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Federal Trade Commission v. AMG Services, Inc.

United States District Court, D. Nevada

April 30, 2017

FEDERAL TRADE COMMISSION, Plaintiff,
v.
AMG SERVICES, INC., et al., Defendants.

          AMENDED ORDER [1]

          Gloria M. Navarro Chief Judge United States District Judge.

         Pending 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”).[2]Plaintiff Federal Trade Commission (“FTC”) filed a Response, (ECF No. 938), and the Tucker Defendants filed a Reply, (ECF No. 949).

         Also 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. 952).

         Also 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).

         Because the Court GRANTS FTC's Motion, the Court DENIES as moot the motions filed by the Tucker Defendants and the Relief Defendants (collectively “Defendants”).[3]

         I. BACKGROUND

         This 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).

         The FTC 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 Defendants.

         A. Factual History[4]

         Scott 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).

         B. Procedural History

         On 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).

         On May 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, 888-889).

         In the 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.

         II. LEGAL STANDARD

         The 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 (1986).

         In 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).

         If the 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.

         At 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.

         III. DISCUSSION

         A. Evidentiary Objections

         The 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.

         1.The Squar Milner Report

         The 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).

         The FTC 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 inadmissible.

         2.Emails

         The 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).

         Regarding 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.

         3.Checks and Other Bank Records

         The 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 circumstances”).

         Next, 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.

         B. Defenses

         The 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”).

         Likewise, 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).

         Here, 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.

         C. Individual Liability

         An 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)

         If the 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 deceive.”).

         1.Participation and Authority to Control

         Authority 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)).

         The FTC 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).

         Scott 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).

         With 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).

         Scott 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).

         Consistent 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).

         Further, 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. 908-155).

         2. Knowledge

         The 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.”).

         The 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 No. 908-68).

         With 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).

         Finally, 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.[5](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.

         D. Common Enterprise Liability

         Under 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).

         The 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 ...


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