FTC v. Benjamin Hoskins , 616 F. App'x 360 ( 2015 )

FILED
NOT FOR PUBLICATION
OCT 05 2015
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
FEDERAL TRADE COMMISSION, No. 13-16052
Plaintiff - Appellee, D.C. No. 2:11-cv-00283-JCM-
GWF
v.
IVY CAPITAL, INC., MEMORANDUM*
Defendant,
And
BENJAMIN HOSKINS; DREAM
FINANCIAL; LEANNE HOSKINS
(Relief Defendant); OXFORD
FINANCIAL, LLC (Relief Defendant),
Defendants - Appellants.
Appeal from the United States District Court
for the District of Nevada
James C. Mahan, District Judge, Presiding
Argued and submitted August 12, 2015
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: KOZINSKI and TALLMAN, Circuit Judges and RAYES,** District Judge.
1. The district court properly held defendant Benjamin Hoskins individually
liable for the deceptive telemarketing actions of the Ivy Capital enterprise.1 See
FTC v. Stefanchik, 559 F.3d 924, 931 (9th Cir. 2009); see also 15 U.S.C. § 45(a);
16 C.F.R. §§ 310.3-.4.2 Because there was no genuine issue of material fact as to
Mr. Hoskins's individual liability, summary judgment in favor of the FTC on that
issue was proper. Mr. Hoskins had “the authority to control” the deceptive acts
because as owner and founder of Ivy Capital and as an owner, officer, agent or
member of Dream Finance, Logic Solutions, Oxford Debt Holdings, LLC, Sell It
**
The Honorable Douglas L. Rayes, District Judge for the U.S. District
Court for the District of Arizona
1
The Ivy Capital enterprise consisted of eight individual defendants and
twenty-two corporate entities. We affirm the district court’s finding that these
individual and corporate defendants were all part of a common enterprise. See
FTC v. Network Servs. Depot, Inc., 617 F.3d 1127, 1142-43 (9th Cir. 2010)
(sharing office space, interrelated activity, and commingled funds all weigh in
favor of finding a common enterprise where each may be held jointly and severally
liable).
2
Although defendant Dream Financial and relief defendant Oxford Financial,
LLC, were included in the notice of appeal, the opening brief does not raise
“specifically and distinctly” any arguments related to Dream Financial or Oxford.
“We review only issues [that] are argued specifically and distinctly in a party’s
opening brief.” Brownfield v. City of Yakima, 612 F.3d 1140, 1149 n.4 (9th Cir.
2010) (internal quotation marks omitted). Thus, we do not consider the judgments
against them.
2
Vizions, LLC, and Global Financial Group, LLC—all entities part of the Ivy
Capital scheme—he participated in manager meetings, had the authority to sign
contracts on behalf of the enterprise, was a signatory for multiple Ivy Capital
accounts, provided consulting services and crucial start up resources, and even
assisted in setting up a call center in the Phillippines. See FTC v. Publ’g Clearing
House, Inc., 104 F.3d 1168, 1170-71 (9th Cir. 1997) (finding that the defendant’s
role as president and her authority to sign documents on behalf of a corporation
“demonstrate that she had the requisite control over the corporation”).
There is no genuine issue of material fact as to Mr. Hoskins’s reckless
indifference to the truth or falsity of the misrepresentations that were perpetrated
by the Ivy Capital enterprise. Id. at 1171. “There were myriad red flags that
would have led a reasonable person to suspect that something was amiss at” Ivy
Capital and its affiliated corporate entities. Network Servs. Depot, 617 F.3d at
1141. The evidence, such as management emails, shows that Mr. Hoskins was
aware of customer complaints, the high price of “business coaching” packages
($2,000 - $10,000), Ivy Capital’s high chargeback rates with credit card merchants
indicating potential fraud, and offshore accounts in St. Kitts. See id. (listing
“multiple customer complaints” and “suspicious financial practices” as “warning
signs” of fraud).
3
2. The district court did not abuse its discretion in finding Mr. Hoskins
jointly and severally liable with all other defendants (settled or otherwise) for
$130,375,057.52, plus prejudgment interest. “Equity may require a defendant to
restore his victims to the status quo where the loss suffered is greater than the
defendant’s unjust enrichment.” See Stefanchik, 559 F.3d at 931-32.
3. The district court did not err in finding relief defendant Leanne Hoskins
liable for disgorgement as the alter ego of Oxford Financial, LLC. (1) She
influenced and governed Oxford as its majority (51%) owner3 and manager of its
primary operations; (2) Oxford funds were used to pay school tuition, personal
credit cards, and other household expenses demonstrating a “unity of interest and
ownership”; and (3) adherence to the corporate fiction would promote injustice.
See Mosa v. Wilson-Bates Furniture Co., 583 P.2d 453, 454 (Nev. 1978).
We reject Ms. Hoskins’s “theory of the pleadings” argument. “The
pleadings need not identify any particular legal theory under which recovery is
sought.” Crull v. GEM Ins. Co., 58 F.3d 1386, 1391 (9th Cir. 1995); see also A.
Wallace Tashima & James M. Wagstaffe, Federal Civil Procedure Before Trial,
Calif. & 9th Cir. Editions ¶ 8:96.
3
Mr. Hoskins owns the remaining 49% of Oxford Financial, LLC.
4
However, we vacate the disgorgement order against Ms. Hoskins
individually because we hold that, as the alter ego of Oxford, she is jointly and
severally liable for Oxford’s disgorgement order. The district court abused its
discretion because ordering disgorgement against Ms. Hoskins “both individually
and through the corporation would result in an impermissible double recovery.”
Am. Capital Corp. v. FDIC, 472 F.3d 859, 866 (Fed. Cir. 2006); see also EEOC v.
Waffle House, Inc., 534 U.S. 279, 297 (2002) (“[I]t goes without saying that the
courts can and should preclude double recovery . . . .” (internal quotation marks
omitted)).
AFFIRMED in part, and VACATED and REMANDED in part, with
instructions to alter the judgment against Leanne Hoskins to hold her jointly and
severally liable with Oxford Financial, LLC, for $1,529,292.52, plus prejudgment
interest.
Each party shall bear its own costs.
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