IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NEW YORK
FEDERAL TRADE COMMISSION
1306506 ONTARIO LIMITED, a Canadian Corporation;
T.S.I. SERVICE CORP., a Nevada Corporation;
VINNY BUBIC, individually and as a director and officer of 1306506
Ontario Limited and T.S.I. Service Corp.; and
ERROL ALEXANDER, individually and as a director and officer of 1306506
Ontario Limited and T.S.I. Service Corp.;
Civil Action No.
DECLARATION IN SUPPORT OF ITS MOTION FOR EX PARTE TEMPORARY
RESTRAINING ORDER AND EX PARTE MOTION TO FILE PAPERS UNDER SEAL
Pursuant to Fed. R. Civ. P. 65(b), David A. O'Toole submits the following declaration:
1. I am an attorney employed by plaintiff Federal Trade Commission ("FTC").
2. Plaintiff has not attempted to notify defendants of its Ex Parte Motion for
Temporary Restraining Order and other motions filed contemporaneously, nor should such
notice be given, for the following reasons:
- a. The evidence set forth in plaintiff's Memorandum of Points and Authorities in Support
of its Ex Parte Motion for Temporary Restraining Order and the accompanying
exhibits, which I have personally reviewed, show that defendants have engaged, and are
likely to continue to engage, in a scheme to deprive consumers of substantial amounts of
money through fraud and deception. The evidence shows that defendants, in the
telemarketing of a credit card loss protection program have made material
misrepresentations and failures to disclose material facts, resulting in substantial
- b. The systematic fraud perpetrated by defendants 1306506 Ontario Limited; T.S.I.
Service Corp.; Vinny Bubic, individually and as a director and officer of 1306506 Ontario
Limited and T.S.I. Service Corp.; and Errol Alexander, individually and as a director and
officer of 1306506 Ontario Limited and T.S.I. Service Corp.; provides motivation and
opportunity for dissipation of assets and destruction of records;
- c. There is good cause to believe that immediate and irreparable damage to the Court's
ability to achieve effective final relief for consumers in the form of monetary redress
will occur from the sale, transfer, concealment, or other disposition by defendants of
their assets, and from the destruction, transfer, concealment, or other disposition of
their records, if they are notified of plaintiff's TRO Motion prior to a hearing thereon;
- d. Moreover, as illustrated by the following examples upon information and belief, it
has been the FTC's experience that defendants who receive notice of the FTC's intent to
file an action alleging fraud have attempted to undermine the FTC's attempts to preserve
the status quo by immediately dissipating, concealing, or destroying assets and documents:
i. In FTC v. Academic Guidance Services, No. 92-3001 (AET) (D. N.J. 1992),
defendants discovered that the FTC intended to file a case against them (and seek an ex
parte TRO) the following week. An informant told the FTC that defendants then leased
a document shredder and spent the weekend destroying documents, which was confirmed by one
of defendant's employees.
ii. In FTC v. World Class Network, Inc., CV-97-162 AHS (C.D. Cal. 1997), after
the Court issued an ex parte TRO, two of the defendants withdrew, spent, and hid
$202,000 in assets after being served with the TRO and asset freeze.
iii. In FTC v. American National Cellular, Inc., CV-85-7375 WJR (C.D. Cal.
1985), the court issued an ex parte TRO with an asset freeze on November 12,
1985. A defendant learned of the court's ruling and immediately withdrew $1.2 million from
his bank accounts before the banks were served with a copy of the freeze order. The
defendant fled California and dissipated the money while living overseas. While ultimately
the defendant was prosecuted and convicted of criminal contempt under 18 U.S.C. § 401 for
his failure to abide by the terms of the TRO, tens of thousands of dollars were never
recovered. See 868 F.2d 315, 316-17 (9th Cir. 1989).
iv. In FTC v. Osborne Precious Metals, Inc., CV-92-4194 AWT (C.D. Cal. 1992),
the court issued an ex parte TRO on July 15, 1992. The receiver and his
representatives effected service of the order the following day: first at defendants'
offices in Los Angeles, and an hour later, at defendants' offices in Las Vegas. The
receiver discovered that a number of business records in the Las Vegas offices had been
destroyed shortly before his representatives arrived to secure the premises.
v. In FTC v. Ellis, No. SA CV-96-114 LHM (C.D. Cal. 1996), the court issued an
ex parte TRO freezing assets and appointing a temporary receiver, which was
served the following day. Defendants disregarded the order and continued to operate the
business from a different location, and apart from the receiver.
vi. In FTC v. Equifin International, Inc., CV-97-4526 DT, 1997 U.S. Dist.
LEXIS 10288 (C.D. Cal. July 3, 1997), after an ex parte TRO had been issued
against the corporate defendants and their owner, and the order had been served on
corporate defendants, but before the individual defendant had been personally served with
the TRO, he directed an affiliate to withdraw bank funds from an account containing
defendants' credit card revenues. Upon demand of the Receiver, the defendant returned the
vii. In FTC v. Intellicom, CV-97-4572 TJH (C.D. Cal. 1997), the FTC obtained
an ex parte TRO and served banks at which the defendants were known to have
accounts. One defendant, whose bank was served earlier in the day, called the bank and
asked the branch manager to wire out approximately $100,000 held in an account that was
specifically designated in the TRO as frozen. The branch manager encountered a red flag in
the system, discovered the account had been frozen, and refused to release the funds.
viii. In FTC v. IntellinetCom, Inc.,CV-98-2140 CAS (C.D. Cal. 1998), the FTC
obtained an ex parte TRO. The FTC served the TRO on banks where the defendants
were known or suspected to have accounts. While the person who was serving the TRO for the
FTC was at one of the banks and speaking to a branch manager about the TRO, one of the
defendants came into the bank, after having been served with the TRO, and attempted to
withdraw money from his account there. He was unsuccessful.
ix. In FTC v. Lopinto, CV S-93-561 (LDG) (D. Nev. 1993), the district court
issued an ex parte TRO with an asset freeze in June 1993. The order was served on
a bank where one of the defendant businesses maintained an account. However, before the
bank could implement the freeze, an agent of the defendant business (who knew of the
freeze) withdrew $12,300 from the defendant's account.
x. In FTC v. Empress Corporation, d/b/a American Publishers Exchange,
CV-S-95-01174-LDG (D. Nev. 1995), defendants disposed of or concealed numerous business
records on the night of December 6, 1996. Earlier that day, the U.S. Department of Justice
had announced that Attorney General Janet Reno was coming to Las Vegas the next day to
make a major announcement regarding enforcement efforts against telemarketing fraud. On
December 7, 1996, the FTC executed an ex parte TRO with asset freeze against
defendants, and Attorney General Reno announced criminal actions against hundreds of
xi. In FTC v. Showcase Distributing, Inc., CV-95-1368-PHX-SMM (D. Ariz. 1995),
shortly after the individual defendant was served with an ex parte TRO, he and
his wife went to an ATM and withdrew money from an account covered by the TRO, "just
to show they could do it."
xii. In FTC v. Thomas E. O'Day, No. 94-1108-CIV-ORL-22 (M.D. Fla. 1994), the
district court denied the FTC's request to issue a TRO with asset freeze without notice,
and scheduled a noticed hearing on the relief sought. Several days later, the Federal
Bureau of Investigation executed a search warrant on defendants' business premises as the
FTC served notice of its action and the upcoming hearing. Within hours, an individual
defendant withdrew approximately $200,000 from one of his bank accounts.
xiii. In FTC v. Applied Telemedia Engineering and Management, Inc., No. 91-635
(S.D. Fla. 1991), defendants were advised, pursuant to an agreement with the FTC, that the
FTC had filed its complaint and intended to seek a TRO with an asset freeze from the
court. When the FTC's agents went to defendants' offices to serve process, they observed
defendants removing boxes of documents from the premises. The FTC moved for, and received,
an ex parte TRO the following day. xiv. In FTC v. United Consumer Services,
No. 94-CV-3164-CAM (N.D. Ga. 1994), the FTC attempted to serve a TRO with asset freeze
upon a defendant who was traveling on business. When defendant's lawyer notified his
client of the order, the defendant went directly to his bank and removed $100,000 from a
corporate bank account. The FTC learned of the withdrawal only after receiving the account
statements from the bank. After being served with an order to show cause why defendant
should not be held in contempt for violating the asset freeze, the defendant finally
produced the money at a deposition.
3. Accordingly, the FTC respectfully submits that it is in the interest of justice and
the public interest that the FTC's Ex Parte Motion for Temporary Restraining
Order and Ex Parte Motion for Order to File Papers Under Seal be heard without
notice to defendants, and that the file in this matter be placed under seal through and
until October 27, 2000, at 5:00 p.m.
I state under penalty of perjury that the foregoing is true and correct to the best of
Executed at Buffalo, New York, on October 23, 2000.
Federal Trade Commission
55 E. Monroe St., Suite 1860
Chicago, IL 60603
(312) 960-5600 (fax)