United States District Court, D. Nevada
AMENDED ORDER 
M. Navarro Chief Judge United States District Judge.
before the Court is a Motion for Summary Judgment, (ECF No.
900), filed by Defendants AMG Capital Management, LLC
(“AMG Capital”); Level 5 Motorsports, LLC
(“Level 5”); Black Creek Capital Corporation
(“Black Creek”); Broadmoor Capital Partners
(“Broadmoor”); and Scott A. Tucker (“Scott
Tucker”) (collectively “Tucker
Defendants”).Plaintiff Federal Trade Commission
(“FTC”) filed a Response, (ECF No. 938), and the
Tucker Defendants filed a Reply, (ECF No. 949).
pending before the Court is a Motion for Summary Judgment,
(ECF No. 907), filed by the FTC. Defendants Park 269, LLC
(“Park 269”) and Kim C. Tucker (“Kim
Tucker”) (collectively “Relief Defendants”)
filed a Response, (ECF No. 935), as did the Tucker
Defendants, (ECF No. 941). The FTC filed a Reply, (ECF No.
pending before the Court is a Motion for Summary Judgment,
(ECF No. 913), filed by the Tucker Defendants. The FTC filed
a Response, (ECF No. 940), and the Tucker Defendants filed a
Reply, (ECF No. 950).
the Court GRANTS FTC's Motion, the Court DENIES as moot
the motions filed by the Tucker Defendants and the Relief
action was brought by the FTC, asserting that the
“high-fee, short-term payday loans” offered by
former Defendants AMG Services, Inc. (“AMG”),
SFS, Inc. (“SFS”), Red Cedar Services, Inc.
(“Red Cedar”), and MNE Services, Inc.
(“MNE”) (collectively “Lending
Defendants”) violated section 5 of the Federal Trade
Commission Act of 1914, 15 § U.S.C. 45(a)(1), the Truth
in Lending Act of 1968, 15 U.S.C. § 1601(a), and
Regulation Z, 12 C.F.R. § 1026(a). (Am. Compl.
15:1-20:6, ECF No. 386).
has filed its Motion for Summary Judgment against the only
remaining parties that did not settle the claims against
them. The remaining defendants are AMG Capital, Level 5,
Black Creek, and Broadmoor (collectively “Corporate
Lending Defendants”) as well as Scott Tucker. The FTC
seeks injunctive relief against Scott Tucker and equitable
monetary relief from the Corporate Lending Defendants and
Scott Tucker. The FTC also seeks disgorgement from the Relief
Tucker controlled, founded, or was president of a host of
short-term payday loan marketing and servicing companies,
including, inter alia, National Money Service, Inc.
(“NMS”), CLK Management LLC (“CLK”),
and Universal Management Services, Inc. (“UMS”)
(collectively “Scott Tucker Loan Servicing
Companies”). (Exs. 1-2, 4-5, 14 to Singhvi Decl., ECF
Nos. 908-1-2, 4-5, 14). Between 2003 and 2008, the Scott
Tucker Loan Servicing Companies entered into agreements with
the Santee Sioux Tribe of Nebraska, the Miami Tribe of
Oklahoma, and the Modoc Tribe of Oklahoma to allow the tribes
to become “authorized lenders” for CLK.
(See Exs. 14-15, 18 to Singhvi Decl., ECF Nos.
908-14-15, 18). The tribes subsequently formed SFS, Red
Cedar, and MNE. (Exs. 17, 19-20 to Singhvi Decl., ECF Nos.
908-17, 19-20). In 2006, CLK transferred its trademarks for
500 FastCash, OneClickCash, Ameriloan, USFastCash, and
UnitedCashLoans (“Loan Portfolios”) to the new
tribal entities. (Ex. 6 to Singhvi Decl., ECF No. 908-6).
Following these transfers, SFS, Red Cedar, and MNE became the
lenders for the Loan Portfolios. (Dempsey Dep. at 15-19, ECF
No. 908-7). In 2008, CLK was acquired by AMG Services, Inc.,
a tribal corporation created by the Miami Tribe. (Ex. 46 to
Singvhi Decl., ECF No. 908-46).
December 27, 2012, the Court signed an Order, (ECF No. 296),
entering the parties' joint stipulation for preliminary
injunction and bifurcation. The Bifurcation Order divided the
litigation into two phases: Phase I, a liability phase, and
Phase II, a relief phase. (Id. 9:1- 10:23). During
Phase I of the proceedings, the Court would adjudicate the
merits of the FTC's claims for violations of the FTC Act,
TILA, and EFTA. (Id. 9:1-24). During Phase II of the
proceedings, the Court would adjudicate the remaining issues,
including the individual liability of the various Defendants.
(Id. 10:119). On January 28, 2014, Magistrate Judge
Cam Ferenbach entered a Report and Recommendation
(“R&R”), (ECF No. 539), granting summary
judgment in favor of the FTC on two of its four causes of
action. In his R&R, Magistrate Judge Ferenbach reviewed
the websites through which the Lending Defendants sold their
loans as well as the Loan Note Disclosures contained therein.
(See, e.g., R&R 2:12-16).
28, 2014, this Court entered an Order, (ECF No. 584),
adopting the R&R. Specifically, the Court agreed that
“the net impression of the Loan Note Disclosure is
likely to mislead borrowers acting reasonably under the
circumstances because the large prominent print in the TILA
Box implies that borrowers will incur one finance charge
while the fine print creates a process under which multiple
finance charges will be automatically incurred unless
borrowers take affirmative action.” (Order 15:8-12, ECF
No. 584). Subsequently, the Lending Defendants stipulated to
settle all of the FTC's claims against them resulting in
monetary judgments in the aggregate amount of $25, 496, 677.
(See generally Orders, ECF Nos. 727, 760- 762,
instant Motion, the FTC seeks summary judgment on the
Defendants' remaining affirmative defenses as well as the
issues of individual liability, common enterprise liability,
liability of the Relief Defendants, and remedies. (Pl.s'
MSJ 14:22-23, ECF No. 907). The Court addresses each of these
issues in turn, after first addressing several of
Defendants' evidentiary objections.
Federal Rules of Civil Procedure provide for summary
adjudication when the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed.R.Civ.P. 56(a).
Material facts are those that may affect the outcome of the
case. See Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986). A dispute as to a material fact is genuine
if there is sufficient evidence for a reasonable jury to
return a verdict for the nonmoving party. See Id.
“Summary judgment is inappropriate if reasonable
jurors, drawing all inferences in favor of the nonmoving
party, could return a verdict in the nonmoving party's
favor.” Diaz v. Eagle Produce Ltd. P'ship,
521 F.3d 1201, 1207 (9th Cir. 2008) (citing United States
v. Shumway, 199 F.3d 1093, 1103-04 (9th Cir. 1999)). A
principal purpose of summary judgment is “to isolate
and dispose of factually unsupported claims.”
Celotex Corp. v. Catrett, 477 U.S. 317, 323-24
determining summary judgment, a court applies a
burden-shifting analysis. “When the party moving for
summary judgment would bear the burden of proof at trial, it
must come forward with evidence which would entitle it to a
directed verdict if the evidence went uncontroverted at
trial. In such a case, the moving party has the initial
burden of establishing the absence of a genuine issue of fact
on each issue material to its case.” C.A.R. Transp.
Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480
(9th Cir. 2000) (citations omitted). In contrast, when the
nonmoving party bears the burden of proving the claim or
defense, the moving party can meet its burden in two ways:
(1) by presenting evidence to negate an essential element of
the nonmoving party's case; or (2) by demonstrating that
the nonmoving party failed to make a showing sufficient to
establish an element essential to that party's case on
which that party will bear the burden of proof at trial.
See Celotex Corp., 477 U.S. at 323- 24. If the
moving party fails to meet its initial burden, summary
judgment must be denied and the court need not consider the
nonmoving party's evidence. See Adickes v. S.H. Kress
& Co., 398 U.S. 144, 159-60 (1970).
moving party satisfies its initial burden, the burden then
shifts to the opposing party to establish that a genuine
issue of material fact exists. See Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986). To establish the existence of a factual dispute, the
opposing party need not establish a material issue of fact
conclusively in its favor. It is sufficient that “the
claimed factual dispute be shown to require a jury or judge
to resolve the parties' differing versions of the truth
at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec.
Contractors Ass'n, 809 F.2d 626, 631 (9th Cir.
1987). In other words, the nonmoving party cannot avoid
summary judgment by relying solely on conclusory allegations
that are unsupported by factual data. See Taylor v.
List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the
opposition must go beyond the assertions and allegations of
the pleadings and set forth specific facts by producing
competent evidence that shows a genuine issue for trial.
See Celotex Corp., 477 U.S. at 324.
summary judgment, a court's function is not to weigh the
evidence and determine the truth but to determine whether
there is a genuine issue for trial. See Anderson,
477 U.S. at 249. The evidence of the nonmovant is “to
be believed, and all justifiable inferences are to be drawn
in his favor.” Id. at 255. But if the evidence
of the nonmoving party is merely colorable or is not
significantly probative, summary judgment may be granted.
See Id. at 249-50.
Tucker Defendants object to nearly all of the evidence relied
upon by the FTC in its Motion for Summary Judgment.
(See Obj., ECF No. 943). While the Court addresses
some of those objections that pertain to the Court's
Order below, the Tucker Defendants' remaining objections
do not merit further discussion.
Squar Milner Report
Squar Milner Report was prepared at AMG's request
“to assist management in calculating any outstanding
balances to, from, and among AMG, CLK Management, the various
portfolios . . . on the one hand, and Scott Tucker and
related entities, on the other hand.” (Squar Milner
Report at 8, ECF No. 908-260). It reflects statements and
interviews with unknown individuals, (see Id. at
11), and the FTC seeks to offer evidence from the Squar
Milner Report to prove the truth of the matter asserted:
“the presence of thousands of transactions
solely for Scott Tucker's benefit, that AMG's books
and records were not maintained in an orderly fashion, and
that the Defendants' complete lack of accounting controls
were susceptible to manipulation, ” (FTC's MSJ
47:24-27, ECF No. 907).
argues this Report falls within the exception under Federal
Rule of Evidence 803(6) for a business record. (See
Resp. to Obj. 13:3-14:9, ECF No. 953). However, the Court
finds that this Report does not meet the requirements in
order to constitute a business record pursuant to this Rule.
The case relied upon by Defendants, Paddack v. Dave
Christensen, Inc., 745 F.2d 1254 (9th Cir. 1984), is
instructive. In Paddack, the subject documents were
special audit reports prepared in anticipation of litigation,
not restated quarterly and annual reports or corresponding
auditor's work product prepared in the ordinary course of
business. Paddack, 745 F.2d at 1257-58. Similarly,
the Squar Milner Report is not simply a regular audit report.
Instead, it was “a special investigation” in
which “a financial audit report under GAAP” was
not issued and, moreover, was likely made in anticipation of
and preparation for this litigation. (Obj., 4:9-15, ECF No.
943). Therefore, the Court finds that the Squar Milner Report
was not made in the normal, regular course of business, as
required by Federal Rule of Evidence 803(6), and is therefore
Tucker Defendants argue that the emails relied upon by the
FTC “must be excluded as unauthenticated and
inadmissible hearsay.” (Obj. 11:25-26). However, all
but one of the emails are presumptively authentic because
they were produced by a party opponent. Haack v. City of
Carson City, No. 3:11-CV-00353-RAM, 2012 WL 3638767, at
*7 (D. Nev. Aug. 22, 2012) (noting that exhibits produced by
a party opponent are “deemed authentic”). In
addition, all of the emails are authentic per Federal Rule of
Evidence 901(b)(4) because of their distinctive
characteristics. See, e.g., Brown v. Wireless
Networks, Inc., No. C 07-4301 EDL, 2008 WL 4937827, at
*4 (N.D. Cal. Nov. 17, 2008).
the hearsay issue, many of the emails are admissible
non-hearsay as they were sent by Scott Tucker or an employee
of the Corporate Lending Defendants. See Fed. R.
Evid. 801(d)(2)(D). Further, other emails are admissible
pursuant to Federal Rule of Evidence 801(c)(2) because they
are not offered for the truth of the matter asserted.
See Fed. R. Evid. 801(c)(2). The FTC relies on one
such email, for example, to show Scott Tucker was
“aware that the loan repayment model was
problematic and confusing to consumers, ” (Resp. to
Obj. 18:13-15) (emphasis added), not that “90% of the
issues [the Tucker Defendants] have with customers stems from
them not understanding [the Tucker Defendants'] process
of renewal and paydowns, ” (Ex. 75 to Singhvi Decl.,
ECF No. 908-75). The Court therefore overrules the Tucker
Defendants' objections regarding emails.
and Other Bank Records
Tucker Defendants seek to exclude certain checks and bank
records as unauthenticated and inadmissible hearsay.
(See Tucker Defs.' Resp. to FTC's MSJ 16:26-
18:11, ECF No. 941). With regard to the authentication
objection, “[a]s a negotiable instrument, a check is a
species of commercial paper, and therefore
self-authenticating.” United States v. Pang,
362 F.3d 1187, 1192 (9th Cir. 2004); see also Fed.
R. Evid. 902(9). As to the bank records, the Tucker
Defendants have not set forth any reasons for questioning the
authenticity of the bank records submitted by the FTC.
Federal Rule of Evidence 901(a) provides that “the
requirement of authentication or identification as a
condition precedent to admissibility is satisfied by evidence
sufficient to support a finding that the matter in question
is what its proponent claims.” Fed.R.Evid. 901(a). The
appearance of the bank records and content persuade the Court
that the documents are what they purport to be. See
Fed. R. Evid. 902(9) (“Commercial paper, signatures
thereon, and documents relating thereto to the extent
provided by general commercial law” are
self-authenticating); Fed.R.Evid. 901(b)(4) (documents can be
authenticated by their “appearance, contents,
substance, internal patterns, or other distinctive
characteristics, taken in conjunction with the
neither the checks nor the bank records constitute hearsay.
The bank records fall under the business records exception to
the hearsay rule. See Fed. R. Evid. 803(6);
(see, e.g., Custodian of Bus. R. Aff., Ex. 257 to
Singhvi Decl., ECF No. 908-257) (laying foundation testimony
establishing that bank statements are bank's business
records). Further, to the extent the bank statements and
checks are signed by Scott Tucker, they are non-hearsay
pursuant to Federal Rule of Evidence 801(d)(2)(A).
Accordingly, the Court overrules the Tucker Defendants'
objections regarding the checks and bank records relied upon
by the FTC.
remaining affirmative defenses argued by Defendants' are
without merit. See F.T.C. v. Am. Microtel, Inc., No.
CV-S-92-178-LDG(RJJ), 1992 WL 184252, at *1 (D. Nev. June 10,
1992) (“[T]he law is well established that principles
of laches and equitable estoppel are not available as
defenses in a suit brought by the government to enforce a
public right or a public interest.”) (citing United
States v. Ruby Co., 588 F.2d 697, 705 n. 10 (9th Cir.));
F.T.C. v. Ivy Capital, Inc., No. 2:11-CV-283 JCM
GWF, 2011 WL 2470584, at *2 (D. Nev. June 20, 2011)
(“Section 13(b) of the Federal Trade Commission Act
specifies no statute of limitations period.”);
F.T.C. v. Commerce Planet, Inc., 815 F.3d 593, 601
(9th Cir. 2016) (holding that “joint and several
liability is permissible” in actions brought under
§ 13(b) and affirming monetary award); F.T.C. v.
Evans Prod. Co., 775 F.2d 1084, 1086 (9th Cir. 1985)
(rejecting defendant's attempt to “limit §
13(b) to cases involving ‘routine fraud'” and
agreeing that “a ‘proper case' for which
§ 13(b) injunctive relief may be sought includes . . .
any case involving a law enforced by the FTC”).
the Court rejects the Tucker Defendants' argument that
the FTC abused its discretion under the FTC Act by proceeding
through adjudication rather than rulemaking. (See
Tucker Defs.' Resp. to FTC's MSJ 96:15-16).
“[T]he choice made between proceeding by general rule
or by individual, ad hoc litigation is one that lies
primarily in the informed discretion of the administrative
agency.” S.E.C. v. Chenery Corp., 332 U.S.
194, 203 (1947). The Ninth Circuit has clarified that where
“adjudication change[d] existing law, and ha[d]
widespread application, ” the FTC “exceeded its
authority by proceeding to create new law by adjudication
rather than by rulemaking.” Ford Motor Co. v.
F.T.C., 673 F.2d 1008, 1010 (9th Cir. 1981). Subsequent
cases have clarified that an agency may announce new
principals during adjudication so long as “its action
[does not] 1) constitute an abuse of discretion or 2)
circumvent the [Administrative Procedure Act's]
requirements.” Union Flights, Inc. v. FAA, 957
F.2d 685, 688 (9th Cir. 1992).
adjudication by the FTC is proper. First, this litigation
will not result in any changes to existing law. It merely
applies the established principles of the FTC Act to the
Tucker Defendants' particular unfair business practices.
Moreover, this action is against a single set of defendants
and involves one discrete fraudulent practice. The
Court's instant Order does not have “widespread
application.” Further, the FTC has not abused its
discretion nor attempted to circumvent the APA. The FTC is
not using this “adjudication to amend a recently
amended rule, or to bypass a pending rulemaking
proceeding.” Union Flights, 957 F.2d at 688.
Similarly, the Tucker Defendants cannot claim that they
relied on a former FTC policy, or any other recognized
situation constituting an abuse of discretion. See
Id. Without these showings, the Tucker Defendants have
not demonstrated an abuse of discretion or an attempt to
circumvent the APA.
individual may be held liable for corporate violations of the
FTC Act if the individual: “(1) participated directly
in, or had the authority to control, the unlawful acts or
practices at issue; and (2) had actual knowledge of the
misrepresentations involved, was recklessly indifferent to
the truth or falsity of the misrepresentations, or was aware
of a high probability of fraud and intentionally avoided
learning the truth.” Commerce Planet, 815 F.3d
at 600; see also F.T.C. v. Stefanchik, 559 F.3d 924,
931 (9th Cir. 2009)
FTC proves direct participation in or authority to control
the wrongful act, then the individual may be permanently
enjoined from engaging in acts that violate the FTC Act.
F.T.C. v. Garvey, 383 F.3d 891, 900 (9th Cir. 2004).
To hold an individual liable for monetary redress, the FTC
must additionally establish knowledge. FTC v. Affordable
Media, 179 F.3d 1228, 1234 (9th Cir. 1999); FTC v.
Publ'g Clearing House, Inc., 104 F.3d 1168, 1171
(9th Cir. 1997). Proof that the defendant intended to deceive
consumers or acted in bad faith is unnecessary to establish a
§ 5(a) violation. FTC v. World Travel Vacation
Brokers, Inc., 861 F.2d 1020, 1029 (7th Cir. 1988)
(“An advertiser's good faith does not immunize it
from responsibility for its misrepresentations.”);
Feil v. F.T.C., 285 F.2d 879, 896 (9th Cir. 1960)
(“Whether good or bad faith exists is not material, if
the Commission finds that there is likelihood to
and Authority to Control
to control may be evidenced by “active involvement in
business affairs and making of corporate policy, including
assuming the duties of a corporate officer.” F.T.C.
v. Amy Travel Serv., Inc., 875 F.2d 564, 573 (7th Cir.
1989). An individual's position as a corporate officer or
authority to sign documents on behalf of the corporate
defendant is sufficient to show requisite control. See
Publ'g Clearing House, 104 F.3d at 1170 (holding
that individual's “assumption of the role of
president of [the corporation] and her authority to sign
documents on behalf of the corporation demonstrate that she
had the requisite control over the corporation” for
purposes of finding individual liability under § 5(a)).
has satisfied the first prong for individual liability. The
evidence abundantly establishes that Scott Tucker
participated in and had authority to control the Lending
Defendants. As president of NMS and CLK, Scott Tucker
directed the creation and organization of the Lending
Defendants, which operated merely as a veneer for Scott
Tucker's lending entities. Specifically, Scott Tucker
presented the Santee Sioux Tribe of Nebraska, the Miami Tribe
of Oklahoma, and the Modoc Tribe of Oklahoma with business
proposals that would allow the tribes to become
“authorized lenders” for NMS. (Exs. 2, 12-13 to
Singhvi Decl., ECF Nos. 908-2, 12-13). These proposals
required the Scott Tucker Loan Servicing Companies to provide
“the capital to fund all loan transactions” and
“the personnel, equipment and knowledge to make the
business an immediate success, ” while the tribes were
not required to invest any capital in the business. (See,
e.g., Ex. 2 to Singhvi Decl. at 3, 7, ECF No. 908-2)
(“The Tribe and the proposed Tribal entity will not be
required to provide any investment, cash or cash equivalent
and will not be responsible for any losses.”). Instead,
the tribes were merely required to designate one employee and
to do “all things reasonably necessary to carry on the
Pay Day Loan business as a lender with the full support of [a
Scott Tucker Loan Servicing Company].” (Id.).
In exchange, the tribes would receive a guaranteed monthly
fee. (Id.). Scott Tucker arranged for the drafting
of the tribal lending ordinances that the tribes ultimately
enacted without any significant changes. (Exs. 18, 27-29 to
Singhvi Decl., ECF Nos. 908-18, 27-29).
Tucker structured the Lending Defendants to be completely
dependent on the Scott Tucker Loan Servicing Companies. The
service agreements signed by Scott Tucker between UMS and the
tribes required UMS to “furnish . . . all support
staff, equipment and business arrangements required to
conduct an efficient payday loan business.” (Miami
Tribe Serv. Agreement ¶ 3, ECF No. 908-14). Further, UMS
agreed to provide all capital for the payday loan operation
“to be administered wholly and only by UMS.”
(Id. ¶ 2); (see also SFS Serv.
Agreement ¶ 1, ECF No. 908-15). Moreover, the Lending
Defendants' 30(b)(6) representative, Natalie Dempsey,
testified that “all the consumer loans ever offered by
[the Lending Defendants have] been serviced by AMG, CLK or NM
Services.” (Dempsey Dep. at 21, ECF No. 908-7).
regard to the Lending Defendants' lending activities,
SFS's Rule 30(b)(6) representative, Lee Ickes
(“Ickes”), testified that AMG drafted SFS's
loan applications. (Ickes Dep. at 9, ECF No. 908-13).
Similarly, MNES stated during discovery that AMG performs
“the drafting, modification and review of [MNES's]
loan notes, disclosures and websites.” (MNE Resp. to
FTC Interrog. No. 9, ECF No. 908-144); (see also Red
Cedar Resp. to Interrog. No. 9, ECF No. 908-146) (stating
same). Moreover, Dempsey testified that only AMG staff were
involved in the drafting and modification of loan disclosures
and websites. (Dempsey Dep. at 90). Ickes testified that AMG
set the payment schedule for consumer loans for SFS and
underwrites consumers' loan applications. (Ickes Dep. at
14, 16). Moreover, Ickes testified that SFS does not have
access to the criteria for loan approval, and SFS has never
rejected a loan that AMG determined met the criteria for
approval. (Id. at 15-16).
Tucker's role did not materially change following the
merger of CLK into AMG in 2008. Indeed, AMG Meeting Minutes
describe CLK's merger with AMG as “just a name
change.” (Ex. 48 to Singhvi Decl., ECF No. 908-48). In
addition, an email to CLK employees announcing the AMG merger
clarifies that “[y]our job description,
responsibilities and pay will not change at all . . . just
the name of the company you work for.” (Ex. 49 to
Singhvi Decl., ECF No. 908-49). Even after the merger, Scott
Tucker retained the authority to implement policies as
AMG's President. (See Grote Dep. at 44, Ex.
908-67); (Ex. 54 to Singhvi Decl. at 7, ECF No. 908-54)
(referencing Scott Tucker as AMG President). Although Scott
Tucker attempted to obfuscate his official title with AMG
over time, Defendants admit that, at the very least, Scott
Tucker was an executive with operational control of AMG. (AMG
Am. Resp. to Expedited Interrog. No. 3, ECF No. 908-58).
with this authority, Scott Tucker continued to participate in
control of the Lending Defendants. Scott Tucker had authority
to control the Lending Defendants' accounts used to fund
consumer loans. (See Ickes Dep. at 21) (“AMG
Services oversees or manages [the day-to-day operational
funds] for the Santee Sioux Nation, SFS, Inc.”).
Specifically, the Miami Tribe passed a corporate resolution
granting Scott Tucker power of attorney over its accounts.
(Ex. 80 to Singhvi Decl., ECF No. 908-80). Scott Tucker is
also an authorized signatory on the SFS portfolio account and
seven other accounts belonging to the Lending Defendants.
(Ickes Dep. at 29); (AMG Am. Resp. to Interrog. No. 1, ECF
No. 908-81). The FTC has produced a voluminous record of
checks signed by Scott Tucker from the Lending
Defendants' accounts to the Corporate Lending Defendants
wholly owned by Scott Tucker. (See, e.g., Ex. 83 to
Singhvi Decl., ECF No. 908-83).
Scott Tucker reviewed and approved loan disclosures and
websites for the Lending Defendants. (See, e.g., AMG
Am. Resp. to Expedited Interrog. No. 9, ECF No. 908-62);
(Dempsey Dep. at 90). Indeed, the FTC has produced numerous
examples of Scott Tucker involved in such activities.
(See, e.g., Ex. 63 to Singhvi Decl., ECF No. 908-63)
(email in which Scott Tucker opines on whether or not certain
language should be included in lending application). Scott
Tucker also had the power to hire and fire and exercised that
authority with respect to the expansion of loan processing
employees in the Miami office. (Williams Decl. at 7, ECF No.
knowledge requirement is satisfied by establishing that
“the individual had actual knowledge of the material
misrepresentation, was recklessly indifferent to the truth or
falsity of a misrepresentation, or had an awareness of a high
probability of fraud along with an intentional avoidance of
truth.” Garvey, 383 F.3d at 900 (citing
Publ'g Clearing House, 104 F.3d at 1171).
“The degree of participation in business affairs is
probative of knowledge.” FTC v. Am. Standard Credit
Sys., 874 F.Supp. 1080, 1089 (C.D. Cal. 1994); see
also Affordable Media, 179 F.3d at 1235 (“The
extent of an individual's involvement in a fraudulent
scheme alone is sufficient to establish the requisite
knowledge for personal restitutionary liability.”).
evidence demonstrates that, at the very least, Scott Tucker
was recklessly indifferent to the misleading representations
of the Lending Defendants. As discussed above, Scott Tucker
reviewed the loan disclosures and websites. Dempsey testified
that Tucker “conducted reviews” of loan documents
and websites. (Dempsey Dep. at 90). In many instances, Scott
Tucker proposed specific language for loan disclosures.
(See, e.g., Ex. 65 to Singhvi Decl., ECF No.
908-65). Further, Scott Tucker stated in discovery exchanges
that he “comments on and recommends proposed changes to
webpages.” (Scott Tucker Resp. to Interrog. No. 2, ECF
regard to consumer complaints, Scott Tucker had ample notice
of internal AMG complaint tracking reports as well as
complaints received by the tribes and third party services.
Dempsey testified that Scott Tucker had “seen [AMG]
reports on customer complaints.” (Dempsey Dep. at 90).
Red Cedar Services' president, Troy LittleAxe, stated
that he “would forward the written [consumer]
complaints to AMG Services, Inc., specifically Scott
Tucker.” (LittleAxe Resp. to Pl.'s Interrog. No. 4,
ECF No. 908-69). Moreover, “[e]verytime [LittleAxe] had
contact with an individual consumer or a state agency, [he]
would notify . . . AMG Services, Inc., specifically Scott
Tucker.” (Id.). In emails between Scott Tucker
and Blaine Tucker discussing the escalating consumer
complaints, Scott Tucker suggested development of a
compliance department. (See Ex. 72 to Singhvi Decl.,
ECF No. 908-72).
Scott Tucker was specifically aware that customers often did
not understand Defendants' process of renewals and
paydowns. Scott Tucker received an email from Tim Buckley, an
AMG manager, proposing a new repayment model that would
address the fact that “90% of the issues we have with
customers stem from them not understanding our process of
renewals and paydowns.” (Ex. 75 to Singhvi Decl.). When
asked about the e-mail during his deposition, Scott Tucker
invoked his Fifth Amendment privilege against
self-incrimination.(Scott Tucker Dep. 41:25-44:9,, ECF No.
908-76). Scott Tucker's pervasive role and authority at
AMG, which extended to almost every facet of the
company's business and operations, also creates a strong
inference that Scott Tucker had the requisite knowledge that
the Lending Defendants' webpages were misleading. Am.
Standard Credit Sys., 874 F.Supp. at 1089; Amy
Travel, 875 F.2d at 574; Affordable Media, 179
F.3d at 1235. Accordingly, the evidence, coupled with Scott
Tucker's assertions of the Fifth Amendment, demonstrate
that Scott Tucker had the requisite knowledge to be held
individually liable for the deceptive website marketing of
the Lending Defendants.
Common Enterprise Liability
the theory of common enterprise, each entity in a group of
interrelated companies can be held jointly and severally
liable for the actions of other entities in that group.
FTC v. Network Servs. Depot, Inc., 617 F.3d 1127,
1142-43 (9th Cir. 2010). “Entities constitute a common
enterprise when they exhibit either vertical or horizontal
commonality-qualities that may be demonstrated by a showing
of strongly interdependent economic interests or the pooling
of assets and revenues.” Id. “To
determine whether a common enterprise exists, the Court
considers factors such as: common control; the sharing of
office space and officers; whether business is transacted
through a maze of interrelated companies; the commingling of
corporate funds and failure to maintain separation of
companies; unified advertising; and evidence that reveals
that no real distinction exists between the corporate
defendants.” FTC v. Grant Connect, LLC, 827
F.Supp.2d 1199, 1216 (D. Nev. 2011) aff'd in part,
vacated in part, 763 F.3d 1094 (9th Cir. 2014).
evidence demonstrates that no real distinction exists between
the Corporate Lending Defendants. The Tucker Defendants admit
that AMG Capital, Level 5, and Broadmore all used the same
Nevada address for incorporation. (Tucker Defs.' Am. Ans.
¶¶ 10-12, 15, ECF No. 397). Further, bank
statements, checks, and invoices all demonstrate that the
Corporate Lending Defendants all operated from the same
Kansas address, which the Tucker Defendants do not dispute.
(See Ex. 168 to Singhvi Dep., ECF No. 908-168). Nor
do the Tucker Defendants dispute that the Corporate Lending
Defendants are wholly-owned by Scott Tucker. (See
Corp. Disclosure Statement, ECF No. 58). Finally, as
discussed supra, Scott Tucker dominated the Lending
Defendants' bank accounts and funneled thousands of
payments to the Corporate Lending Defendants. Indeed, beyond
their unfounded evidentiary ...