UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON

Plaintiff, the Federal Trade Commission ("Commission" or “FTC”), having filed a complaint for a permanent injunction and other relief, including restitution to consumers, pursuant to Sections 13(b) and 19 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 53(b) and 57b, to obtain preliminary and permanent injunctive relief, rescission, restitution, disgorgement and other equitable relief for defendants’ violations of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a) and the FTC’s Trade Regulation Rule entitled "Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures ("the Franchise Rule"), 16 C.F.R. Part 436, and having moved for a noticed temporary restraining order and for an order to show cause why a preliminary injunction should not be granted pursuant to Rule 65(b) of the Federal Rules of Civil Procedure, and the Commission and defendants TouchNet, Inc., TouchTone Telecommunications & Advertising, Inc., Eric Carino and Malissa Carino, hereinafter collectively referred to as "defendants," having agreed to the following, the Court now orders:

1. This Court has jurisdiction of the subject matter of this case and there is good cause to believe it will have jurisdiction over all parties hereto.
2. There is good cause to believe the Commission will ultimately succeed in establishing that defendants have engaged in and are likely to engage in acts and practices that violate Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
3. There is good cause to believe that immediate and irreparable damage will be done to the public and to this Court's ability to grant full and effective relief among the parties hereto absent entry of this Order.
4. Weighing the equities and considering the Commission's likelihood of ultimate success, a Temporary Restraining Order is in the public interest.

ORDER

I. - CEASE AND DESIST

IT IS THEREFORE ORDERED that, defendants are hereby temporarily restrained and enjoined from:

A. Making, directly or by implication, orally, visually, or in writing, in connection with the advertising, offering for sale or sale of any franchise or business venture, any statement or representation of material fact that is false or misleading, including, but not limited to, any false or misleading representation about the earnings a person is likely to receive; and

B. Violating any provision of the Franchise Rule, 16 C.F.R. Part 436, including, but not limited to, any failure to:

1. provide any prospective franchisee with a basic written disclosure document containing the information required under 16 C.F.R. § 436.1(a) of the Franchise Rule, in the manner and within the times stated in the Franchise Rule; and
2. provide any prospective franchisee with an earnings claim document, as described in 16 C.F.R § 436.1(b) - (e) of the Franchise Rule, in the manner and within the times stated in the Franchise Rule.

II. - MAINTENANCE OF RECORDS

IT IS FURTHER ORDERED that defendants are hereby temporarily restrained and enjoined from:

A. Failing to create and maintain books, records, and accounts which, in reasonable detail, accurately, fairly, and completely reflect the incomes, disbursements, transactions, and use of monies by defendants.

B. Destroying, erasing, mutilating, concealing, altering, transferring or otherwise disposing of, in any manner, directly or indirectly, any contracts, accounting data, correspondence, advertisements, seminar materials, computer tapes, disks, or other computerized records, books, written or printed records, handwritten notes, telephone logs, telephone scripts, or other audio or video tape recordings, receipt books, invoices, postal receipts, ledgers, personal and business canceled checks and check registers, bank statements, appointment books, copies of federal, state or local business or personal income or property tax returns, and other documents or records of any kind that relate to the business practices or business or personal finances of any defendant.

III. - DUTIES OF ASSET HOLDERS

IT IS FURTHER ORDERED that, except as stipulated by the parties or as directed by further order of the Court, any financial or brokerage institution, business entity, or person that holds, controls, or maintains custody of any account or asset, whether tangible or intangible, real or personal, or held at some time since January 1, 1997, of defendants, shall:

A. Provide counsel for plaintiff within five business days of receiving a copy of this Order, a certified statement setting forth:

1. The identification number of each account or asset titled in the name, individually or jointly, of any of these defendants, or held on behalf of, or for the benefit of, any of these defendants, including all trust accounts managed on behalf of these defendants or subject to any of these defendants’ control;
2. The balance of each identified account, or a description of the nature and value of the asset as of the close of business on the day on which this Order is served, and, if the account or other asset has been closed or removed since January 1, 1997, the date closed or removed, the total funds removed in order to close the account, and the name of the person or entity to whom the account or other asset was remitted; and
3. The identification and location of any safe deposit box that is either titled in the name, individually or jointly, of any of these defendants, or is otherwise subject to access by any of these defendants.

B. Upon request and within five business days, provide to counsel for plaintiff copies of all records or other documentation pertaining to any and all accounts or assets described in Paragraph A above, including, but not limited to, originals or copies of account applications, account statements, signature cards, checks, drafts, deposit tickets, transfers to and from the accounts, all other debit and credit instruments or slips, currency transaction reports, 1099 forms, and safe deposit box logs.

IV. - SERVICE OF TRO

IT IS FURTHER ORDERED that copies of this Order may be served by first class mail, overnight delivery, facsimile, or personally, by employees or agents of the FTC, upon any bank, savings and loan institution, credit union, financial institution, brokerage house, escrow agent, money market or mutual fund, title company, commodity trading company, common carrier, storage company, trustee, commercial mail receiving agency, mail holding or forwarding company, or any other person, partnership, corporation, or legal entity that may be in possession of any records, assets, property, or property right of any defendant or other person, partnership, corporation, or legal entity that may be subject to any provision of this Order. For purposes of service on anyone in possession of records, assets, property, or property rights, actual notice of this Order shall include notice from service by facsimile transmission of the first page, Sections IV and V, and the signature page of this Order, provided that this notice is followed within five business days by delivery of a complete copy of this Order.

V. - DEFENDANTS’ FINANCIAL STATEMENTS

IT IS FURTHER ORDERED that each defendant, to the extent not already provided, shall, within four business days from service of this Order, prepare and deliver to counsel for the Commission completed financial statements on the forms attached to this Order. The completed financial statements shall be accurate as of the date of service of this Order upon the defendants. The defendants shall attach to these completed financial statements copies of all state and federal income and property tax returns for each individual and entity since January 1, 1995 and copies of all policies of insurance in effect since January 1, 1997, with attachments and schedules thereto, insuring against loss of, or damage to, real or personal property owned or held by or for any defendant.

VI. - CREATION OF OTHER BUSINESSES

IT IS FURTHER ORDERED that defendants are hereby temporarily restrained and enjoined from creating, operating or controlling any business entity, whether newly-formed or previously inactive, including any partnership, limited partnership, joint venture, sole proprietorship, or corporation, without first providing the Commission with a written statement disclosing: (1) the name of the business entity; (2) the address and telephone number of the business entity; (3) the names of the business entity's officers, directors, principals, managers and employees; and (4) a detailed description of the business entity's intended activities.

VII. - EXPEDITED DISCOVERY

IT IS FURTHER ORDERED that discovery shall be governed by the following time lines: the deposition of any person, in any judicial district, can, pursuant to FRCP 30(a), be taken at any time after the date of this Order, upon three days notice; pursuant to FRCP 33, responses to any interrogatories shall be within five days after service of the interrogatories; pursuant to FRCP 34, responses to any request for production of documents shall be within five days after service of the request; and, pursuant to FRCP 36, responses to any request for admissions shall be within five days after service of the request.

VIII. - CONSUMER CREDIT REPORTS

IT IS FURTHER ORDERED that pursuant to Section 604(1) of the Fair Credit Reporting Act, 15 U.S.C. § 1681b(1), any consumer reporting agency may furnish a consumer report concerning any defendant to the plaintiff.

IX. - FILING OF PLEADINGS

IT IS FURTHER ORDERED that defendants shall file their opposition, including any declarations, exhibits, memoranda, or other evidence on which defendants intend to rely, not less than three business days before the hearing on the order to show cause why a preliminary injunction should not issue. Defendants shall serve copies of all these materials on plaintiff by delivery or facsimile to designated counsel for the Federal Trade Commission, at 915 Second Avenue, Suite 2896, Seattle, Washington 98174, prior to 4:00 p.m. on the day that it is filed.

X. - WITNESSES AT HEARINGS

IT IS FURTHER ORDERED that if any party to this action intends to present the testimony of any witness at the hearing on a preliminary injunction in this matter, that party shall, at least seventy-two hours prior to the scheduled date and time of hearing, file with this Court and serve on counsel for the other party, a statement of the name, address, and telephone number of that witness, and either a summary of the witness' expected testimony, or the witness' declaration or affidavit revealing the substance of the witness' expected testimony; and that, after the service of the statement, the served party thereafter shall have forty-eight hours from the time of service of the witness information to provide information to the Court and to the serving party for any witness whose testimony the served party intends to present.

XII. - EXPIRATION

IT IS FURTHER ORDERED that the Temporary Restraining Order granted herein shall be in effect until such time as any party renews the Motion for Preliminary Injunction and the Court rules on the Motion or the parties stipulate and the Court approves a Stipulated Preliminary Injunction or a Stipulated Permanent Injunction.

XIII. - RETENTION OF JURISDICTION

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for all purposes.

SO ORDERED, this _____ day of February, 1998, at _______.

______________________________
Barbara Rothstein
United States District Judge

Jointly stipulated to and submitted by the parties:

FOR PLAINTIFF FEDERAL TRADE COMMISSION

FOR DEFENDANTS TOUCHNET AND TOUCHTONE

___________________________
President, Eric Carino