There aren’t too many things worse than showing up at the office in the morning and realizing that the FTC has gotten a temporary restraining order against your company and frozen your assets.
While most FTC investigations don’t occur in such dramatic fashion, occasionally some do and the consequences are often dire. This is exactly what happened to several companies and individual defendants in a case filed by the FTC in Utah last month. In that case, the FTC alleged a tangled web of purported misrepresentations involving a training/business education company and several of its suppliers. The federal court granted the FTC’s request for a temporary restraining order as well as imposing an asset freeze that froze not only those assets directly traceable to the businesses that were the subject of the complaint but also assets from unrelated businesses and assets of the named individuals. Under the original order, the individuals had no access to any funds, including funds that might be needed to buy food or fuel, pay legal fees, or pay utility bills nor did the businesses have access to funds needed to maintain their operations. Since the FTC routinely argues that assets other than those directly traceable to the alleged unlawful activity are fair game in satisfying any consumer redress requirement, the FTC’s request in this regard is hardly surprising.