed CAC’s finances, served as a point of contact for several of CAC’s and True Count’s merchant accounts, and responded to consumer complaints on CAC’s behalf. 315. Because he signed a January 2018 letter from CAC to a payment processor in which he acknowledged that CAC had incurred excessive chargebacks and that fraud was one of the top reasons for such chargebacks, Nguyen knew, or recklessly avoided knowing, the material misrepresentations and omissions that CAC’s and True Count’s sales representatives and processors made to consumers.

316. Nguyen knew, or recklessly avoided knowing, that the Student Loan Debt Relief Companies charged and collected enrollment and monthly fees from consumers before the companies had obtained loan-repayment plans for consumers and before consumers had made their first payments toward such repayment plans.

317. Kim, Wen, and Nguyen provided substantial assistance to the Student Loan Debt Relief Companies in their violations of the TSR.

Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 44 of 78 Page ID #:8412

Page 259

REDACTED SECOND AMENDED COMPLAINT

COUNT VI By the Bureau and the States (Substantial Assistance in Violation of the TSR) (Payment Companies) 318. The allegations in paragraphs 1-274 are incorporated by reference. 319. 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 that [constitutes deceptive or abusive conduct]” under the Rule. 16 C.F.R. § 310.3(b).

320. The Payment Companies knew, or consciously avoided knowing, the material misrepresentations that the Student Loan Debt Relief Companies made to consumers.

321. The Payment Companies knew, or consciously avoided knowing, that the Student Loan Debt Relief Companies charged and received fees from consumers 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.

322. The Payment Companies 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 By the Bureau (CFPA – Deception) (The Student Loan Debt Relief Companies and Individual Defendants) 323. The allegations in paragraphs 1-262 and 275-285 are incorporated by reference.

Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 45 of 78 Page ID #:8413

Page 260

REDACTED SECOND AMENDED COMPLAINT

324. Among other things, the Student Loan Debt Relief Companies and Individual Defendants misrepresented, directly or indirectly, expressly or by implication that:

fees paid by consumers were payments toward the consumer’s outstanding loan debt;

fees paid by consumers reflected the adjusted amount of the consumers’ periodic payments toward their outstanding loan balance; c.

consumers’ loans would be forgiven in whole or in part following payment of the initial enrollment fees; d.

consumers were eligible or approved for lower monthly payments, including where such payment amounts have been calculated based on an incorrect family size, income, or marital status; e.

consumers’ monthly payment amounts had been lowered for the life of the repayment plan; and f.

any fees collected would be held in trust accounts maintained by a third-party account provider until the Student Loan Debt Relief Companies had performed certain services. 325. The Student Loan Debt Relief Companies also failed to inform consumers that:

it was their practice to submit forbearance requests on behalf of consumers; and b.

it was their practice to falsify consumers’ family size, marital status, and income to consumers’ student-loan servicers and the consequences for consumers of that practice. 326. The Student Loan Debt Relief Companies’ representations were material and likely to mislead consumers acting reasonably under the circumstances.

Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 46 of 78 Page ID #:8414

Page 261

REDACTED SECOND AMENDED COMPLAINT

327. Among other things, Kim generated marketing leads for Prime, approved sales scripts for CAC, and managed day-to-day operations for CAC and True Count. He was also aware of CAC’s and True Count’s high chargeback and consumer-refund rates. He participated directly in these representations or had the authority to control them as CAC’s co-owner and president and had knowledge of these 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. 328. Among other things, Wen managed payment-processor relationships on behalf of True Count, was a signatory on True Count’s bank accounts, and was aware of CAC’s and True Count’s high chargeback and consumer-refund rates. He participated directly in these representations or had the authority to control them as CAC’s co-owner and president and True Count’s owner and president and had knowledge of these 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.

329. Among other things, Nguyen managed CAC’s finances, responded to consumer complaints, and served as point of contact on several of CAC’s and True Count’s merchant accounts. He was aware of CAC’s and True Count’s high chargeback and consumer-refund rates. He participated directly in these representations or had the authority to control them and had knowledge of these 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.

330. The Student Loan Debt Relief Companies and Individual Defendants have therefore engaged in deceptive acts or practices in violation of §§ 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531, 5536. Case 8:19-cv-01998-MWF-KS Document 284 Filed 04/20/21 Page 47 of 78 Page ID #:8415

The rest of the text is omitted here to keep this page loading quickly; the full document is in the PDF.

Stipulation (June 2021)

PDF of this document (15 pages)

Page 293

STIPULATED FINAL JUDGMENT AND ORDER

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Bureau of Consumer Financial Protection, et al.,

Plaintiffs,

Consumer Advocacy Center Inc., d/b/a Premier Student Loan Center, et al.,

Defendants.

CASE NO. 8:19-cv-01998 MWF (KS)

STIPULATED FINAL JUDGMENT AND ORDER AS TO RELIEF DEFENDANT JUDY DAI

Court: Hon. Michael W. Fitzgerald Courtroom 5A

STIPULATED FINAL JUDGMENT AND ORDER AS TO RELIEF DEFENDANT JUDY DAI Plaintiffs the Bureau of Consumer Financial Protection (Bureau), the State of Minnesota, the State of North Carolina, and the People of the State of California (collectively, Plaintiffs) commenced this civil action on October 21, 2019, filed an amended complaint on February 24, 2020, and a second amended complaint (Second Amended Complaint) on April 20, 2021, to obtain Case 8:19-cv-01998-MWF-KS Document 298 Filed 06/15/21 Page 1 of 15 Page ID #:8777

Page 294

STIPULATED FINAL JUDGMENT AND ORDER permanent injunctive relief, damages, rescission or reformation of contracts, refunds of moneys paid, restitution, disgorgement or compensation for unjust enrichment, civil money penalties, and other monetary and equitable relief from: (1) Defendants Consumer Advocacy Center Inc., d/b/a Premier Student Loan Center; True Count Staffing Inc., d/b/a SL Account Management; Prime Consulting LLC, d/b/a Financial Preparation Services; TAS 2019 LLC, d/b/a Trusted Account Services; Horizon Consultants LLC; First Priority LLC, d/b/a Priority Account Management; Albert Kim; Kaine Wen in his individual capacity and as trustee of the Kaine Wen 2017 Trust; and Tuong Nguyen; and (2) Relief Defendants Infinite Management Corp., f/k/a Infinite Management Solutions Inc.; Hold the Door, Corp.; TN Accounting Inc.; Mice and Men LLC; Sarah Kim; 1st Generation Holdings, LLC; Anan Enterprise, Inc.; and Judy Dai in her individual capacity and as trustee of the Judy Dai 2017 Trust. The Second Amended Complaint alleges violations of sections 1031(a) and 1036(a) of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a); the Telemarketing and Consumer Fraud and Abuse Prevention Act (TCFAPA), 15 U.S.C. § 6102(c)(2), based on alleged violations of the Telemarketing Sales Rule (TSR), 16 C.F.R. pt. 310; the Minnesota Prevention of Consumer Fraud Act (MNPCFA), Minn. Stat. §§ 325F.68-.694; the Minnesota Uniform Deceptive Trade Practices Act (MNUDTPA), Minn. Stat. §§ 325D.43-.48; the North Carolina Debt Adjusting Act (NCDAA), N.C. Gen. Stat. § 14-423 et seq.; the North Carolina Telephonic Seller Registration Act (NCTSRA), N.C. Gen. Stat. § 66-260 et seq.; the North Carolina Unfair and Deceptive Practices Act (NCUDPA), N.C. Gen. Stat. § 75-1.1; and the California Unfair Competition Law (CAUCL), Cal. Bus. & Prof. Code § 17200 et seq. in connection with the above-named defendants’ marketing and sale of debt-relief services. The Second Amended Complaint also includes claims for Case 8:19-cv-01998-MWF-KS Document 298 Filed 06/15/21 Page 2 of 15 Page ID #:8778

Page 295

STIPULATED FINAL JUDGMENT AND ORDER avoidance of fraudulent transfers under the Federal Debt Collection Procedures Act, 28 U.S.C. §§ 3001-3308, and the California Uniform Voidable Transactions Act, Cal Civ. Code §§ 3439-3439.14. The Plaintiffs and Relief Defendant Judy Dai (Settling Relief Defendant) agree to entry of this Stipulated Final Judgment and Order (Order), without adjudication of any issue of fact or law, to settle and resolve any claims Plaintiffs might bring against Settling Relief Defendant either: (1) under the CFPA, TCFAPA, TSR, MNPCFA, MNUDTPA, NCDAA, NCTSRA, NCUDPA, and CAUCL related to the student loan debt relief operation described in the Second Amended Complaint; or (2) based on the transfers alleged at Paragraphs 220- 223, 227, 246, and 250 of the Second Amended Complaint.

THEREFORE, IT IS ORDERED:

FINDINGS 1.

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

Settling Relief Defendant neither admits nor denies the allegations in the Second Amended Complaint, except as specifically stated herein. For purposes of this Order, Settling Relief Defendant admits the facts necessary to establish the Court’s jurisdiction over Settling Relief Defendant and the subject matter of this action.

Settling Relief Defendant waives all rights to seek judicial review or otherwise challenge or contest the validity of this Order and any claim she 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. 4.

Entry of this Order is in the public interest. Case 8:19-cv-01998-MWF-KS Document 298 Filed 06/15/21 Page 3 of 15 Page ID #:8779

Page 296

STIPULATED FINAL JUDGMENT AND ORDER DEFINITIONS The following definitions apply to this Order: 5.

“Assets” means any legal or equitable interest in, right to, or claim to any real, personal, or intellectual property owned or controlled by, or held, in whole or in part for the benefit of, or subject to access by any Defendant or Relief Defendant, wherever located, whether in the United States or abroad. This includes, but is not limited to, chattel, goods, instruments, equipment, fixtures, general intangibles, effects, leaseholds, contracts, mail or other deliverables, shares of stock, commodities, futures, inventory, checks, notes, accounts, credits, receivables (as those terms are defined in the Uniform Commercial Code), funds, cash, and trusts. 7.

“Bureau” means the Bureau of Consumer Financial Protection. 8.

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

Page 297

STIPULATED FINAL JUDGMENT AND ORDER Choice Financial Center), Administrative Account Services, Primary Account Solutions, Prime Document Services, Financial Accounting Center, Doc Management Solutions, ALW Loans, Administrative Accounting Center, Best Choice Financial Center, First Document Services, Global Direct Accounting Solutions, Keystone Document Center, Pacific Palm Financial Group, Pacific Shores Advisory, Sequoia Account Management, Signature Loan Solutions, Yellowstone Account Services, ClearStudentLoanDebt, Clear Student Loan Debt, Trusted Account Services, Premier Student Loan Center, and Priority Account Management; b.

“Individual Defendants” means Albert Kim, a/k/a Albert King; Kaine Wen, a/k/a Wenting Kaine Dai, Wen-Ting Dai, Wen Ting Dai, Kaine Dai, and Kaine Wen Dai, in his individual capacity and as trustee of the Kaine Wen 2017 Trust; and Tuong Nguyen, a/k/a Tom Nelson, collectively, or in any combination, and each of them by any other names by which they might be known;

“Relief Defendants” means:

Infinite Management Corp., f/k/a Infinite Management Solutions Inc.; Hold the Door, Corp.; TN Accounting Inc.; Mice and Men LLC; 1st Generation Holdings, LLC; and Anan Enterprise, Inc., collectively, or in any combination, and their successors and assigns, and each Case 8:19-cv-01998-MWF-KS Document 298 Filed 06/15/21 Page 5 of 15 Page ID #:8781

Page 298

STIPULATED FINAL JUDGMENT AND ORDER of them by any other names by which they might be known; and ii.

Sarah Kim and Judy Dai, in her individual capacity and as trustee of the Judy Dai 2017 Trust, and any other names by which each of them might be known. 9.

10.

“Effective Date” means the date on which this Order is entered by the Court.

11.

“Enforcement Director” means the Assistant Director of the Office of Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

12.

“Light Street Asset” means the investment in the Light Street Argon, L.P Series A2 A/O fund that Settling Relief Defendant currently holds in an investment account, account number ending in 50 2X, in the name of the Judy Dai 2017 Trust at UBS Financial Services Inc. 13.

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

14.

Page 299

STIPULATED FINAL JUDGMENT AND ORDER 15.

“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 Settling Relief Defendant based on substantially the same facts as described in the Second Amended Complaint. 16.

“Settling Relief Defendant” means Relief Defendant Judy Dai in her individual capacity and as trustee of the Judy Dai 2017 Trust, and any other names by which she may be known.

MONETARY PROVISIONS I Order to Pay Redress It is FURTHER ORDERED that:

17.

A judgment for monetary relief is entered in favor of Plaintiffs and against Settling Relief Defendant as follows: a. Settling Relief Defendant shall be liable to the Bureau and the People of the State of California for:

i. the liquidation value of the Light Street Asset up to but not exceeding $3,000,000;

ii. if the liquidation value of the Light Street Asset is less than $3,000,000, Settling Relief Defendant will be additionally liable for the difference between the liquidation value of the Light Street Asset and $3,000,000, up to but not exceeding $500,000; and b. Settling Relief Defendant shall be liable to all Plaintiffs for $88,381.80.

18.

In satisfaction of the judgment as ordered in Paragraph 17, Settling Relief Defendant:

a. must, within ten days of the Effective Date, pay to the Bureau, by Case 8:19-cv-01998-MWF-KS Document 298 Filed 06/15/21 Page 7 of 15 Page ID #:8783

Page 300

STIPULATED FINAL JUDGMENT AND ORDER wire transfer to the Bureau or the Bureau’s agent, and according to the Bureau’s wiring instructions, $88,381.80; and b. hereby grants to the Bureau all rights and claims that Settling Relief Defendant has to $3,000,000 worth of the Light Street Asset as set forth in Paragraphs 17 and 20, and shall forfeit any rights to this asset.

19.

Within five business days of entry of this Order, Settling Relief Defendant must instruct UBS Financial Services Inc. to liquidate the Light Street Asset in accordance with the applicable investment terms and to the extent that notice to liquidate the Light Street Asset has not already been provided in a manner consistent with Paragraph VII.A of the Preliminary Injunction issued on November 15, 2019 (ECF No. 103). 20.

Within ten business days of liquidation of the Light Street Asset and of receipt of a copy of this Order by any means, including but not limited to via facsimile or email, UBS Financial Services Inc. shall transfer to the Bureau or its designated agent the entire proceeds of the Light Street Asset liquidation, up to but not exceeding $3,000,000. If UBS Financial Services Inc. transfers less than $3,000,000 to the Bureau under this Section, Settling Relief Defendant must transfer to the Bureau the difference between the amount UBS Financial Services Inc. transferred and $3,000,000, up to but not exceeding $500,000. Settling Relief Defendant must make this transfer to the Bureau within five business days of UBS Financial Services Inc. transferring the proceeds of the Light Street Asset liquidation to the Bureau. UBS Financial Services Inc. and Settling Relief Defendant shall make all transfers required by this Paragraph to the Bureau or the Bureau’s designated agent according to the Bureau’s wiring instructions.

Case 8:19-cv-01998-MWF-KS Document 298 Filed 06/15/21 Page 8 of 15 Page ID #:8784

Page 301

STIPULATED FINAL JUDGMENT AND ORDER 21.

Settling Relief Defendant shall be wholly responsible for all taxes, fees, and costs associated with liquidation of the Light Street Asset. 22.

23.

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. Settling Relief 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.

24.

Payment of redress to any Affected Consumer under this Order may not be conditioned on that Affected Consumer waiving any right. II Additional Monetary Provisions It is FURTHER ORDERED that:

25.

In the event of any default on Settling Relief 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.

26.

Settling Relief Defendant relinquishes all dominion, control, and title to the funds and all other Assets transferred or paid under this Order to the Case 8:19-cv-01998-MWF-KS Document 298 Filed 06/15/21 Page 9 of 15 Page ID #:8785

Page 302

STIPULATED FINAL JUDGMENT AND ORDER fullest extent permitted by law and no part of the funds or other Assets may be returned to Settling Relief Defendant.

27.

The facts alleged against Settling Relief Defendant in the Second Amended Complaint 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 Plaintiffs, 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. 28.

The facts alleged in the Second Amended Complaint establish all elements necessary to sustain an action by the Plaintiffs 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 Settling Relief Defendant, even in her capacity as a debtor-in-possession. 29.

Under 31 U.S.C. § 7701, Settling Relief Defendant, unless she has already done so, must furnish to Plaintiffs any taxpayer-identification numbers associated with her, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. 30.

Within thirty days of the entry of a final judgment, order, or settlement in a Related Consumer Action, Settling Relief 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 the Settling Relief 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.

Case 8:19-cv-01998-MWF-KS Document 298 Filed 06/15/21 Page 10 of 15 Page ID #:8786

Page 303

STIPULATED FINAL JUDGMENT AND ORDER III Lifting of Asset Freeze It is FURTHER ORDERED that:

31.

The freeze on the Assets listed in Paragraphs 17-20 is modified to permit the payments and other transfers of Assets identified in Section I of this Order. Upon completion of all payments and other obligations identified in Section I of this Order, the freeze of the Assets listed at Paragraphs 17-20 and of the Assets held in the Judy Dai 2017 Trust account ending in 50 2X at UBS Financial Services Inc. pursuant to the Preliminary Injunction entered on November 15, 2019 (ECF No. 103), shall be dissolved. COMPLIANCE PROVISIONS IV Reporting Requirements It is FURTHER ORDERED that:

32.

Within seven days of the Effective Date, Settling Relief Defendant must designate at least one telephone number and email, physical, and postal address as points of contact, which Plaintiffs may use to communicate with her. 33.

For five years from the Effective Date or until such time as a final judgment is entered as to Defendant Kaine Wen, whichever is longer, Settling Relief Defendant must report any change in the information required to be submitted under Paragraph 32 at least 30 days before the change or as soon as practicable after learning about the change, whichever is sooner. 34.

Until such time as a final judgment is entered as to Defendant Kaine Wen and he has fully complied with all monetary provisions of such judgment, Settling Relief Defendant must report, within seven days of the end of each quarter, any Asset that Defendant Wen transfers to or provides for Settling Relief Defendant’s benefit, directly or indirectly, if the aggregate value Case 8:19-cv-01998-MWF-KS Document 298 Filed 06/15/21 Page 11 of 15 Page ID #:8787

Page 304

STIPULATED FINAL JUDGMENT AND ORDER of such transfers exceeds $500 for that quarter, including: a. a detailed description of the nature of the asset transferred; b. the value or estimated value of the asset transferred, including all applicable measures of its value (e.g., currency denomination and amount, appraisal, acquisition value, estimate in dollars); and c. a description of how the asset was transferred, including identifying the names of all individuals, the financial institution and accounts, and all other identifying information associated with each transfer.

V Recordkeeping It is FURTHER ORDERED that:

35.

Settling Relief Defendant must create and maintain, for at least 5 years from the Effective Date or until such time as a final judgment is entered as to Defendant Kaine Wen, whichever is longer, the following records: a. All documents and records necessary to demonstrate full compliance with each provision of this Order, including all submissions to the Bureau; and b. All documents and records pertaining to any transfer Settling Relief Defendant must report under Paragraph 34 of this Order. Settling Relief Defendant must make these documents available to any Plaintiff upon the Plaintiff’s request.

VI Notices It is FURTHER ORDERED that:

36.

Unless otherwise directed in writing by the Bureau, Settling Relief Defendant must provide all submissions, requests, communications, or other Case 8:19-cv-01998-MWF-KS Document 298 Filed 06/15/21 Page 12 of 15 Page ID #:8788

Page 305

STIPULATED FINAL JUDGMENT AND ORDER documents relating to this Order in writing, with the subject line, “CFPB, et al., v. CAC, et al., Case No. 8:19-cv-01998-MWF-KS” 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 37.

Unless otherwise directed by a representative of the State of North Carolina in writing, all submissions to the State of North Carolina pursuant to this Order must be sent by overnight courier or first-class mail to the below address and contemporaneously by email to [email protected]: M. Lynne Weaver, Special Deputy Attorney General North Carolina Department of Justice 114 W. Edenton Street Raleigh, North Carolina 27603 39.

Unless otherwise directed by the State of California in writing, all submissions to the State of California pursuant to this Order must be sent by Case 8:19-cv-01998-MWF-KS Document 298 Filed 06/15/21 Page 13 of 15 Page ID #:8789

Page 306

STIPULATED FINAL JUDGMENT AND ORDER overnight courier or first-class mail to the below address and contemporaneously by email to [email protected]: Christina Tusan Supervising Deputy City Attorney Los Angeles City Attorney’s Office 200 N. Main Street, 5th Floor Los Angeles, CA 90012 VII Cooperation with Plaintiffs It is FURTHER ORDERED that:

40.

Settling Relief Defendant must cooperate fully with Plaintiffs in this matter and in any investigation or litigation related to or associated with the conduct described in the Second Amended Complaint. Settling Relief Defendant must provide truthful and complete information, evidence, and testimony. Settling Relief Defendant must appear for interviews, discovery, hearings, trials, and any other proceedings that any Plaintiff may reasonably request upon ten days written notice, or other reasonable notice, at such places and times as Plaintiff may designate, without the service of compulsory process. 41.

Settling Relief Defendant must cooperate fully to help Plaintiffs determine the identity, location, and contact information of any Defendant and any Person who might have contact information for any Defendant, and the identity and location of Assets of any Defendant. Settling Relief Defendant must provide such information in her or her agents’ possession or control within fourteen days of receiving a written request from any Plaintiff. Case 8:19-cv-01998-MWF-KS Document 298 Filed 06/15/21 Page 14 of 15 Page ID #:8790

Page 307

STIPULATED FINAL JUDGMENT AND ORDER VIII Compliance Monitoring It is FURTHER ORDERED that, to monitor Settling Relief Defendant’s compliance with this Order:

42.

Within fourteen days of receipt of a written request from any Plaintiff, Settling Relief Defendant must submit the requested information, which must be made under penalty of perjury; provide sworn testimony; or produce documents.

43.

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

IX Retention of Jurisdiction It is FURTHER ORDERED that:

44.

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

It is SO ORDERED, this 15th day of June, 2021.

_________________________________

MICHAEL W. FITZGERALD United States District Judge

Case 8:19-cv-01998-MWF-KS Document 298 Filed 06/15/21 Page 15 of 15 Page ID #:8791

Judgment (July 2021)

PDF of this document (18 pages)

Page 308

STIPULATED FINAL JUDGMENT AND ORDER

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Bureau of Consumer Financial Protection, et al.,

Plaintiffs,

Consumer Advocacy Center Inc., d/b/a Premier Student Loan Center, et al.,

Defendants.

CASE NO. 8:19-cv-01998 MWF (KSx)

STIPULATED FINAL JUDGMENT AND ORDER AS TO RELIEF DEFENDANTS 1st GENERATION HOLDINGS, LLC AND INFINITE MANAGEMENT CORP., F/K/A INFINITE MANAGEMENT SOLUTIONS INC.

Court: Hon. Michael W. Fitzgerald Courtroom 5A

STIPULATED FINAL JUDGMENT AND ORDER AS TO RELIEF DEFENDANTS 1st GENERATION HOLDINGS, LLC AND INFINITE MANAGEMENT CORP.

Case 8:19-cv-01998-MWF-KS Document 304 Filed 07/01/21 Page 1 of 18 Page ID #:8847

Page 309

STIPULATED FINAL JUDGMENT AND ORDER

Plaintiffs the Bureau of Consumer Financial Protection (Bureau), the State of Minnesota, the State of North Carolina, and the People of the State of California (collectively, Plaintiffs) commenced this civil action on October 21, 2019, filed an amended complaint on February 24, 2020, and a second amended complaint (Second Amended Complaint) on April 20, 2021, to obtain permanent injunctive relief, damages, rescission or reformation of contracts, refunds of moneys paid, restitution, disgorgement or compensation for unjust enrichment, civil money penalties, and other monetary and equitable relief from: (1) Defendants Consumer Advocacy Center Inc., d/b/a Premier Student Loan Center; True Count Staffing Inc., d/b/a SL Account Management; Prime Consulting LLC, d/b/a Financial Preparation Services; TAS 2019 LLC, d/b/a Trusted Account Services; Horizon Consultants LLC; First Priority LLC, d/b/a Priority Account Management; Albert Kim; Kaine Wen in his individual capacity and as trustee of the Kaine Wen 2017 Trust; and Tuong Nguyen; and (2) Relief Defendants Infinite Management Corp., f/k/a Infinite Management Solutions Inc.; Hold the Door, Corp.; TN Accounting Inc.; Mice and Men LLC; Sarah Kim; 1st Generation Holdings, LLC; Anan Enterprise, Inc.; and Judy Dai in her individual capacity and as trustee of the Judy Dai 2017 Trust.

The Second Amended Complaint alleges violations of sections 1031(a) and 1036(a) of the Consumer Financial Protection Act of 2010, 12 U.S.C. §§ 5531(a), 5536(a); the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. § 6102(c)(2), based on alleged violations of the Telemarketing Sales Rule, 16 C.F.R. pt. 310; the Minnesota Prevention of Consumer Fraud Act, Minn. Stat. §§ 325F.68-.694; the Minnesota Uniform Deceptive Trade Practices Act, Minn. Stat. §§ 325D.43-.48; the North Carolina Debt Adjusting Act, N.C. Gen. Stat. § 14-423 et seq.; the North Carolina Telephonic Seller Registration Act, N.C. Gen. Stat. § 66-260 et seq.; the North Carolina Unfair and Deceptive Practices Act, Case 8:19-cv-01998-MWF-KS Document 304 Filed 07/01/21 Page 2 of 18 Page ID #:8848

Page 310

STIPULATED FINAL JUDGMENT AND ORDER

N.C. Gen. Stat. § 75-1.1; and the California Unfair Competition Law, Ca. Bus. & Prof. Code §17200 et seq. in connection with the above-named defendants’ marketing and sale of debt-relief services. The Second Amended Complaint also includes claims for avoidance of fraudulent transfers under the Federal Debt Collection Procedures Act, 28 U.S.C. §§ 3001-3308, and the California Uniform Voidable Transactions Act, Cal Civ. Code §§ 3439-3439.14. The (1) Plaintiffs, (2) Relief Defendant 1st Generation Holdings, LLC, and (3) Relief Defendant Infinite Management Corp., 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 them 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.

Settling Relief Defendants neither admit nor deny the allegations in the Second Amended Complaint, except as specifically stated herein. For purposes of this Order, Settling Relief Defendants admit the facts necessary to establish the Court’s jurisdiction over them and the subject matter of this action. 3.

Settling Relief Defendants waive all rights to seek judicial review or otherwise challenge or contest the validity of this Order and any claim each of them 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.

Case 8:19-cv-01998-MWF-KS Document 304 Filed 07/01/21 Page 3 of 18 Page ID #:8849

Page 311

STIPULATED FINAL JUDGMENT AND ORDER

DEFINITIONS The following definitions apply to this Order: 5.

“1st Generation Holdings” means 1st Generation Holdings, LLC, and its successors and assigns, and any other names by which it might be known. 6.

“Assets” means any legal or equitable interest in, right to, or claim to any real, personal, or intellectual property owned or controlled by, or held, in whole or in part for the benefit of, or subject to access by any Defendant or Relief Defendant, wherever located, whether in the United States or abroad. This includes, but is not limited to, chattel, goods, instruments, equipment, fixtures, general intangibles, effects, leaseholds, contracts, mail or other deliverables, shares of stock, commodities, futures, inventory, checks, notes, accounts, credits, receivables (as those terms are defined in the Uniform Commercial Code), funds, cash, and trusts.

“Bureau” means the Bureau of Consumer Financial Protection. 9.

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

Page 312

STIPULATED FINAL JUDGMENT AND ORDER

Financial, Tangible Savings Solutions, Coastal Shores Financial Group, First Choice Financial Centre (a/k/a First Choice Financial Center), Administrative Account Services, Primary Account Solutions, Prime Document Services, Financial Accounting Center, Doc Management Solutions, ALW Loans, Administrative Accounting Center, Best Choice Financial Center, First Document Services, Global Direct Accounting Solutions, Keystone Document Center, Pacific Palm Financial Group, Pacific Shores Advisory, Sequoia Account Management, Signature Loan Solutions, Yellowstone Account Services, ClearStudentLoanDebt, Clear Student Loan Debt, Trusted Account Services, Premier Student Loan Center, and Priority Account Management;

“Relief Defendants” means:

Infinite Management Corp., f/k/a Infinite Management Solutions Inc.; Hold the Door, Corp.; TN Accounting Inc.; Mice and Men LLC; 1st Generation Holdings, LLC; and Anan Enterprise, Inc., collectively, or in any combination, and their Case 8:19-cv-01998-MWF-KS Document 304 Filed 07/01/21 Page 5 of 18 Page ID #:8851

Page 313

STIPULATED FINAL JUDGMENT AND ORDER

successors and assigns, and each of them by any other names by which they might be known; and ii.

Sarah Kim and Judy Dai in her individual capacity and as trustee of the Judy Dai 2017 Trust, and any other names by which they might be known.

10.

“Effective Date” means the date on which this Order is entered by the Court.

12.

“Enforcement Director” means the Assistant Director of the Office of Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

13.

“Infinite Management Corp.” means Infinite Management Corp., and its successors and assigns, and by any other names by which it might be known, including its former name, Infinite Management Solutions Inc. 14.

“Judgment Amount” refers to the judgments for monetary relief this Court entered against Prime Consulting, LLC, and Tuong Nguyen in the amount of $95,057,757. (ECF Nos. 205, 210).

15.

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

16.

Page 314

STIPULATED FINAL JUDGMENT AND ORDER

17.

“Receiver” means Thomas W. McNamara.

18.

“Settling Relief Defendants” means 1st Generation Holdings, LLC and Infinite Management Corp.

20.

“States” means the State of Minnesota, the State of North Carolina, and the People of the State of California. 21.

“Subject Accounts” means the accounts appearing in Attachment A in the name of 1st Generation Holdings, LLC. MONETARY PROVISIONS I Order to Pay Redress It is FURTHER ORDERED that:

22.

A judgment for monetary relief is entered in favor of Plaintiffs and against Settling Relief Defendants as set forth below: a.

Settling Relief Defendant 1st Generation Holdings, LLC shall be jointly and severally liable for the amount of $3,984,779.28 of the Judgment Amount. Settling Relief Defendant 1st Generation Holdings, LLC is further ordered to disgorge any funds held in the Subject Accounts in excess of this amount, including any income such as interest, dividends, and capital gains, as of the date the funds are transferred pursuant to Paragraph 25. All funds referenced in this subparagraph shall be treated in accordance with Paragraphs 30-31. b.

Settling Relief Defendant Infinite Management Corp. shall be jointly and severally liable for the amount of $2,049,189.07 of the Case 8:19-cv-01998-MWF-KS Document 304 Filed 07/01/21 Page 7 of 18 Page ID #:8853

Page 315

STIPULATED FINAL JUDGMENT AND ORDER

Judgment Amount, such amount being for the purpose of providing redress to Affected Consumers.

23.

Full payment of Settling Relief Defendant Infinite Management Corp.’s portion of the judgment set forth in Paragraph 22 will be suspended, based on its inability to pay, upon its satisfaction of the obligations in Paragraphs 24-27 of this Section, Paragraph 38 of Section III, and subject to Section II of this Order. 24.

25.

Within 10 business days from receipt of a copy of this Order by any means, including but not limited to via facsimile or email, JP Morgan Chase Bank, N.A., UBS Financial Services Inc., and Wells Fargo Bank, N.A. shall transfer to the Bureau or its designated agent all funds held in the accounts listed in Attachment A by wire transfer to the Bureau or the Bureau’s agent according to the Bureau’s wiring instructions.

26.

To the extent they have not already done so, Settling Relief Defendants relinquish to the Bureau, or to its designated agent, dominion and all legal and equitable right, title, and interest in the Assets listed on Attachment B. 27.

Settling Relief Defendants hereby grant to the Bureau all rights and claims they have to any Assets that are currently in the possession, custody, or control of the Receiver, and shall forfeit any rights and claims to the funds in the receivership estate, including but not limited to: all funds held, obtained, or to be obtained by the Receiver since the inception of the receivership whether through this Order or otherwise.

28.

The suspension of the monetary judgment in Paragraph 23 shall not affect the Receiver’s ability to pursue recovery of funds from any third parties, Case 8:19-cv-01998-MWF-KS Document 304 Filed 07/01/21 Page 8 of 18 Page ID #:8854

Page 316

STIPULATED FINAL JUDGMENT AND ORDER

including family members of Defendants, to satisfy all or a portion of the full monetary judgment entered in Paragraph 22. Settling Relief Defendant Infinite Management Corp. shall remain jointly and severally liable for full payment of its respective judgment to the extent that funds to satisfy all or a portion of this judgment are able to be recovered from third parties by the Receiver acting on behalf of the Receivership Defendants.

29.

With regard to any redress that Settling Relief Defendants pay under this Section, if Settling Relief Defendants receive, directly or indirectly, any reimbursement or indemnification from any source, including but not limited to payment made under any insurance policy, or if Settling Relief Defendants secure a tax deduction or tax credit with regard to any federal, state, or local tax, Settling Relief Defendants must: (a) immediately notify the Enforcement Director and States in writing, and (b) within 10 days of receiving the funds or monetary benefit, Settling Relief Defendants must transfer 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 23 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 22.

30.

Case 8:19-cv-01998-MWF-KS Document 304 Filed 07/01/21 Page 9 of 18 Page ID #:8855

Page 317

STIPULATED FINAL JUDGMENT AND ORDER

31.

Payment of redress to any Affected Consumer under this Order may not be conditioned on that Affected Consumer waiving any right. II Misrepresentation or Omission Regarding Financial Condition or Non- Compliance with Order to Pay Redress It is FURTHER ORDERED that:

33.

The suspension of the monetary judgment entered in Section I of this Order is expressly premised on the truthfulness, accuracy, and completeness of Settling Relief Defendant Infinite Management Corp.’s sworn financial statements and supporting documents, which it asserts are truthful, accurate, and complete, and which include: Financial Statement of Infinite Management Corp., signed on November 1, 2019, and submitted to the Bureau on or about November 4, 2019, and the declaration of Albert Kim submitted to the Bureau on behalf of Infinite Management Corp. on June 23, 2021.

34.

If upon motion by any Plaintiff, the Court determines that Settling Relief Defendant Infinite Management Corp. failed to disclose any material Asset or that any of its financial statements contain any material misrepresentation or omission, including materially misstating the value of any Asset, the Court shall terminate the suspension of the monetary judgment entered in Section I and without further adjudication, shall reinstate the judgment entered in Section I of this Order and the full judgment set forth in that Section with respect to Settling Case 8:19-cv-01998-MWF-KS Document 304 Filed 07/01/21 Page 10 of 18 Page ID #:8856

Page 318

STIPULATED FINAL JUDGMENT AND ORDER

Relief Defendant Infinite Management Corp shall be immediately due and payable, less any amounts it paid to the Bureau under Section I of this Order. 35.

In all other respects this Order shall remain in full force and effect unless otherwise ordered by the Court; and, proceedings instituted under this Section 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 Plaintiffs may initiate to enforce this Order.

III Additional Monetary Provisions It is FURTHER ORDERED that:

37.

39.

The facts alleged in the Second Amended Complaint 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 Plaintiffs, including in a proceeding to enforce their rights to any payment or monetary judgment under this Order, such as a non-dischargeability complaint in Case 8:19-cv-01998-MWF-KS Document 304 Filed 07/01/21 Page 11 of 18 Page ID #:8857

Page 319

STIPULATED FINAL JUDGMENT AND ORDER

any bankruptcy case.

40.

The facts alleged in the Second Amended Complaint establish all elements necessary to sustain an action by the Plaintiffs 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 each Settling Relief Defendant, even in such Defendants’ capacity as debtor-in-possession. 41.

Under 31 U.S.C. § 7701, Settling Relief Defendants, unless they have already done so, must furnish to Plaintiffs any taxpayer-identification numbers associated with them or their Assets, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. 42.

43.

The freeze on the Assets of Settling Relief Defendants is modified to permit the transfers of Assets identified in Sections I and III of this Order. Upon completion of all payments and other obligations identified in Sections I and III of this Order, the freeze of the Settling Relief Defendants’ Assets pursuant to the Preliminary Injunction entered on November 15, 2019 (ECF No. 103), shall be dissolved.

Case 8:19-cv-01998-MWF-KS Document 304 Filed 07/01/21 Page 12 of 18 Page ID #:8858

Page 320

STIPULATED FINAL JUDGMENT AND ORDER

COMPLIANCE PROVISIONS V Notices It is FURTHER ORDERED that:

44.

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

Washington, D.C. 20552 45.

Unless otherwise directed by a representative of the State of North Carolina in writing, all submissions to the State of North Carolina pursuant to this Order must be sent by overnight courier or first-class mail to the below address and contemporaneously by email to [email protected]: Case 8:19-cv-01998-MWF-KS Document 304 Filed 07/01/21 Page 13 of 18 Page ID #:8859

Page 321

STIPULATED FINAL JUDGMENT AND ORDER

M. Lynne Weaver, Special Deputy Attorney General North Carolina Department of Justice 114 W. Edenton Street Raleigh, North Carolina 27603 47.

Christina Tusan Supervising Deputy City Attorney Los Angeles City Attorney’s Office 200 N. Main Street, 5th Floor Los Angeles, CA 90012 VI Cooperation with Plaintiffs It is FURTHER ORDERED that:

48.

Settling Relief Defendants must cooperate fully to help Plaintiffs determine the identity, location, and contact information of any Defendant and any Person who might have contact information for any Defendant. Settling Relief Defendants must provide such information in their or their agents’ possession or control within 14 days of receiving a written request from any Plaintiff. 49.

Settling Relief Defendants must cooperate fully to help Plaintiffs determine the identity and location of, and the amount of injury sustained by, each Affected Consumer. Settling Relief Defendants must provide such information in Case 8:19-cv-01998-MWF-KS Document 304 Filed 07/01/21 Page 14 of 18 Page ID #:8860

Page 322

STIPULATED FINAL JUDGMENT AND ORDER

their or their agents’ possession or control within 14 days of receiving a written request from any Plaintiff.

50.

Within 14 days of receipt of a written request from any Plaintiff, each Settling Relief Defendant must submit Compliance Reports or other requested information, which must be made under penalty of perjury; provide sworn testimony; or produce documents.

51.

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

52.

VIII Receivership It is FURTHER ORDERED that:

53.

The receivership imposed by this Court shall continue in the manner set forth in the Preliminary Injunction issued on November 15, 2019 (ECF No. 103), as to all Defendants and Relief Defendants, except as modified by this Section and Section IV, and the Receiver shall continue to have the full powers of Case 8:19-cv-01998-MWF-KS Document 304 Filed 07/01/21 Page 15 of 18 Page ID #:8861

Page 323

STIPULATED FINAL JUDGMENT AND ORDER

an equity receiver, as an agent of the Court, pursuant to Sections XIV and XV of the Preliminary Injunction, which shall remain in effect until further order of the Court.

54.

IX Retention of Jurisdiction It is FURTHER ORDERED that:

55.

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

It is SO ORDERED, this first day of July, 2021.

____________________________________

MICHAEL W. FITZGERALD United States District Judge

Case 8:19-cv-01998-MWF-KS Document 304 Filed 07/01/21 Page 16 of 18 Page ID #:8862

Page 324

ATTACHMENT A

List of Assets Transferred Pursuant to Paragraphs 24-25 of the Order

Any and all Assets at the following financial institutions and in the following accounts:

1. JP Morgan Chase Bank, N.A., account number ending in 3880 in the name of Infinite Management Solutions, Inc.

2. UBS Financial Services Inc., account number ending in 6198 in the name of 1st Generation Holdings LLC

3. Wells Fargo Bank, N.A.:

a. account number ending in 5580 in the name of 1st Generation Holdings LLC b. account number ending in 5598 in the name of 1st Generation Holdings LLC

Case 8:19-cv-01998-MWF-KS Document 304 Filed 07/01/21 Page 17 of 18 Page ID #:8863

Page 325

ATTACHMENT B

Relief Defendant Infinite Management Corp. grants to the Bureau all rights and claims it has to the following Assets pursuant to Paragraph 24 and 26 of the Order:

1. The following vehicles:

a. 2016 Bentley Continental GT, VIN ending in 7293, owned by and registered to Sarah Kim, CA Registration No. 8EAP909; and b. 2016 Mercedes Benz G550, VIN ending in 2027, owned by and registered to Sarah Kim, CA Registration No. L411MO.

2. The following Assets, identified at Item no. 23 on the Financial Statement of Infinite Management Corp.: a. Audemars Piguet, Royal Offshore watch, $58,000 acquisition cost, owned by Albert Kim;

b. Rolex Day Date Presidential watch, $30,000 acquisition cost, owned by Sarah Kim;

c. Rolex Submariner watch, $14,000 acquisition cost, owned by Albert Kim;

d. 3 caret solitaire diamond engagement ring, $53,000 acquisition cost, owned by Sarah Kim;

e. Gucci earrings, $4,500 acquisition cost, owned by Sarah Kim; f. Furniture, acquisition cost unknown; and g. Electronics, acquisition cost unknown.

Case 8:19-cv-01998-MWF-KS Document 304 Filed 07/01/21 Page 18 of 18 Page ID #:8864

Judgment (July 14, 2021)

PDF of this document (23 pages)

Page 326

STIPULATED FINAL JUDGMENT AND ORDER

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION

Bureau of Consumer Financial Protection, et al.,

Plaintiffs,

Consumer Advocacy Center Inc., d/b/a Premier Student Loan Center, et al.,

Defendants.

CASE NO. 8:19-cv-01998 MWF (KS)

STIPULATED FINAL JUDGMENTAND ORDER AS TO DEFENDANT CONSUMER ADVOCACY CENTER, INC.

Court: Hon. Michael W. Fitzgerald Courtroom 5A

STIPULATED FINAL JUDGMENT AND ORDER AS TO CONSUMER ADVOCACY CENTER, INC. Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 1 of 23 Page ID #:9104

Page 327

STIPULATED FINAL JUDGMENT AND ORDER

Plaintiffs, the Bureau of Consumer Financial Protection (“Bureau”), the State of Minnesota, the State of North Carolina, and the People of the State of California (collectively, the “Plaintiffs”), commenced this civil action on October 21, 2019, and filed an amended complaint on February 24, 2020 (“Amended Complaint”), and a second amended complaint (Second Amended Complaint) on April 20, 2021, to obtain permanent injunctive relief, damages, rescission or reformation of contracts, refunds of moneys paid, restitution, disgorgement or compensation for unjust enrichment, civil money penalties, and other monetary and equitable relief from: (1) Defendants Consumer Advocacy Center Inc. d/b/a Premier Student Loan Center; True Count Staffing Inc. d/b/a SL Account Management; Prime Consulting LLC d/b/a Financial Preparation Services; TAS 2019 LLC d/b/a Trusted Account Services; Horizon Consultants LLC; First Priority LLC d/b/a Priority Account Management; Albert Kim; Kaine Wen in his individual capacity and as trustee of the Kaine Wen 2017 Trust; and Tuong Nguyen; and (2) Relief Defendants Infinite Management Corp., f/k/a Infinite Management Solutions Inc.; Hold the Door, Corp.; TN Accounting Inc.; Mice and Men LLC; Sarah Kim; 1st Generation Holdings, LLC; Anan Enterprise, Inc.; and Judy Dai in her individual capacity and as trustee of the Judy Dai 2017 Trust. The Second Amended Complaint alleges violations of sections 1031(a) and 1036(a) of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a); the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. § 6102(c)(2) (Telemarketing Act), based on Defendants’ violations of the Telemarketing Sales Rule (TSR), 16 C.F.R. pt. 310; the Minnesota Prevention of Consumer Fraud Act (MNCFA), Minn. Stat. §§ 325F.68-.694; the Minnesota Uniform Deceptive Trade Practices Act (MNDTPA), Minn. Stat. §§ Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 2 of 23 Page ID #:9105

Page 328

STIPULATED FINAL JUDGMENT AND ORDER

325D.43-.48; the North Carolina Debt Adjusting Act (NCDAA), N.C. Gen. Stat. § 14-423 et seq.; the North Carolina Telephonic Seller Registration Act (NCTSRA), N.C. Gen. Stat. § 66-260 et seq.; the North Carolina Unfair and Deceptive Practices Act (NCUDPA), N.C. Gen. Stat. § 75-1.1; and the California Business and Professions Code 17200 et seq. (the Unfair Competition Law or UCL) in connection with the above-named Defendants’ marketing and sale of debt-relief services. The Second Amended Complaint also includes claims for avoidance of fraudulent transfers under the Federal Debt Collection Procedures Act and the California Uniform Voidable Transactions Act.

The Plaintiffs and the Trustee (as defined below) for CAC request that the Court enter this Stipulated Final Judgment and Order (“Order”). THEREFORE, IT IS ORDERED:

FINDINGS 1.

On January 16, 2019, before the commencement of the instant civil action, CAC filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. §§ 101 et seq. (“Bankruptcy Code”) initiating a bankruptcy proceeding in the United States Bankruptcy Court for the Southern District of Florida, Fort Lauderdale Division (“Bankruptcy Court”), captioned In re Consumer Advocacy Center Inc., Case No. 19-10655. 2.

On July 31, 2019, the Bankruptcy Court directed the appointment of a trustee over CAC’s estate. Sonya Salkin Slott was appointed as CAC’s Chapter 11 trustee on August 5, 2019.

On August 12, 2019, the Chapter 11 trustee moved to convert the proceeding to a Chapter 7 case.

Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 3 of 23 Page ID #:9106

Page 329

STIPULATED FINAL JUDGMENT AND ORDER

On August 19. 2019, the Bankruptcy Court granted the Trustee’s motion to convert the proceeding to a Chapter 7 case. Sonya Salkin Slott was appointed as CAC’s Chapter 7 trustee (“Trustee”) on August 20, 2019. 5.

The Trustee is not operating the business of CAC and is proceeding with an orderly liquidation under Chapter 7. Given that CAC is a Chapter 7 debtor, is no longer doing business, and there is an independent fiduciary in place, the Bureau has agreed not to seek its customary compliance and reporting requirements.

On February 21, 2020, the Trustee produced to the Bureau all nonprivileged documents in CAC’s possession, custody, or control, to which the Trustee had access.

The automatic stay of the Bankruptcy Code does not stay the affirmative relief sought in this civil action against CAC because the action falls within the police and regulatory power exception to the automatic stay set forth in 11 U.S.C. 362(a)(b)(4).

On March 25, 2020, the Bureau timely filed an amended proof of claim in the Bankruptcy Proceeding seeking at least $35,105,017.93 in monetary relief for CAC’s violations of the TSR and CFPA as alleged in the Second Amended Complaint (“Bureau Claim”).

On February 10, 2020, the State of North Carolina timely filed an amended proof of claim in the Bankruptcy Proceeding seeking at least $2,871,359.26 for CAC’s violations of the NCDAA, the NCTSRA, and the NCUDPA, as alleged in the Second Amended Complaint (“North Carolina Claim”).

Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 4 of 23 Page ID #:9107

Page 330

STIPULATED FINAL JUDGMENT AND ORDER

10.

On February 28, 2020, the State of Minnesota timely filed an amended proof of claim in the Bankruptcy Proceeding seeking at least $32,923,344.02 in monetary relief for CAC’s violations of the TSR, MNCFA, and MNDTPA as alleged in the Second Amended Complaint (“Minnesota Claim”). 11.

On March 25, 2020, the People of the State of California timely filed a proof of claim seeking at least $10,545,496.40 for CAC’s violations of the California Unfair Competition Law, as alleged in the Second Amended Complaint (“California Claim”).

12.

On January 10, 2020, prior to the amendments of such claims, the Trustee filed objections to each of the Bureau Claim, the North Carolina Claim and the Minnesota Claim in the Bankruptcy Proceeding (“Trustee’s Claim Objections”).

13.

The Bankruptcy Court has authorized the Trustee to enter into this Order by order dated June 25, 2021, a copy of which is attached as Exhibit A to the Stipulation as to Entry of Final Judgment and Order. The Bankruptcy Court’s order is now final and no longer subject to appeal. 14.

The Plaintiffs and the Trustee (the “Parties”) agree to entry of this Order, without adjudication of any issue of fact or law, to settle and resolve all matters in dispute between them arising from the conduct of CAC alleged in the Second Amended Complaint as well as the Trustee’s Claim Objections. 15.

The Trustee is an independent fiduciary for CAC and its bankruptcy estate, having been appointed by the Office of the United States Trustee and approved by the Bankruptcy Court. Accordingly, the Plaintiffs make no allegations against the Trustee, but only against CAC.

Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 5 of 23 Page ID #:9108

Page 331

STIPULATED FINAL JUDGMENT AND ORDER

16.

For purposes of this Order, the Trustee admits the facts necessary to establish the Court’s jurisdiction over CAC solely with respect to the subject matter of this action. On behalf of CAC, the Trustee waives service under Rule 4(d) of the Federal Rules of Civil Procedure and waives all rights to seek judicial review or otherwise challenge or contest the validity of this Order. On behalf of CAC, the Trustee also waives any claim that Consumer Advocacy Center Inc. may have under the Equal Access to Justice Act, 28 U.S.C. § 2414, 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. 17.

This Court has jurisdiction over the subject matter of this action. 18.

The Second Amended Complaint states claims upon which relief may be granted under the CFPA, 12 U.S.C. §§ 5531(a), 5536(a), 5564, 5581, the Telemarketing Act, 15 U.S.C. §§ 6102(c)(2), 6105(d), and the TSR, 16 C.F.R. pt. 310, the MNCFA, Minn. Stat. §§ 325F.68-.694, the MNDTPA, Minn. Stat. §§ 325D.43-.48, the NCDAA, N.C. Gen. Stat. § 14-423 et seq., the NCTSRA, N.C. Gen. Stat. § 66-260 et seq., the NCUDPA, N.C. Gen. Stat. § 75-1.1, and the UCL, California’s Business and Professions Code 17200 et seq. The relief provided in this Order is appropriate and available pursuant to the CFPA, 12 U.S.C. §§ 5564, 5565, and the Telemarketing Act, 15 U.S.C. § 6102(c), 6105(d) and the TSR, 16 C.F.R. pt. 310, the MNCFA, Minn. Stat. §§ 325F.68-.694, the MNDTPA, Minn. Stat. §§ 325D.43-.48, the NCDAA, N.C. Gen. Stat. § 14-423 et seq., the NCTSRA, N.C. Gen. Stat. § 66-260 et seq., the NCUDPA, N.C. Gen. Stat. § 75-1.1, and the UCL, California’s Business and Professions Code 17200 et seq. 19.

Consumer Advocacy Center Inc. is a “covered person” as defined in the CFPA, 12 U.S.C. § 5481(1), (6), (19), (25), and (26). Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 6 of 23 Page ID #:9109

Page 332

STIPULATED FINAL JUDGMENT AND ORDER

20.

During the Relevant Period, Consumer Advocacy Center Inc. offered or provided Consumer Financial Products or Services, including financial advisory services to assist consumers in settling debts, 12 U.S.C. § 5481(5), (15)(A)(viii). 21.

Consumer Advocacy Center Inc. induced the purchase of financial advisory services by use of one or more telephones and conducted more than one interstate telephone call. Consumer Advocacy Center Inc. is therefore a “seller” or “telemarketer” of a “debt relief service,” who engaged in “telemarketing,” as defined by the TSR. 16 C.F.R. § 310.2 (o), (dd), (ff), (gg). 22.

In the course of telemarketing Debt-Relief Services and offering or providing Consumer Financial Products or Services during the Relevant Period, Consumer Advocacy Center Inc. misrepresented material aspects of its services, including material aspects of the performance, efficacy, nature, or central characteristics of the services.

23.

During the Relevant Period, CAC received at least $35,105,017.93 in unlawful fees, including unlawful advance fees, from Affected Consumers directly or through True Count Staffing Inc.

24.

Consumer Advocacy Center Inc., True Count Staffing Inc., and Prime Consulting caused harm to consumers in the amount of the total fees consumers paid for their purported Debt-Relief Services, less any refunds. 25.

The Court finds that Consumer Advocacy Center Inc.’s acts and practices described above violate the TSR, 16 C.F.R. §§ 310.3(a)(2)(iii), (x), 310.3(b), 310.4(a)(5)(i); the CFPA, 12 U.S.C. §§ 5531(a), 5536(a); 15 U.S.C. § 6102(c)(2); the MNCFA, Minn. Stat. §§ 325F.68-.694, the MNDTPA, Minn. Stat. §§ 325D.43-.48, the NCDAA, N.C. Gen. Stat. § 14-423 et seq., the NCTSRA, N.C. Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 7 of 23 Page ID #:9110

Page 333

STIPULATED FINAL JUDGMENT AND ORDER

Gen. Stat. § 66-260 et seq., the NCUDPA, N.C. Gen. Stat. § 75-1.1, and the UCL, California’s Business and Professions Code 17200 et seq. 26.

Consumer Advocacy Center Inc.’s acts and practices described in the Second Amended Complaint and above violate the TSR, 16 C.F.R. § 310.4(a)(5)(i)(A)-(B) and are abusive acts or practices in telemarketing. 27.

Consumer Advocacy Center Inc.’s acts and practices described in the Second Amended Complaint and above are false and misleading and constitute deceptive acts or practices in violation of the TSR, 16 C.F.R. § 310.3(a)(2)(iii), (x), and sections 1031(a) and 1036(a) of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), CFPA, 12 U.S.C. §§ 5531, 55536. 28.

Consumer Advocacy Center Inc.’s acts and practices described in the Second Amended Complaint and above are also false and misleading and constitute unlawful, unfair, or deceptive business acts or practices in violation of the North Carolina Debt Adjusting Act (“NCDAA”), N.C. Gen. Stat. § 14-423 et seq., the North Carolina Telephonic Seller Registration Act (“NCTSRA”), N.C. Gen. Stat. § 66-260 et seq., and the North Carolina Unfair and Deceptive Practices Act (“NCUDPA”), N.C. Gen. Stat. § 75-1.1, including but not limited to Consumer Advocacy Center Inc.’s predicate violations of the TSR, 16 C.F.R. § 310.3(a)(2)(iii), (x), and sections 1031(a) and 1036(a) of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), CFPA, 12 U.S.C. §§ 5531, 55536.

29.

Consumer Advocacy Center Inc.’s acts and practices described in the Second Amended Complaint and above are also false and misleading and constitute deceptive business acts or practices in violation of the MNCFA, Minn. Stat. §§ 325F.68-.694, and the MNDTPA, Minn. Stat. §§ 325D.43-.48, including Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 8 of 23 Page ID #:9111

Page 334

STIPULATED FINAL JUDGMENT AND ORDER

but not limited to Consumer Advocacy Center Inc.’s predicate violations of the TSR, 16 C.F.R. § 310.3(a)(2)(iii), (x).

30.

Consumer Advocacy Center Inc.’s acts and practices described in the Second Amended Complaint and above are also false and misleading and constitute unlawful, unfair, or fraudulent business acts or practices in violation of the California Unfair Competition Law (“UCL”), Cal Bus & Prof Code § 17200, including but not limited to Consumer Advocacy Center Inc.’s predicate violations of the TSR, 16 C.F.R. § 310.3(a)(2)(iii), (x), and sections 1031(a) and 1036(a) of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), CFPA, 12 U.S.C. §§ 5531, 55536.

31.

Entry of this Order is in the public interest. DEFINITIONS The following definitions apply to this Order: 32.

“Advance Fee” means any fee or consideration requested or received by a Debt-Relief Service Provider from a consumer for any Debt-Relief Service, whether directly or indirectly, that occurs before: a.

the Debt-Relief Service Provider has renegotiated, settled, reduced, or otherwise altered the terms of a debt pursuant to a settlement agreement, debt management plan, or other valid contractual agreement executed by the Consumer; and b.

the Consumer has made at least one payment pursuant to that settlement agreement, debt management plan, or other valid contractual agreement between the Consumer and the creditor or debt collector.

Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 9 of 23 Page ID #:9112

Page 335

STIPULATED FINAL JUDGMENT AND ORDER

33.

“Affected Consumers” includes any consumer who paid Consumer Advocacy Center Inc. or its officers, agents, servants, employees, or attorneys, for any Debt-Relief Service from November 2, 2015, to December 31, 2018. 34.

“Anan Adversary Proceeding” means the adversary action complaint filed on December 30, 2019, by the Trustee against Anan Enterprise, Inc., Sonya S. Slott, Chapter 7 Trustee v. Anan Enterprise, Inc., Adv. Case No. 19-01960, for recovery of certain avoidable transfers or fraudulent transferred funds. 35.

“Assets” means any legal or equitable interest in, right to, or claim to any real, personal, or intellectual property owned or controlled by, or held, in whole or in part for the benefit of, or subject to access by any Defendant in this action, wherever located, whether in the United States or abroad. This includes, but is not limited to, chattel, goods, instruments, equipment, fixtures, general intangibles, effects, leaseholds, contracts, mail or other deliverables, shares of stock, commodities, futures, inventory, checks, notes, accounts, credits, receivables (as those terms are defined in the Uniform Commercial Code), funds, cash, and trusts.

36.

“Assist[ing] Others” includes, but is not limited to: a.

consulting in any form whatsoever;

providing paralegal or administrative support services; c.

performing customer service functions, including but not limited to, receiving or responding to consumer complaints; d.

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 Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 10 of 23 Page ID #:9113

Page 336

STIPULATED FINAL JUDGMENT AND ORDER

text of any Internet website, email, or other electronic communication or advertisement;

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

performing marketing, billing, or payment services of any kind; and h.

acting or serving as an owner, officer, director, manager, or principal of any entity.

37.

“Bureau” means the Bureau of Consumer Financial Protection. 39.

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 Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 11 of 23 Page ID #:9114

Page 337

STIPULATED FINAL JUDGMENT AND ORDER

management or debt settlement, modifying the terms of any extension of credit, or avoiding foreclosure; and b.

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. 40.

“Debt-Relief Service Provider” means any Person that offers or provides any Debt-Relief Service.

42.

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

Page 338

STIPULATED FINAL JUDGMENT AND ORDER

Solutions, Prime Document Services, Financial Accounting Center, Doc Management Solutions, First Priority LLC, ALW Loans Administrative Accounting Center, Best Choice Financial Center, First Document Services, Global Direct Accounting Solutions, Keystone Document Center, Pacific Palm Financial Group, Pacific Shores Advisory, Sequoia Account Management, Signature Loan Solutions, Yellowstone Account Services, ClearStudentLoanDebt, Clear Student Loan Debt, Trusted Account Services, Premier Student Loan Center, and Priority Account Management; b.

“Effective Date” means the date on which this Order is entered by the Court.

44.

“Enforcement Director” means the Assistant Director of the Office of Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.

45.

“Estate” or “Consumer Advocacy Center Estate” means the bankruptcy estate created within the Bankruptcy Proceeding pursuant to 11 U.S.C. § 541.

46.

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

Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 13 of 23 Page ID #:9116

Page 339

STIPULATED FINAL JUDGMENT AND ORDER

47.

48.

“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 the Estate based on substantially the same facts as described in the Second Amended Complaint.

49.

“Relevant Period” means November 2, 2015, to October 23, 2019. 50.

“States” means the State of Minnesota, the State of North Carolina, and the People of the State of California.

51.

“Service Provider” means any person that provides a material service to a covered person, in connection with the offering or provision by such covered person of a consumer financial product or service, including a person that—(i) participates in designing, operating, or maintaining the consumer financial product or service; or (ii) processes transactions relating to the consumer financial product or service (other than unknowingly or incidentally transmitting or processing financial data in a manner that such data is undifferentiated from other types of data of the same form as the person transmits or processes). “Service provider” does not include a person solely by virtue of such person offering or providing to a covered person—(i) a support service of a type provided to businesses generally or a similar ministerial service; or (ii) time or space for an advertisement for a consumer financial product or service through print, newspaper, or electronic media.

Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 14 of 23 Page ID #:9117

Page 340

STIPULATED FINAL JUDGMENT AND ORDER

52.

“Trustee” means Sonya Salkin Slott, solely in her capacity as the Trustee appointed over Defendant Consumer Advocacy Center Inc. by the United States Bankruptcy Court, Southern District of Florida, and any successor trustee. ORDER I Consumer Advocacy Center Inc. Not to Resume Operating It is ORDERED that:

53.

Consumer Advocacy Center Inc. will not engage in the following, and the Trustee will not move the Bankruptcy Court pursuant to 11 U.S.C. § 721, or otherwise seek authorization to operate Consumer Advocacy Center Inc.’s business, including seeking authorization for Consumer Advocacy Center Inc., whether acting directly or through any other Person, to engage in the following: a.

participating in telemarketing or Assisting Others engaged in telemarketing any Consumer Financial Product or Service; b.

participating in or Assisting Others in advertising, marketing, promoting, offering for sale, selling, or providing any Debt-Relief Service;

receiving any remuneration or other consideration from, holding any ownership interest in, providing services to, or working in any capacity for any Person engaged in or assisting in advertising, marketing, promoting, offering for sale, selling, or providing any Debt-Relief Service. This prohibition does not apply to the extent it may relate to recovering avoidable transfers in the Bankruptcy Proceeding or obtaining turnover or possession of property of the Estate.

Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 15 of 23 Page ID #:9118

Page 341

STIPULATED FINAL JUDGMENT AND ORDER

Nothing in this Order shall be read as an exception to this Paragraph. II Customer Information It is FURTHER ORDERED that:

54.

The Trustee, on behalf of and as a fiduciary for the Estate of Consumer Advocacy Center, may not:

disclose, use, or benefit from customer information, including names, addresses, telephone numbers, email addresses, social security numbers, other identifying information, or any data that enables access to a customer’s account (including a credit card, bank account, or other financial account), that was obtained before the Effective Date in connection with the offering or providing of Debt-Relief Services by Consumer Advocacy Center Inc., True Count Staffing Inc., and Prime Consulting LLC;

attempt to collect, sell, assign, or otherwise transfer any right to collect payment from any consumer who purchased or agreed to purchase a Debt-Relief Service from any Defendant. 55.

However, customer information may be disclosed if requested by a government agency or required by law, regulation, or court order, including without limitation as may be required by the Bankruptcy Court in the Bankruptcy Proceeding.

III Monetary Judgment It is FURTHER ORDERED that:

56.

A judgment for monetary relief is entered in favor of the Plaintiffs and Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 16 of 23 Page ID #:9119

Page 342

STIPULATED FINAL JUDGMENT AND ORDER

against Consumer Advocacy Center Inc., in the total amount of $35,105,017.93, to be paid to the Bureau for the purpose of providing redress to Affected Consumers (“Monetary Judgment”).

57.

The Monetary Judgment will be deemed to be an allowed general unsecured claim against the Estate in favor of the Bureau on behalf of all of the Plaintiffs, subject to 11 U.S.C. §§ 507(a) and 726 governing priorities of expenses and claims in the Bankruptcy Proceeding.

58.

Except as provided herein, the Monetary Judgment shall constitute the entirety of the Plaintiffs’ allowed claims in the Bankruptcy Proceeding, including the Bureau Claim, the North Carolina Claim, the Minnesota Claim and the California Claim, and shall resolve the Trustee’s Claim Objections. As a result, the Bureau Claim shall be deemed an allowed general unsecured claim in the amount of the Monetary Judgment, and the North Carolina Claim, the Minnesota Claim and the California Claim shall be reduced to $5,000.00 each as provided herein. 59.

Any funds received by the Bureau in satisfaction of the Monetary Judgment shall be deposited into a fund or funds administered by the Bureau or its 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.

60.

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 Trustee will have no right to Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 17 of 23 Page ID #:9120

Page 343

STIPULATED FINAL JUDGMENT AND ORDER

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. 61.

Payment of redress to any Affected Consumer under this Order may not be conditioned on that Affected Consumer waiving any right. IV Order to Pay Civil Money Penalties It is FURTHER ORDERED that:

62.

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 taking into account the factors in 12 U.S.C. § 5565(c)(3), a civil money penalty in favor of the Bureau and against the Estate is ordered in the amount of $1, which shall be deemed an allowed general unsecured claim in the Bankruptcy Proceeding. 63.

The civil money penalty paid to the Bureau 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).

64.

Under N.C. Gen. Stat. § 75-15.2, by reason of the violations of law alleged in the Second Amended Complaint, a civil money penalty in favor of the State of North Carolina and against the Estate is ordered in the amount of $5,000, which shall be deemed an allowed general unsecured claim in the Bankruptcy Proceeding. Accordingly, the North Carolina Claim shall be deemed allowed in the amount of $5,000.00.

65.

Under Minnesota Statutes Section 8.31, by reason of the violations of law alleged in the Second Amended Complaint, a civil money penalty in favor of the State of Minnesota and against the Estate is ordered in the amount of $5,000, which shall be deemed an allowed general unsecured claim in the Bankruptcy Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 18 of 23 Page ID #:9121

Page 344

STIPULATED FINAL JUDGMENT AND ORDER

Proceeding. Accordingly, the Minnesota Claim shall be deemed allowed in the amount of $5,000.00. The Minnesota Attorney General will remit these funds to the general fund of the State of Minnesota pursuant to Minn. Stat. §§ 8.31 and 16A.151.

66.

Under section 17206 of the UCL, Cal Bus & Prof Code § 17206, by reason of the violations of law alleged in the Second Amended Complaint and taking into account the factors in section 17206, a civil money penalty in favor of the People of the State of California and against the Estate is ordered in the amount of $5,000, which shall be deemed an allowed general unsecured claim in the Bankruptcy Proceeding. Accordingly, the California Claim shall be deemed allowed in the amount of $5,000.00.

V Additional Monetary Provisions It is FURTHER ORDERED that:

67.

Subject to 11 U.S.C. §§ 507(a) and 726 governing priorities of expenses and claims in the Bankruptcy Proceeding, the Trustee must relinquish all dominion, control, and title to the funds paid to the Bureau on account of its claims to the fullest extent permitted by law and no part of the funds may be returned to the Estate.

68.

Within 30 days of the entry of a final judgment, order or settlement in a Related Consumer Action, to the extent that such a Related Consumer Action is commenced in the Bankruptcy Proceeding or otherwise on notice to the Trustee while the Bankruptcy Proceeding is pending, then the Trustee must notify the Assistant Director for Enforcement in writing of any such final judgment, order or settlement. Such notification must include the amount of redress, if any, that Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 19 of 23 Page ID #:9122

Page 345

STIPULATED FINAL JUDGMENT AND ORDER

the Estate paid or is required to pay to consumers and, to the extent available to the Trustee, describe the consumers or classes of consumers to whom that redress has been or will be paid.

69.

Within 30 days of the entry of a final judgment, order or settlement in the Anan Adversary Proceeding, the Trustee must notify the Assistant Director for Enforcement in writing of any such final judgment, order or settlement. Such notification should include the amount of recovery of any avoidable or fraudulent transfers.

VI Pendency of Bankruptcy Proceeding IT IS FURTHER ORDERED that:

70.

Plaintiffs must, if they have not already done so, seek leave of the Bankruptcy Court to amend and reduce their proofs of claim to conform with the Monetary Judgment as set forth herein. In the alternative, the Order approving the resolution of the Plaintiffs’ claims in the Bankruptcy Proceeding may serve as the amendment to Plaintiffs’ proofs of claim.

71.

The Trustee shall not object to the Plaintiffs’ proofs of claim as amended herein.

72.

The Trustee’s agreed-to obligations under this Order in this Court will terminate upon the closure of the Bankruptcy Proceeding. VII Cooperation with Plaintiffs IT IS FURTHER ORDERED that:

73.

In connection with this action, the Order, or any subsequent Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 20 of 23 Page ID #:9123

Page 346

STIPULATED FINAL JUDGMENT AND ORDER

investigations related to or associated with the transactions or occurrences that are the subject of the Second Amended Complaint, the Trustee shall provide reasonable and good faith cooperation to help Plaintiffs determine the identity and location of, and the amount of injury sustained by, each Affected Consumer, to the extent that such information has not previously been produced to Plaintiffs by the Trustee and to the extent that such information is in the Trustee’s possession or control.

74.

Within 21 calendar days of receipt of a written request from any Plaintiff, the Trustee must provide any available documents or information that are the subject of the request.

VIII Notices It is FURTHER ORDERED that:

75.

Unless otherwise directed in writing by the Bureau, the Trustee must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “CFPB, et al., v. CAC, et al., Case No. 8:19-cv-01998-MWF-KS” by email to [email protected]. The Trustee may send an additional copy by overnight courier or first-class mail to the below address:

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

Washington D.C. 20552 Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 21 of 23 Page ID #:9124

Page 347

STIPULATED FINAL JUDGMENT AND ORDER

76.

Unless otherwise directed by a representative of the State of Minnesota in writing, all submissions to the State of Minnesota pursuant to this Order must be sent by email to [email protected]. The Trustee may send an additional copy by overnight courier or first-class mail to the below address:

Evan Romanoff, Assistant Attorney General Office of the Minnesota Attorney General 445 Minnesota Street, Suite 1200 St. Paul, Minnesota 55101 77.

Unless otherwise directed by a representative of the State of North Carolina in writing, all submissions to the State of North Carolina pursuant to this Order must be sent by email to [email protected]. The Trustee may also send an additional copy by overnight courier or first-class mail to the below address: M. Lynne Weaver, Special Deputy Attorney General North Carolina Department of Justice 114 W. Edenton Street Raleigh, North Carolina 27603 78.

Unless otherwise directed by the State of California in writing, all submissions to the State of California pursuant to this Order must be sent by email to [email protected]. The Trustee may also send an additional copy by overnight courier or first-class mail to the below address: Christina Tusan Supervising Deputy City Attorney Los Angeles City Attorney’s Office 200 N. Main Street, 5th Floor Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 22 of 23 Page ID #:9125

Page 348

STIPULATED FINAL JUDGMENT AND ORDER

Los Angeles, CA 90012 IX Retention of Jurisdiction It is FURTHER ORDERED that:

79.

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

It is SO ORDERED, this 14th day of July, 2021.

MICHAEL W. FITZGERALD United States District Judge

Case 8:19-cv-01998-MWF-KS Document 311 Filed 07/14/21 Page 23 of 23 Page ID #:9126

Amended complaint (Aug. 2021)

PDF of this document (78 pages)

Page 349

REDACTED THIRD AMENDED COMPLAINT BUREAU OF CONSUMER FINANCIAL PROTECTION NATHAN DIMOCK (D.C. Bar No. 487743) (Admitted pro hac vice) Tel.: (202) 435-9198 / Email: [email protected] SARAH PREIS (D.C. Bar No. 997387) (admitted Pro Hac Vice) Tel.: (202)-435-9318 / Email: [email protected] JESSE STEWART (N.Y. Bar No. 5145495) (admitted Pro Hac Vice) Tel: (202)-435-9641 / Email: [email protected] 1700 G Street, NW Washington, DC 20552 Fax: (844) 826-5016 LEANNE E. HARTMANN (CA Bar No. 264787) (Local Counsel for the Bureau of Consumer Financial Protection) 301 Howard Street, Suite 1200 San Francisco, CA 94105 Email: [email protected]/Fax: (415) 844-9788 Attorneys for Plaintiff the Bureau of Consumer Financial Protection THE STATE OF MINNESOTA EVAN ROMANOFF (Attorney Reg. No. 0398223) (admitted Pro Hac Vice) Assistant Attorney General 445 Minnesota Street, Suite 1200 St. Paul, MN 55101-2130 Tel.: (651) 757-1454/Email: [email protected] Attorney for Plaintiff the State of Minnesota THE STATE OF NORTH CAROLINA M. LYNNE WEAVER (N.C. Bar No. 19397) (admitted Pro Hac Vice) North Carolina Department of Justice 114 W. Edenton Street Raleigh, NC 27602 Tel.: (919) 716-6000 / Fax: (919) 716-6050 Email: [email protected] Attorney for Plaintiff the State of North Carolina THE PEOPLE OF THE STATE OF CALIFORNIA MICHAEL N. FEUER, City Attorney (CA Bar No. 111529) CHRISTINA V. TUSAN, Supvr. Deputy City Attorney (CA Bar No. 192203) WILLIAM PLETCHER, Deputy City Attorney (CA Bar No. 212664) MIGUEL RUIZ, Deputy City Attorney (CA Bar No. 240387) OFFICE OF THE CITY ATTORNEY 200 N. Main Street, 500 City Hall East Los Angeles, California 90012-4131 Tel: (213) 473-6908/Fax: (213) 978-8112 Emails: [email protected] / [email protected] Attorneys for Plaintiff the People of the State of California Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 1 of 78 Page ID #:9129

Page 350

REDACTED THIRD AMENDED COMPLAINT

UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT OF CALIFORNIA

Plaintiffs,

Defendants, and

Infinite Management Corp., f/k/a Infinite Management Solutions Inc.; Hold The Door, Corp.; TN Accounting Inc.; Mice and Men LLC; 1st Generation Holdings, LLC; Sarah Kim; Anan Enterprise, Inc.; and Judy Dai in her individual capacity and as trustee of the Judy Dai 2017 Trust,

Relief Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No: SACV 19-1998-MWF(KSx)

THIRD AMENDED COMPLAINT

INTRODUCTION 1.

Page 351

REDACTED THIRD AMENDED COMPLAINT

under and the Telemarketing and Consumer Fraud and Abuse Prevention Act (Telemarketing Act), 15 U.S.C. §§ 6101-6108, and its implementing regulation, the Telemarketing Sales Rule (TSR), 16 C.F.R. Part 310; under § 3304(b)(1) of the Federal Debt Collection Procedures Act (FDCPA), 28 U.S.C. §§ 3001- 3308; under § 3439.04(a) of the California Uniform Voidable Transactions Act (UVTA), Cal Civ. Code §§ 3439-3439.14; and under the Court’s ancillary enforcement jurisdiction. The Bureau brings this action against the student-loan debt-relief operation involving Defendants Consumer Advocacy Center Inc., d/b/a Premier Student Loan Center; True Count Staffing Inc., d/b/a SL Account Management; Prime Consulting LLC, d/b/a Financial Preparation Services (collectively, Student Loan Debt Relief Companies); Defendants TAS 2019 LLC, d/b/a Trusted Account Services, Horizon Consultants LLC, and First Priority LLC (collectively, Payment Companies); and Defendants Albert Kim; Kaine Wen, in his individual capacity and as trustee of the Kaine Wen 2017 Trust; and Tuong Nguyen (collectively, Individual Defendants). (Student Loan Debt Relief Companies, Payment Companies, and Individual Defendants are referred to, collectively, as Defendants.) 2.

The State of North Carolina, by its Attorney General, brings this enforcement action to, among other things, obtain temporary, preliminary, and Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 3 of 78 Page ID #:9131

Page 352

REDACTED THIRD AMENDED COMPLAINT

permanent injunctive relief, restitution, and civil penalties for Defendants’ acts or practices in violation of North Carolina’s Debt Adjusting Act, N.C. Gen. Stat. § 14-423, et seq., (NCDAA); North Carolina’s Unfair and Deceptive Practices Act, N.C. Gen. Stat. § 75-1.1 (NCUDPA); North Carolina’s Telephonic Seller Registration Act, N.C. Gen. Stat. § 66-260, et seq. (NCTSRA); and the Telemarketing Act, 15 U.S.C. §§ 6101-6108, and its implementing regulation, the TSR, 16 C.F.R. Part 310, in connection with Defendants’ student-loan debt-relief operation. 4.

The People of the State of California (collectively with the States of Minnesota and North Carolina, “the States”), by and through Michael N. Feuer, Los Angeles City Attorney, bring this enforcement action to, among other things, obtain temporary, preliminary, and permanent injunctive relief, restitution, and civil penalties for Defendants’ acts or practices in violation of California’s Business and Professions Code section 17200 et seq. (the “Unfair Competition Law,” or “UCL”), the UVTA, Cal. Civil Code sections 3439 through 3439.14, and the Telemarketing Act, 15 U.S.C. §§ 6101-6108, and its implementing regulation, the TSR, 16 C.F.R. Part 310, in connection with student-loan debt-relief operation.

The Bureau and the States bring this action to stop Defendants’ unlawful conduct, obtain relief for harmed consumers, avoid certain fraudulent transfers to satisfy any judgment in favor of the Bureau and the People of the State of California against Defendant Kaine Wen, and impose civil money penalties on Defendants for their unlawful actions. 7.

The Bureau and the States also bring this action against Infinite Management Corporation; Hold the Door, Corp.; TN Accounting Inc.; Mice Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 4 of 78 Page ID #:9132

Page 353

REDACTED THIRD AMENDED COMPLAINT

and Men LLC; 1st Generation Holdings, LLC; Sarah Kim; Anan Enterprise, Inc.; and Judy Dai in her individual capacity and as trustee of the Judy Dai 2017 Trust, as Relief Defendants.

OVERVIEW 8.

From at least 2015 until the filing of this action, Defendants operated a debt-relief enterprise that deceived thousands of federal-student-loan borrowers and collected over $95 million in illegal advance fees, in violation of the TSR, the CFPA, the MNCFA, the MNDTPA, the NCDAA, the NCUDPA, the NCTSRA, and the UCL. Unless otherwise noted, all references to “borrowers” and “consumers” in this Complaint include California, Minnesota, and North Carolina borrowers and consumers.

10.

11.

Page 354

REDACTED THIRD AMENDED COMPLAINT

12.

13.

14.

15.

At no time did the Student Loan Debt Relief Companies hold consumer payments in independent third-party accounts. 16.

At no time did the Student Loan Debt Relief Companies use payments from consumers to make payments toward consumers’ student-loan debts.

17.

JURISDICTION AND VENUE 18.

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), Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 6 of 78 Page ID #:9134

Page 355

REDACTED THIRD AMENDED COMPLAINT

presents a federal question, 28 U.S.C. § 1331, and is brought by an agency of the United States, 28 U.S.C. § 1345. This Court has supplemental jurisdiction over the States’ claims pursuant to 28 U.S.C. § 1367. 19.

Venue is proper in this district pursuant to 12 U.S.C. § 5564(f) because Defendants are located, reside, or do business in this district. PARTIES 20.

21.

22.

The State of North Carolina is acting through its Attorney General Joshua H. Stein, pursuant to authority granted by Chapters 14, 66, 75, and 114 Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 7 of 78 Page ID #:9135

Page 356

REDACTED THIRD AMENDED COMPLAINT

of the North Carolina General Statutes, and the Telemarketing Act, 15 U.S.C. § 6103(a).

24.

25.

CAC has held itself out as doing business as Premier Student Loan Center.

27.

CAC transacted its student-loan debt-relief business in the Central District of California since at least November 2015. 28.

29.

30.

True Count has held itself out as doing business as SL Account Management.

Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 8 of 78 Page ID #:9136

Page 357

REDACTED THIRD AMENDED COMPLAINT

31.

32.

Prime has held itself out as doing business as Financial Preparation Services.

33.

34.

TAS 2019 LLC’s operations and principal place of business were located in the Central District of California. 35.

36.

Defendant Albert Kim (a/k/a Albert King) is CAC’s primary owner and founder.

Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 9 of 78 Page ID #:9137

Page 358

REDACTED THIRD AMENDED COMPLAINT

38.

Kim is a resident of the State of California and performed work for CAC while residing in this jurisdiction. 39.

Kim exercised substantial control over CAC’s business practices. 40.

Kim exercised managerial responsibility for CAC and participated in the conduct of its affairs.

41.

Wen is a resident of the State of California and performed work for CAC and True Count while residing in this jurisdiction. 43.

Wen exercised substantial control over True Count’s business practices.

44.

Wen exercised managerial responsibility for True Count and participated in the conduct of its affairs. 45.

Wen exercised managerial responsibility for CAC and participated in the conduct of its affairs.

46.

47.

Defendant Tuong Nguyen (a/k/a Tom Nelson) served as CAC’s controller and as True Count’s secretary. 48.

Nguyen is a resident of the State of California and performed work for CAC and True Count while residing in this jurisdiction. 49.

Nguyen exercised managerial responsibility for CAC and participated in the conduct of its affairs. 50.

Nguyen exercised managerial responsibility for True Count and participated in the conduct of its affairs. Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 10 of 78 Page ID #:9138

Page 359

REDACTED THIRD AMENDED COMPLAINT

51.

Kim served as Infinite Management’s registered agent and president, and he is the sole signatory on a bank account belonging to it. 53.

Hold the Door was incorporated by Wen, and he has served as its sole corporate officer.

55.

56.

Nguyen has served as TN Accounting’s president and sole corporate officer.

57.

59.

Mice and Men is purportedly owned by Relief Defendant Judy Dai, Defendant Wen’s mother, who resides in Monterey Park, CA. Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 11 of 78 Page ID #:9139

Page 360

REDACTED THIRD AMENDED COMPLAINT

60.

Judy Dai was listed with Registered Agents Inc. as the contact person for Mice and Men, using her Monterey Park, CA residence as the mailing address.

61.

Invoices from Registered Agents Inc. for services rendered for Mice and Men were billed to Mice and Men, LLC, Judy Dai, at Judy Dai’s Monterey Park, CA residence.

62.

Relief Defendant 1st Generation Holdings, LLC (1st Generation) is a Wyoming corporation with its principal place of business in Downey, California.

63.

Relief Defendant Sarah Kim is Defendant Kim’s wife. She is a resident of the State of California.

64.

Relief Defendant Judy Dai is Defendant Wen’s mother. She is a resident of the State of California and this District. 66.

FACTS Student Loan Forgiveness and Repayment Programs 67.

Page 361

REDACTED THIRD AMENDED COMPLAINT

68.

70.

Initially, CAC’s internal structure included sales, processing, and customer-service departments.

73.

74.

The processing department charged consumers the initial advance fees, and prepared and submitted forbearance, loan-consolidation, and IDR Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 13 of 78 Page ID #:9141

Page 362

REDACTED THIRD AMENDED COMPLAINT

requests to consumers’ student-loan servicers. The consumer’s student-loan servicer then evaluated the requests.

75.

In March 2018, Kim and Wen moved CAC’s processing and customer-service operations into a new entity, True Count. 76.

As part of this shift, CAC’s processing and customer-service departments physically moved to a new office location. 77.

78.

The Individual Defendants, through True Count and Prime, set up First Priority, Horizon, and TAS to collect payments from consumers. Debt Relief Sales and Business Practices 80.

The Student Loan Debt Relief Companies marketed their debtrelief services through inbound and outbound calls, websites, social media, and direct mail.

81.

When consumers called the front-end sales company (CAC or Prime), the consumer first spoke with a sales representative. 82.

Page 363

REDACTED THIRD AMENDED COMPLAINT

83.

Sales representatives downloaded student-loan data from the consumer’s online FSA account into the company’s customer–relationshipmanagement system.

84.

Sales representatives often stated that there was an urgent need to sign up for the respective Student Loan Debt Relief Company’s services. 85.

For example, some sales representatives told consumers that they had a limited time in which they could apply for an IDR program. 86.

At times, sales representatives represented that the respective Student Loan Debt Relief Company was affiliated with DOE. Representations about Fees 87.

During sales calls, sales representatives made affirmative representations or material omissions about the purpose of the fees paid by consumers to the Student Loan Debt Relief Companies. 88.

Sales representatives frequently represented that the fees would be applied to the balance of consumers’ student loans. 89.

91.

In fact, the fees paid to the Student Loan Debt Relief Companies were in addition to, and did not relieve consumers of, their obligation to pay their student loans.

92.

Page 364

REDACTED THIRD AMENDED COMPLAINT

93.

In fact, consumers can apply free of charge for loan forgiveness or IDR programs, either through their student-loan servicer or directly to the DOE. 94.

Moreover, consumers can recertify annually their eligibility to remain enrolled in their IDR plans through their student-loan servicer for free. Representations about Loan Forgiveness 95.

The Student Loan Debt Relief Companies’ sales representatives often told consumers that they were qualified or approved for loan forgiveness. 96.

The DOE’s loan forgiveness programs require anywhere from 10- 25 years of qualifying payments, as well as satisfaction of other eligibility criteria, to qualify for loan forgiveness. 98.

Only the DOE can approve consumers for loan forgiveness. 99.

101. In fact, the new, lower monthly payment amount identified by sales representatives was often calculated based on an incorrect family size, income, or marital status.

102. Sales representatives often represented that consumers’ lower monthly payment would be in place over the life of the loan. Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 16 of 78 Page ID #:9144

Page 365

REDACTED THIRD AMENDED COMPLAINT

105. Processors conducted a “welcome call” during which they typically asked consumers for proof of income and, at times, verified certain information.

Page 366

REDACTED THIRD AMENDED COMPLAINT

116. Processors frequently submitted IDR applications to consumers’ student loan servicers that listed consumers’ family sizes greater than the consumers’ actual family size.

Page 367

REDACTED THIRD AMENDED COMPLAINT

divert all postal mail from the consumer’s student-loan servicer to the Student Loan Debt Relief Company.

Page 368

REDACTED THIRD AMENDED COMPLAINT

131. Kim was in the office frequently and helped manage CAC’s and True Count’s day-to-day operations.

132. Kim oversaw CAC’s marketing.

136. When Kim applied for a merchant account on CAC’s behalf in or about July 2017, he agreed to maintain fraud and chargebacks below certain levels.

Page 369

REDACTED THIRD AMENDED COMPLAINT

hundreds of thousands of dollars in consumer refunds between August 2017 and March 2019.

138. After CAC filed for bankruptcy, Kim personally generated marketing leads for Prime.

139. Kaine Wen served as CAC’s owner, managing partner, and general counsel.

140. CAC’s 2016 tax returns and U.K. registration documents list Wen as CAC’s 50% owner.

Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 21 of 78 Page ID #:9149

Page 370

REDACTED THIRD AMENDED COMPLAINT

152. Tuong Nguyen served as the controller and provided accounting services for CAC.

155. True Count identified Nguyen as its secretary in some communications with banks.

158. Nguyen also acknowledged that the top chargeback reasons included fraud.

159. Nguyen incorporated TN Accounting and served as its president and sole corporate officer.

160. Nguyen has been a signatory on a bank account held by TN Accounting.

Page 371

REDACTED THIRD AMENDED COMPLAINT

Roles of the Payment Companies 163. The Individual Defendants, True Count, and Prime used TAS, Horizon, and First Priority to obtain merchant accounts and to collect fees from consumers.

166. In fact, TAS was not independent of Defendants. 167. Rather, TAS was run from within True Count and Prime by the Individual Defendants.

168. TAS’s domain credentials (username and password) were stored in an account in Albert Kim’s name.

170. Since September 12, 2019, until the date of the temporary restraining order issued by this Court, TAS collected approximately $3 million in payments from consumers.

Page 372

REDACTED THIRD AMENDED COMPLAINT

172. Horizon’s incorporation documents list Keneth Hu, an IT professional employed by the Student Loan Debt Relief Companies, as its Chief Executive Officer and President.

176. Defendant True Count asserts that Horizon holds over $700,000 for its benefit.

177. Horizon’s stated business address was leased by Defendant Prime Consulting.

182. The Individual Defendants, True Count, and Prime used First Priority to open merchant accounts to receive consumer payments to the student loan debt relief enterprise.

Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 24 of 78 Page ID #:9152

Page 373

REDACTED THIRD AMENDED COMPLAINT

185. Defendants Kim and Wen served as contacts on behalf of First Priority for a payment processor.

189. For example, since April 2018, True Count, acting as the purported “billing department” for CAC and Prime, has transferred at least $12 million to CAC and at least $25 million to Prime.

190. CAC lent hundreds of thousands of dollars to True Count without interest or any written agreement.

191. CAC stated in a lease guarantee that it had a “financial interest” in True Count.

192. CAC guaranteed at least one lease on behalf of Prime Consulting and two leases on behalf of True Count.

Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 25 of 78 Page ID #:9153

Page 374

REDACTED THIRD AMENDED COMPLAINT

193. CAC, True Count, and Prime have used overlapping addresses to carry out the debt-relief operation.

Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 26 of 78 Page ID #:9154

Page 375

REDACTED THIRD AMENDED COMPLAINT

198. Wen, Kim, and Nguyen are the signatories on bank accounts for the respective companies and thus controlled the flow of money into and out of their corporate accounts.

199. From 2017 to 2019, payments from CAC or True Count made up most or almost all the income of Hold the Door, Infinite Management, and TN Accounting.

Page 376

REDACTED THIRD AMENDED COMPLAINT

215. True Count’s Corporate Financial Statement submitted pursuant to the TRO identified funds in 1st Generation Holdings accounts as held for the benefit of True Count.

Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 28 of 78 Page ID #:9156

Page 377

REDACTED THIRD AMENDED COMPLAINT

216. Between 2017-2018, CAC paid Anan Enterprise approximately $3.6 million ostensibly for services, but Anan Enterprise never rendered those services.

219. For example, from on or about April 16, 2018, through June 5, 2018, in the name of the Kaine Wen 2017 Trust received a total of about $ in deposits, of which at least $ were from Hold the Door.

220. From on or about June 1 through June 5, 2018, Wen transferred $ from the same Kaine Wen 2017 Trust identified in the preceding paragraph to a held by Judy Dai or the Judy Dai 2017 Trust.

REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 29 of 78 Page ID #:9157

Page 378

REDACTED THIRD AMENDED COMPLAINT

225. Judy Dai has no legitimate claim to the funds that Hold the Door, True Count, and Wen transferred to her or for her benefit as described in paragraphs 217-225.

Page 379

REDACTED THIRD AMENDED COMPLAINT

233. Wen failed to disclose the First Transfer as a gift on

Page 380

REDACTED THIRD AMENDED COMPLAINT

239. Wen responded to BBB within a week, presenting himself as general counsel for CAC.

241. Before the First Transfer, Wen personally guaranteed at least two of CAC’s payment processor accounts that received millions of dollars in unlawfully obtained consumer fees.

242. As the sole corporate officer of True Count, Wen also assumed increased liability risk when True Count took over some of CAC’s operations in 2018.

244. Wen’s personal guarantee of True Count’s merchant accounts made him liable for consumer refund requests and chargebacks due to True Count’s unlawful acts and practices.

Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 32 of 78 Page ID #:9160

Page 381

REDACTED THIRD AMENDED COMPLAINT

249. The Bureau’s proof of claim was for at least $31 million in unliquidated damages and undetermined civil money penalties based on CAC’s violations of the CFPA and TSR.

250. On or about August 20, 2019, the Kaine Wen 2017 Trust transferred from

to the Judy Dai 2017 Trust UBS Account (Second Transfer).

252. Judy Dai and the Judy Dai 2017 Trust did not provide any reasonably equivalent consideration in exchange for the Second Transfer. 253. At the time of the Second Transfer, the Student Loan Debt Relief Companies had unlawfully collected tens of millions of dollars in fees from consumers in violation of the CFPA and the TSR. REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 33 of 78 Page ID #:9161

Page 382

REDACTED THIRD AMENDED COMPLAINT

257. At the time of Second Transfer, Wen was aware of the Bureau’s investigation of the SLDR Companies and had retained counsel for True Count related to the Bureau’s investigation.

Page 383

REDACTED THIRD AMENDED COMPLAINT

265. 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).

REDACTED REDACTED Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 35 of 78 Page ID #:9163

Page 384

REDACTED THIRD AMENDED COMPLAINT

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

Page 385

REDACTED THIRD AMENDED COMPLAINT

279. Section 1002(1) of the CFPA defines the term “affiliate” to mean “any person that controls, is controlled by, or is under common control with another person.” 12 U.S.C. § 5481(1).

Page 386

REDACTED THIRD AMENDED COMPLAINT

Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 38 of 78 Page ID #:9166

Page 387

REDACTED THIRD AMENDED COMPLAINT

Case 8:19-cv-01998-MWF-KS Document 314 Filed 08/05/21 Page 39 of 78 Page ID #:9167

Page 388

REDACTED THIRD AMENDED COMPLAINT

Page 389