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ID C. SHONKAActing General CounselCHARLES A. HARWOODRegional DirectorELEANOR DURHAM, MD BarNADINE S. SAMTER, WA Bar # 23881Email: edurham@ftc.gov/nsamter@ftc.govFederal Trade Commission915 2nd Ave., Suite 2896, Seattle, WA 98174(206) 220-4476 (Durham)/(206) 220-6366 (fax)MARICELA SEGURA, CA Bar #225999Email: msegura@ftc.gov10990 Wilshire Blvd., Los Angeles, CA 90024(310) 824-4343/(310) 824-4330 (fax)UNITED STATES DISTRICT COURTCENTRAL DISTRICT OF CALIFORNIA))FEDERAL TRADE COMMISSION,)))Plaintiff,)))vs.)))ALLIANCE DOCUMENT)PREPARATION, LLC, also dba EZ))Doc Preps, Grads Aid, and First)Document Aid; SBS CAPITAL)GROUP, INC., also dba Grads United )Discharge; SBB HOLDINGS, LLC, also ))dba EZ Doc Preps, Allied Doc Prep, and )Post Grad Services; FIRST STUDENT )AID, LLC; UNITED LEGAL CENTER, ))LLC, also dba Post Grad Aid, Alumni ))Aid Assistance, and United Legal)Discharge; UNITED LEGAL CENTER, )INC., also dba United Legal Discharge; ))ELITE CONSULTING SERVICE,))MEMORANDUM OF POINTS AND AUTHORITIESIN SUPPORT OF TROCiv. No.MEMORANDUM OF POINTS ANDAUTHORITIES IN SUPPORT OFPLAINTIFF’S EX PARTEAPPLICATION FOR TEMPORARYRESTRAINING ORDER, ASSETFREEZE, APPOINTMENT OF ATEMPORARY RECEIVER,IMMEDIATE ACCESS, LIMITEDEXPEDITED DISCOVERY, ANDOTHER EQUITABLE RELIEF,AND ORDER TO SHOW CAUSEWHY PRELIMINARYINJUNCTION SHOULD NOTISSUEFILED UNDER SEALFederal Trade Commission915 2nd Ave., Ste. 2896Seattle, Washington 98174(206) 220-6350
123456789101112131415LLC, fka FIRST GRAD AID, LLC, also ))dba First Grad Aid and; GRADS DOC ))PREP, LLC, also dba Academic AidCenter, Academic Protection, Academy ))Doc Prep, and Academic Discharge;))ELITE DOC PREP, LLC, also dba)Premier Student Aid; BENJAMIN)NADERI aka Benjamin Pournaderi and ))Benjamin Brooks; SHAWN GABBAIE ))aka Shawn Goodman; AVINADAVRUBENI aka Avi Rubeni; MICHAEL ))RATLIFF; RAMIAR REUVENI aka))Rami Reuveni; and FARZAN)AZINKHAN,)))Defendants, and))DIRECT CONSULTING SERVICE, ))LLC; and CAPITAL DOC PREP, INC., )))Relief Defendants.16171819202122232425262728MEMORANDUM OF POINTS AND AUTHORITIESIN SUPPORT OF TROFederal Trade Commission915 2nd Ave., Ste. 2896Seattle, Washington 98174(206) 220-6350
14Table of ContentsI. INTRODUCTION .1II. DEFENDANTS .3A. Corporate Defendants .35B.Individual Defendants .56C.Relief Defendants .77III. DEFENDANTS’ DECEPTIVE BUSINESS PRACTICES .8A. Federal Student Loan Programs .8238910B.Defendants’ False and Unsubstantiated Student Loan Debt ReliefRepresentations .912IV. A TEMPORARY RESTRAINING ORDER SHOULD ISSUE AGAINSTTHE DEFENDANTS .18A. This Court Has the Authority to Grant the Requested Relief .1813B.11141516The FTC Meets the Standard for Granting A Government Agency’s Requestfor Preliminary Injunctive Relief.191.The FTC Has Demonstrated It Is Likely to Succeed on the Merits .202.The Equities Weigh in Favor of Granting Injunctive Relief.23C.Defendants are a Common Enterprise and Jointly and Severally Liable forthe Law Violations.2418D.The Individual Defendants are Liable for Injunctive and Monetary Relief .2519E.An Asset Freeze is Necessary to Preserve the Court’s Ability to FashionMeaningful Relief .27F.A Temporary Receiver is Needed to Determine the Scope of Injury, Locateand Preserve Business Assets and Records, and Protect Consumers’ PersonalFinancial Records .3023G.Immediate Access and Limited Expedited Discovery are Necessary .3124H.The Ex Parte TRO Should Issue Without Notice .3125V. CONCLUSION.3217202122262728MEMORANDUM OF POINTS AND AUTHORITIESIN SUPPORT OF TRO - iFederal Trade Commission915 2nd Ave., Ste. 2896Seattle, Washington 98174(206) 220-6350
Table of Authorities12Cases3Commodity Futures Trading Comm’n v. British Am. Commodity Options Corp.,4560 F.2d 135 (2d Cir. 1977) .255Delaware Watch Co. v. FTC, 332 F.2d 745 (2d Cir. 1964) .266Flynt Distrib. Co., Inc., v. Harvey, 734 F.2d 1389 (9th Cir. 1984) .217FTC and State of Florida v. Consumer Assistance, LLC, 16-cv-21528 FAM (S.D.8Fla. Final Order 1/12/17) .19FTC and State of Florida v. Student Aid Center, Inc., 16-cv-21843 FAM (S.D. Fla.10Final Order entered 8/31/17) .111FTC v. Advanced Mgmt. Servs. NW, LLC, CV-10-148-LR (E.D. Wash. May 10,122010) .3313FTC v. Affordable Media, LLC, 179 F.3d 1228 (9th Cir. 1999). passim14FTC v. Amy Travel Servs., Inc., 875 F.2d 564 (7th Cir. 1989 . 28, 29, 3015FTC v. Beatrice Foods Co., 587 F.2d 1225 (D.C. Cir. 1978) .2016FTC v. Consumer Health Benefits Association, 2011 WL 3652248 (E.D. N.Y. Aug.1718, 2011) .2618FTC v. Cyberspace.com, LLC, 453 F.3d 1196 (9th Cir. 2006) . 21, 23, 2919FTC v. Devry Education Group, Inc., CV 16-00579 MWF-SS (C.D. Cal. Dec. 15,20212016) .2FTC v. Direct Benefits Group, LLC, 2013 WL 3771322 (M.D. Fla. July 18, 2013).22.2623FTC v. Figgie Int’l, Inc., 994 F.2d 595 (9th Cir. 1993).2324FTC v. Five-Star Auto Club, 97 F. Supp. 2d 502 (S.D.N.Y. 2000) . 22, 2525FTC v. Gem Merch. Corp., 87 F.3d 466 (11th Cir. 1996) .1926FTC v. Gill, 265 F.3d. 944 (9th Cir. 2001) .2127FTC v. Gill, 71 F. Supp. 2d 1030 (C.D. Cal. 1999) . 21, 2328MEMORANDUM OF POINTS AND AUTHORITIESIN SUPPORT OF TRO - iiFederal Trade Commission915 2nd Ave., Ste. 2896Seattle, Washington 98174(206) 220-6350
1FTC v. Good EBusiness, LLC, et al., CV16-1048 ODW (JPRx) (C.D. Cal. Final2Order entered 7/12/16) .13FTC v. H.N. Singer, Inc., 668 F.2d 1107 (9th Cir. 1982) . 18, 19, 304FTC v. Johnson, 96 F. Supp. 3d 1110 (D. Nev. Mar. 31, 2015) .235FTC v. Lancaster Colony Corp., 434 F. Supp. 1088 (S.D.N.Y. 1977) .206FTC v. Network Servs. Depot, Inc., 617 F.3d 1127 (9th Cir. 2010) . 28, 297FTC v. Pantron I Corp., 33 F.3d 1088 (9th Cir. 1994) . 19, 21, 228FTC v. Publ’g Clearing House, Inc., 104 F.3d 1168 (9th Cir. 1997). 28, 299FTC v. Stefanchik, 559 F.3d 924 (9th Cir. 2009). 19, 21, 2810FTC v. Strategic Student Solutions, LLC, 17-cv-80619 WPD (S.D. Fla. TRO11entered 5/15/17) .112FTC v. Think Achievement Corp., 144 F. Supp. 2d 993 (N.D. Ind. 2000) .2613FTC v. Thompson Medical Co., 104 F.T.C. 648 (1984) .2214FTC v. Thomsen-King & Co., 109 F.2d 516 (7th Cir. 1940) .2515FTC v. U.S. Oil & Gas Corp., 748 F.2d 1431 (11th Cir. 1984) . 19, 3316FTC v. Warner Commc’ns, Inc., 742 F.2d 1156 (9th Cir. 1984). 20, 2417FTC v. Wealth Educations, Inc., CVC12-02357 SJO (JEMx) (C.D. Ca. Apr. 6,182015) .3019FTC v. World Wide Factors, Ltd., 882 F.2d 344 (9th Cir. 1989) . passim20FTC v. Wyndham Worldwide Corp., 2014 WL 2812049 (D. N.J. June 23, 2014).2621Granny Goose Foods, Inc. v. Teamsters, 415 U.S. 423 (1974) .3522Heideman v. Salt Lake City, 348 F.3d 1182 (10th Cir. 2003) .2123In re Cliffdale Assocs., Inc., 103 F.T.C. 110 (1984).2124Johnson v. Couturier, 572 F.3d 1067 (9th Cir. 2009) .3025Nat’l Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679 (1978).2526Porter v. Warner Holding Co., 328 U.S. 395, 66 S. Ct. 1086 (1946) .3427Reno Air Racing Ass’n, Inc. v. McCord, 452 F.3d 1126 (9th Cir. 2006) .3528Resort CarRental Sys., Inc. v. FTC, 518 F.2d 962 (9th Cir. 1975). 22, 23MEMORANDUM OF POINTS AND AUTHORITIESIN SUPPORT OF TRO - iiiFederal Trade Commission915 2nd Ave., Ste. 2896Seattle, Washington 98174(206) 220-6350
1SEC v. First Fin. Grp. of Texas, 645 F.2d 429 (5th Cir. 1981) .332SEC v. Keller Corp., 323 F.2d 397 (7th Cir. 1963) .333SEC v. Manor Nursing Ctrs., Inc., 458 F.2d 1082 (2d Cir. 1972). 30, 324SEC v. R.J. Allen & Associates, Inc., 386 F. Supp. 866 (S.D. Fla. Nov. 29, 1974) 305Sunshine Art Studios, Inc. v. FTC, 481 F.2d 1171 (1st Cir. 1973) .266United States v. Diapulse Corp. of Am., 457 F.2d 25 (2d Cir. 1972) .247United States v. Ellis Research Laboratories, Inc., 300 F.2d 550 (7th Cir. 1962).258United States v. Laerdal Mfg. Corp., 73 F.3d 852 (9th Cir. 1995).199Statutes10Federal Trade Commission Act, 15 U.S.C. § 45 .311Federal Trade Commission Act, 15 U.S.C. § 53 .1812Rules131415161718192016 C.F.R. § 310.3(a)(2)(vii), (x) .2216 C.F.R. § 310.4(a)(5)(i) .2216 C.F.R. ¶310.2(o).2216 C.F.R. Part 310.2Fed. R. Civ. P. 26(d), 30(a)(2), 33(a), and 34(b) .31Fed. R. Civ. P. 65(b) .31L.R. 7-19.2 .312122232425262728MEMORANDUM OF POINTS AND AUTHORITIESIN SUPPORT OF TRO - ivFederal Trade Commission915 2nd Ave., Ste. 2896Seattle, Washington 98174(206) 220-6350
1I.INTRODUCTION2The Federal Trade Commission asks this Court to halt Defendants’3deceptive nationwide student loan debt relief operation. Exploiting widespread4consumer anxiety about student loan debt, Defendants deceive consumers into5paying them as much as 1000 dollars to enroll in programs Defendants claim will6provide consumers with much-needed debt relief, with the emphasis on loan7forgiveness and loan discharge. In this way, Defendants have defrauded8financially-strapped consumers out of at least 20 million since mid-2015.Student loan debt is the second largest class of consumer debt, with 42910million Americans collectively owing nearly 1.3 trillion.1 Unfortunately, this11increase in student loan debt has been accompanied by a dramatic increase in debt12relief schemes that take advantage of consumers struggling to pay their student13loan debts. Following the same model as deceptive mortgage or credit card debt14relief operations, which proliferated during the economic downturn, student loan15debt relief scams capitalize on consumers’ financial distress and involve similar16misrepresentations and illegal advance fees. The FTC has brought a series of cases17against operations like the one run by Defendants, but the problem persists.2For many consumers, their student loan debt struggles have been made1819worse because of unlawful recruiting and lending practices by certain for-profit20colleges. Several recent high profile lawsuits against these colleges have21highlighted this issue.3 Defendants specifically target alumni of for-profit colleges,222324252627281PX1 ¶ 24 at 40-41; Att. S at 105-08.FTC v. Good EBusiness, LLC, et al., CV16-1048 ODW (JPRx) (C.D. Cal. FinalOrder entered 7/12/16); FTC and State of Florida v. Consumer Assistance, LLC, 16cv-21528 FAM (S.D. Fla. Final Order 1/12/17); FTC and State of Florida v. StudentAid Center, Inc., 16-cv-21843 FAM (S.D. Fla. Final Order entered 8/31/17); FTC v.Strategic Student Solutions, LLC, 17-cv-80619 WPD (S.D. Fla. TRO entered 5/15/17).3See, e.g., FTC v. Devry Education Group, Inc., CV 16-00579 MWF-SS (C.D.Cal. Dec. 15, 2016).2MEMORANDUM OF POINTS AND AUTHORITIESIN SUPPORT OF TRO - 1Federal Trade Commission915 2nd Ave., Ste. 2896Seattle, Washington 98174(206) 220-6350
1promising to enroll them in a program that will eliminate or reduce their student2loan burden. However, the only programs available to federal student loan3borrowers to help them manage their indebtedness are offered free of charge4through the Department of Education (“ED”). Consumers can only enroll in ED5programs through their loan servicers or the ED. Moreover, the programs6Defendants describe to consumers often do not correspond to any ED program or7are not available to consumers through the ED on the terms Defendants describe.8Defendants misrepresent the programs into which they are offering to enroll9consumers to trick them into paying exorbitant fees for their service, which10involves, if actually performed, nothing more than completing application forms to11enroll consumers in ED programs that are freely accessible online.12Along with this Memorandum, the FTC submits overwhelming evidence of13Defendants’ deceptive practices. This evidence includes, among other things:14transcripts of five undercover calls by government investigators that capture15numerous misrepresentations by Defendants; declarations from 29 consumers16victimized by Defendants; a declaration from an authorized federal student loan17servicer that has received hundreds of complaints about Defendants; and a18summary of 245 consumer complaints received by the BBB or a government19agency.20Defendants’ practices violate Section 5 of the Federal Trade Commission21Act (“FTC Act”), 15 U.S.C. § 45, which prohibits deceptive trade practices, and22the Telemarketing Sales Rule (“TSR”), 16 C.F.R. Part 310, which prohibits taking23advance fees for and the deceptive marketing of student debt relief services. To24protect consumers from additional harm and preserve the Court’s ability to provide25effective final relief, the FTC seeks an ex parte temporary restraining order26(“TRO”) to immediately halt Defendants’ deceptive practices, preserve27Defendants’ assets, and appoint a temporary receiver.28MEMORANDUM OF POINTS AND AUTHORITIESIN SUPPORT OF TRO - 2Federal Trade Commission915 2nd Ave., Ste. 2896Seattle, Washington 98174(206) 220-6350
1II.DEFENDANTS2There are nine Corporate Defendants, six Individual Defendants, and two3Relief Defendants. The Corporate Defendants operate as a common enterprise.44A.5Alliance Document Preparation, LLC (“Alliance”), is a California limitedCorporate Defendants6liability company created in April 2015. 5 Alliance has done business as EZ Doc7Preps, First Document Aid, and Grads Aid. 6 Alliance has used multiple Los8Angeles addresses, including 9060 and 9056 Santa Monica Blvd., 7 and has its9phone room and offices located at 1435 S. La Cienega Blvd., Los Angeles.810First Student Aid, LLC (“FSA”), is a California limited liability company11created on August 14, 2015.9 FSA does business under its own name and has12typically done business in conjunction with EZ Doc Preps.10 FSA has used the Los13Angeles address at 9056 Santa Monica Blvd, 11 and has its telephone sales14operation at the 1435 S. La Cienega Blvd. location. 1215SBB Holdings, LLC (“SBB”), is a California limited liability company16created on November 23, 2015.13 SBB has done business as Post Grad Services,17Allied Doc Prep, and EZ Doc Preps.14 SBB has used the Los Angeles addresses1819204See, Section III.C, infra.PX1 ¶ 7.a at 34, Att. C at 56.6Id. ¶¶ 5-6 at 33-34, Atts. A-B at 54-55; PX 26 ¶ 3 at 837, Att. A at 840.7Id. ¶ 6.c at 34, Att. B at 55; ¶ 46 at 47, Att. FF at 272.8Id. ¶ 34 at 43, Att. W at 138-140.9Id. ¶ 8.a at 35, Att. D at 57.10See, e.g., PX 22 ¶ 2 at 783, ¶ 4 at 784, Att. A at 788.11Id. ¶ 8.c at 35, Att. D at 57.12Id. ¶¶ 33-34 at 43, Att. W at 138-40.13Id. ¶ 14.a at 37, Att. J at 66.14Id. ¶ 13.e at 37, Att. I at 65; ¶¶ 35-36 at 43, Att. W at 138-40; ¶ 38.a at 44, Att. Xat 144.52122232425262728MEMORANDUM OF POINTS AND AUTHORITIESIN SUPPORT OF TRO - 3Federal Trade Commission915 2nd Ave., Ste. 2896Seattle, Washington 98174(206) 220-6350
19056 Santa Monica Blvd., and P.O. Boxes 691004 and 351054.15 SBB maintains2its offices and sales operation at 1435 S. La Cienega Blvd. 16United Legal Center, LLC (“ULC”), is a Nevada limited liability34corporation created on August 21, 2015, 17 and has done business as Post Grad Aid,5Alumni Aid Assistance, and United Legal Discharge.18 United Legal Center, Inc.6(“ULC, Inc.”), a California corporation created on February 8, 2017, succeeded7ULC and lists its address as 153 S. Palm Dr., Suite 1, Beverly Hills.19 Consumer8complaints have associated the Los Angeles addresses 1999 Ave. of the Stars9#1100 and 8564 W. Pico with Alumni Aid Assistance.20 ULC and ULC, Inc. have10their offices and telephone sales room located at 1435 S. La Cienega Blvd.2111Elite Consulting Services, LLC (“ECS”), is a California limited liability12company created on November 17, 2015, as First Grad Aid, LLC.22 On January 17,132017, First Grad Aid’s name was changed to ECS, which continues to do business14under the name First Grad Aid. 23 ECS/FGA has used the address 1875 Century15Park E. Ste., 700, Los Angeles, and operates from the phone room at 1435 S. La16Cienega Blvd. 24Elite Doc Prep, LLC (“Elite”), is a California limited liability company1718created on December 15, 2015, 25 and has done business as Premier Student Aid.261920212223242526272815Id. ¶ 13.c at 37, Att. I at 64.Id. ¶¶ 32-36 at 43, Att. W at 138-40; ¶ 60.a at 52.17Id. ¶ 9.a at 35, Att. E at 59.18Id. ¶ 33 at 43, Att. W at 138-40; ¶41.e at 46, Att. AA at 254.19Id. ¶ 18 at 38, Att. N at 70.20Id. ¶ 60.b and c at 52.21Id. ¶ 34 at 43, Att. W at 138-40; ¶ 41.d at 45, Att. AA at 252; ¶ 60.a at 52.22Id. ¶ 12.a at 36, Att. H at 63.23Id. ¶ 17.a at 38, Att. M at 69.24Id. ¶ 19.c at 39, Att. O at 71; ¶¶ 33-34 at 43, Att. W at 138-40.25Id. ¶ 15.a at 37, Att. K at 67.26Id. ¶ 33 at 43, Att. W at 138-40; ¶ 60.a at 52.16MEMORANDUM OF POINTS AND AUTHORITIESIN SUPPORT OF TRO - 4Federal Trade Commission915 2nd Ave., Ste. 2896Seattle, Washington 98174(206) 220-6350
1Elite has listed its address as 125 La Peer Dr., 9060 Santa Monica Blvd, and it also2uses the phone room located at 1435 S. La Cienega Blvd. 273Grads Doc Prep, LLC (“GDP”), is a California limited liability company4created on August 31, 2016.28 GDP has done business as Academic Aid Center,5Academy Doc Prep, and Academic Discharge.29 GDP has listed its address as61467 S. Holt Ave. #5, 8564 W. Pico Blvd., and 1999 Ave. of the Stars #1100, all in7Los Angeles.30 The phone numbers associated with the dbas GDP used, however,8belong to the telephone account in the name of defendant Gabbaie. 319SBS Capital Group, Inc. (“SBS”), is a California corporation created on10March 20, 2017, and lists its address as 1575 Westwood Blvd., Suite 303, Los11Angeles. 32 This is also an address associated with the name “Grads United12Discharge” in consumer complaints.33 The telephone numbers associated with13Grads United Discharge belong to the telephone account in the name of Shawn14Gabbaie.3415B.16Benjamin Naderi (“Naderi”) is the sole owner of Alliance, Direct, SBS,Individual Defendants17and Capital, and co-owner of FSA and SBB. 35 Naderi is responsible for the18telephone account Defendants use to market their services under the names EZ1920272122232425262728Id. ¶ 15.c at 37, Att. K at 67; ¶¶ 33-34 at 43, Att. W at 138-40; ¶ 60.a at 52.Id. ¶ 16.a at 38, Att. L at 68.29Id. ¶ 33 at 43, Att. W at 138-40; ¶ 60.a at 52.30Id. ¶ 16.c at 38, Att. L at 68; ¶ 60.a at 52.31Id. ¶ 36 at 43.32Id. ¶ 20 at 39, Att. P at 72.33Id. ¶ 31.a at 42, Att. V at 133.34Id. ¶ 36 at 43.35Id. ¶ 7 at 34, Att. C at 56-57 (in name of Benjamin Pournaderi); ¶ 10 at 35, Att. F at61; ¶ 20 at 39, Att. P at 72-73; ¶ 21 at 39, Att. Q at 74-75; ¶ 8 at 35, Att. D at 58;¶ 14 at 37, Att. J at 66; ¶ 38 at 44; Att. X at 163.28MEMORANDUM OF POINTS AND AUTHORITIESIN SUPPORT OF TRO - 5Federal Trade Commission915 2nd Ave., Ste. 2896Seattle, Washington 98174(206) 220-6350
1Doc Preps, Grads Aid, First Document Aid, First Student Aid, United Legal2Center, Post Grad Aid, Alumni Aid Assistance, United Legal Discharge, Academic3Aid Center, Academy Doc Preps, Academic Discharge, First Grad Aid, Elite Doc4Prep, and Premier Student Aid. 36 Naderi registered the Internet domain names5ezdocpreps.com, gradsaid.com, firstdocumentaid.com, firststudentaid.com, and6capitaldocprep.com, and he is the signatory on merchant and depository bank7accounts in the names of Alliance, EZ Doc Preps, Capital, and Direct.37Shawn Gabbaie (“Gabbaie”) co-owns SBB and FSA with Naderi. 3889Gabbaie is responsible for the telephone account Defendants use to market their10services under the names Allied Doc Prep, Post Grad Services, and Grads United11Discharge.39 Gabbaie registered the Internet domain names allieddocprep.com,12and postgradservices.com, 40 and is the signatory on merchant and depository bank13accounts in the name of SBB Holdings, including a merchant account in the name14of EZ Doc Preps.41Avinadav Rubeni (“Rubeni”) owns ULC and ULC, Inc. 42 Rubeni is also1516responsible, along with Naderi, for the telephone account Defendants used to17market their services and he is the signatory on merchant and bank accounts in the18name of United Legal Center. 43192021362237232425262728Id. ¶ 33 at 43, Att. W at 138-40.Id. ¶ 22.d at 40, Att. R at 84-85; ¶ 39 at 45, Att. Y at 183; ¶ 42 at 46, Att. BB at258; ¶ 44 at 47, Att. DD at 266-68; ¶ 45 at 47, Att. EE at 269-70.38Id. ¶ 8 at 35; ¶ 14 at 37, Att. J at 66; ¶ 38 at 44; Att. X at 163.39Id. ¶¶ 35-36 at 43, Att. W at 138-40.40Id. ¶ 22.c at 40, Att. R at 80-83 (registered as Shawn Goodman).41Id. ¶ 38 at 44, Att. X at 144; ¶ 43 at 46, Att. CC at 263-64.42Id. ¶ 9.b at 35, Att. E at 59-60; ¶ 18.b at 38, Att. N at 70.43Id. ¶¶ 32-34 at 43, Att. W at 138-40; ¶ 41 at 45, Att. AA245-56; ¶¶ 55-59 at 5152, Atts. OO-SS at 344-52.MEMORANDUM OF POINTS AND AUTHORITIESIN SUPPORT OF TRO - 6Federal Trade Commission915 2nd Ave., Ste. 2896Seattle, Washington 98174(206) 220-6350
Ramiar Reuveni (“Reuveni”) owns GDP. 44 Reuveni pays for the domain12name registrations for academicaidcenter.com, academicprotection.com,3academicdischarge.com, alumniaidassociation.org, unitedlegalcenter.com,4unitedlegaldischarge.com, and gradsuniteddischarge.com, and is a signatory to5bank accounts in the name of GDP. 45Farzan Azinkhan (“Azinkhan”) owns Elite.46 Azinkhan is the domain67registrant for elitedocprep.com and premierstudentaid.com. 47Michael Ratliff (“Ratliff”) owns ECS formerly known as FGA. 48 Ratliff is8910the domain registrant for eliteconsultingservice.com and firstgradaid.com and is asignatory to the bank account for ECS. 4911C.12Direct Consulting Services, LLC (“Direct”), is a California limited13liability company created on September 29, 2015, and uses the address 9056 Santa14Monica Blvd., in Los Angeles. 50 Capital Doc Prep, Inc. (“CDP”), is a California15corporation created on March 20, 2017, and lists it address as 369 S. Doheny Rd.,16#1124, Beverly Hills. 51 Naderi owns both companies. 52 Bank accounts for both17companies reflect payments received from one or more of the CorporateRelief Defendants18192021442245232425262728Id. ¶ 16 at 38, Att. L at 68.Id. ¶ 23 at 40; ¶ 54 at 50-51, Att. NN at 342-43.46Id. ¶ 15 at 37, Att. K at 67.47Id. ¶ 22.b at 40, Att. R at 76-79. Plaintiff was not able to obtain banking recordsfor Elite, but Elite did maintain a bank account. PX37 ¶¶ 10, 15, 17 at 1379-80.48PX1 ¶ 12 at 36, Att. H at 63; ¶ 17 at 38, Att. M at 69.49Id. ¶ 22.a at 39, Att. R at 93-94; ¶ 53 at 50, Att. MM at 323-37.50Id. ¶ 10 at 35, Att. F at 61.51Id. ¶ 21 at 39, Att. Q at 74-75.52Id. ¶ 10 at 35, Att. F at 61; ¶ 21 at 39, Att. Q at 74-75.MEMORANDUM OF POINTS AND AUTHORITIESIN SUPPORT OF TRO - 7Federal Trade Commission915 2nd Ave., Ste. 2896Seattle, Washington 98174(206) 220-6350
1Defendants that are traceable to Defendants’ deceptive practices 53 and to which the2Relief Defendants have no legitimate claim.3III.DEFENDANTS’ DECEPTIVE BUSINESS PRACTICES4A.5To address the high level of distressed student loan debt, the ED administers6a limited number of student loan forgiveness and discharge programs. 54 All of the7programs have strict eligibility requirements that limit their availability to the8majority of borrowers. For example, the Public Service Loan Forgiveness9(“PSLF”) program applies only to employees of governmental units or non-profitFederal Student Loan Programs10organizations and provides loan forgiveness after 10 years of timely monthly11payments. 55 Another program, the Borrower Defense to Repayment (“BDR”)12program, may provide loan discharge to some students who attended colleges that13violated the law with respect to their student loan programs. The ED, however, has14not yet adopted regulations establishing criteria for processing or evaluating BDR15applications.56 As a result, it is very difficult even for experts in the area to know16who qualifies for BDR. 57 The ED also offers income-driven repayment (“IDR”)17programs, which are designed to provide affordable payments for low-income18borrowers.58 Under the IDR programs, if a borrower’s income remains low19throughout the loan term, it is possible that the unpaid balance of the loan will be20forgiven after 20 or 25 years, but the forgiven amount will likely be imputed as212223242526272853PX37 ¶¶ 12, 14, 17 at 1380.PX31 ¶¶ 4-7 at 916-18. The ED loan discharge programs offer completeelimination of indebtedness if the borrower meets certain criteria. The ED loanforgiveness programs eliminate a portion of the debt after the borrower makespayments for some time period.55Id. ¶ 7 at 918.56Id. ¶¶ 4-5 at 916-17.57Id. ¶ 4 at 916.58Id. ¶ 8 at 918-19.54MEMORANDUM OF POINTS AND AUTHORITIESIN SUPPORT OF TRO - 8Federal Trade Commission915 2nd Ave., Ste. 2896Seattle, Washington 98174(206) 220-6350
1income to the borrower for tax purposes. 59 For most, however, IDR is not a2forgiveness program and no one has yet received loan forgiveness under any of the3IDR programs. 60 Federal student loan borrowers can apply for any forgiveness or4repayment plan available to them through their student loan servicers at no cost.615Application to these programs does not require the assistance of a third-party6company to enroll or payment of application fees. 627B.8Defendants’ False and Unsubstantiated Student Loan Debt ReliefRepresentationsDefendants make false and deceptive claims to consumers that: 1) they are910part of, affiliated with, or work directly with the government, government loan11programs, the ED, or consumers’ loan servicers; 2) consumers who purchase12Defendants’ debt relief services generally will have their monthly payments13reduced or their loan balances forgiven in whole or in part; and 3) consumers are14qualified for, or are approved to receive, loan forgiveness or other programs that15will permanently lower or eliminate their loan payments or balances. Defendants16market their services via email, telephone, and social media platforms such as17Facebook, targeting former students of for-profit colleges sued by class action18litigants or government agencies, such as University of Phoenix, DeVry19University, ITT Tech, and the Art Institutes. 6320A typical Facebook advertisement states:21Art Institutes Loan Forgiveness.22Call (844) 478-8487 to see if you qualify2324592560262728Id.Id.61Id. ¶ 3 at 915-16.62Id.63All but one of the consumers whose declarations are attached as PX 2 throughPX30 to
deceptive nationwide student loan debt relief operation. Exploiting widespread consumer anxiety about student loan debt, Defendants deceive consumers into paying them as much as 1000 dollars to enroll in programs Defendants claim will provide consumers with much-needed debt relief, with the emphasis on loan forgiveness and loan discharge.
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