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FTC v. Construct Data Publrs. A.S.

United States District Court for the Northern District of Illinois, Eastern Division

December 11, 2014, Decided; December 11, 2014, Filed

No. 13-cv-01999

Opinion

MEMORANDUM OPINION AND ORDER

Plaintiff Federal Trade Commission ("FTC") has sued Defendants Construct Data Publishers ("Construct Data"), Wolfgang Valvoda ("Valvoda"), and Susanne Anhorn ("Anhorn") under the FTC Act ("FTCA"), 15 U.S.C. § 41 et seq., alleging that they engaged in a plan fraudulently to induce businesses and nonprofit organizations in the United States and other countries to pay for unordered listings in an Internet directory. The [*2]  defendants initially appeared in this case through counsel, but subsequently directed that counsel to withdraw and then defaulted. Thereafter, the Court entered a default judgment in the amount of $9.1 million and imposed a permanent injunction that, inter alia, froze the defendants' assets. Now appearing through new counsel, the defendants have filed the Motion to Vacate Default Judgment and Order for Permanent Injunction ("Motion to Vacate") (Dkt. No. 57) and the Motion to Modify the Asset Freeze Order ("Motion to Modify") (Dkt. No. 68). For the reasons discussed below, the Motion to Vacate is granted and the Motion to Modify is denied without prejudice.

BACKGROUND

On March 14, 2013, the FTC filed a Complaint for Permanent Injunction and Other Equitable Relief ("Complaint") against Valvoda and Anhorn (together, the "Individual Defendants"), as well as Construct Data (together with the Individual Defendants, "Defendants"). The Complaint alleges that Defendants have violated Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), by engaging in deceptive practices in the marketing and selling of Internet directory listings to small businesses and organizations that participate in trade shows and exhibitions. Specifically, the Complaint [*3]  alleges that Defendants targeted consumers in the United States and other countries with mailings falsely representing (1) that the consumers had a preexisting business relationship with Defendants; and (2) that Defendants were affiliated or otherwise connected with a particular trade show or exhibition, or the organizer of that event. Along with the Complaint, the FTC filed a motion for an ex parte temporary restraining order supported by witness declarations, consumer complaints, court orders, and other evidence that Defendants engaged in practices that violated Section 5(a).

The Court issued an ex parte temporary restraining order on March 15, 2013 (the "TRO"), which, among other things, enjoined Defendants from engaging in the activities that the FTC alleged violated Section 5(a) and froze Defendants' assets. The asset freeze allowed the Individual Defendants to "pay from their individual personal funds reasonable, usual, ordinary, and necessary living expenses," subject to the prior written agreement of the FTC. (TRO at 8-9, Dkt. No. 14.) The FTC subsequently provided each Defendant with copies of the Complaint, the TRO, and other court filings, as well as notice of the preliminary injunction hearing. [*4] 

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2014 U.S. Dist. LEXIS 171677 *; 2014-2 Trade Cas. (CCH) P78,989; 2014 WL 7004999

FEDERAL TRADE COMMISSION, Plaintiff, v. CONSTRUCT DATA PUBLISHERS a.s., a foreign corporation, also doing business as FAIR GUIDE, WOLFGANG VALVODA, individually and as an owner, officer, or director of CONSTRUCT DATA PUBLISHERS a.s., and SUSANNE ANHORN, individually and as an owner, officer, or director of CONSTRUCT DATA PUBLISHERS a.s., Defendants.

CORE TERMS

default, Vacate, injunction, mail, permanent, freeze, Modify, meritorious, consumers, withdraw, disseminate, customers, campaign