UNITED STATES DISTRICT COURT DISTRICT OF NEVADA * * * Plaintiff, Defendants.

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1 Federal Trade Commission v. Johnson et al Doc UNITED STATES DISTRICT COURT DISTRICT OF NEVADA * * * FEDERAL TRADE COMMISSION, Case No. :-cv-00-mmd-gwf v. JEREMY JOHNSON, et al., Plaintiff, ORDER Defendants. I. INTRODUCTION Before the Court is motion to set aside t 0, order granting a preliminary injunction. The FTC alleges that Defendants have engaged in deceptive and unfair business practices involving misleading websites. On February, 0, the Court entered a preliminary injunction and appointed a receiver to manage the approximately $00 million of disputed funds the FTC alleges belongs to consumers defrauded by defendants. (See dkt. no..) On March 1, 01, this Court granted partial summary judgment to the FTC. (Dkt. no..) Defendants Jeremy Johnson, Andy Johnson, Loyd Johnson, and Ryan Riddle now ask this Court to set aside the PI Order and allow them to access the assets currently in possession of the Receiver. (Dkt. no..) Defendants offer two arguments in support of their request. First, FTC attorneys committed fraud upon this Court by falsifying affidavits and Dockets.Justia.com

2 intimidating witnesses. Second, the Receiver has acted outside of the scope of his authority, destroyed evidence, and shown favor to the government. Both the FTC and the Receiver have filed opposition briefs. (Dkt. nos.,.) Defendants filed a reply to both responses. (Dkt. no..) II. DISCUSSION A. Fraud on the Court Courts have the inherent power to vacate judgments obtained by fraud Chambers v. NASCO, Inc., 01 U.S., (1). This power, however, is exercised with restraint and only utilized when fraud is shown by clear and convincing evidence. United States v. Estate of Stonehill, 0 F.d 1, (th Cir. 0). The clear and convincing standard is more stringent than the preponderance of evidence standard, but not as demanding as proof beyond a reasonable doubt. See 1B C. Wright & K. Graham, Fed. Prac. & Proc. Evid. 1 (d ed.). Clear and convincing evidence See Colorado v. New Mexico, U.S., 1 (). constitute fraud on the court, the 0 Alexander v. Robertson, F.d 1, (th Cir.) (internal quotations omitted). Generally, perjury by itself 1 does not rise to the level of fraud on the court officers of the court so In re Levander, 0 F.d 1, (th Cir. ). a fraud perpetrated by party bears a high burden in seeking to prove fraud on the court, which must involve an unconscionable plan or scheme which is designed to improperly influence the court in its d Pizzuto v. Ramirez, F.d, (th Cir. 01) (internal quotations omitted). Defendants allege that the FTC pressured two witnesses, Devan Partridge and Natasha Lee Bowman, into providing false or misleading declarations to support the

3 motion for a preliminary injunction. (Dkt. no. at, 1.) Defendants also allege that FTC attorneys declaration for an older declaration which Bowman refused to sign and may have falsified her signature on the declaration filed with this Court. (Id. at 1.) If true, these allegations would certainly constitute the Court to set aside a judgment. declarations from Partridge and Bowman Devan Partridge Defendants have provided a declaration signed by Devan Partridge on December, 01. (Dkt. no. -1.) This declaration was also attached to 1 no. 00-.) This is the third declaration that Partridge has provided in the course of this litigation filed second declaration was prepared in coordination in coordination with the FTC and -1.) His opposition to the motion to intervene and stay discovery. (Dkt. no. -.) third, and most recent, declaration states, among other things, that FTC attorney Collot Guerard threatened him with legal problems and induced him to include untrue statements in his affidavit. (Dkt. no -1.) The declaration goes on to assert that Guerard eventually drafted an untruthful affidavit and forced Partridge to sign it through threats and intimidation. (Id. -.) These statements are similar to statements made in his second declaration. (Dkt. no. -.) /// /// 1 Defendants also cite a YouTube video containing interviews with two people identified as Bowman and Partridge. This video is inadmissible for a number of reasons, the first and most obvious being the Court has no way of knowing whether the speakers are who they purport to be. The video is the only upload from a YouTube user named are identified.

4 The FTC denies any misconduct and argues that Partridg most recent own threats and intimidation. (Dkt. no. at.) January, 01, grand jury testimony in parallel criminal case. During his grand jury testimony, Partridge discussed the creation of his original and second declarations, and clarified his assertions in both. Partridge testified that his original temporary restraining order, was basically true but contained some inaccurate wording. Partridge testified that while he felt pressure to complete a declaration, and do so within a certain timeframe, he did not feel pressure to make any untrue statements. (Id. at -.) In fact, Partridge testified that Johnson included inaccurate words and improperly influenced him in the creation of his second declaration. (Id. at -.) He further testified that Johnson cooperate. (Id. at.) Viewing living hell if he did not finds that Johnson has not provided clear and convincing evidence that the FTC 0 evidence of intimidation is itself undermined by evidence of intimidation. The upshot of 1 most coherent reading of his testimony indicates that he does not believe any statements in his first declaration were false.. Natasha Lee Bowman Defendants have provided a declaration signed by Natasha Lee Bowman on December, 01. (Dkt. no. -.) declaration was also filed earlier in this litigation. (Dkt. no. 00-.) Also like Partridge, Bowman originally filed a declaration prepared in coordination with the FTC. (Dkt. no.

5 ) In the most recent declaration, Bowman makes a number of claims including: FTC attorneys told her she would be entitled to % of everything seized from Johnson if she helped them (id. ); FTC attorneys attempted to have her sign an affidavit with untrue statements about a grant she received, but she refused (id. ); she eventually signed an affidavit which included changes she requested (id. ); several government agents threatened to kick Bowman out of the witness protection program if she did not testify the way they wanted her to testify (id. ); the FTC swapped out the affidavit Bowman signed with the affidavit she refused to sign without her knowledge (id. 1); and the affidavit filed by the FTC but Bowman did not sign that document (id. 1). The FTC responds by providing a declaration from an attorney who represented Bowman when she prepared her original declaration. The attorney states that he believes the affidavit filed by the FTC is the same one he reviewed with Bowman and the same one she signed. (Dkt. no. -1.) The attorney also states that the FTC never mentioned any payment or other consideration for Bowman, and that Bowman was free to refuse to provide an affidavit. (Id.) The FTC further declaration is not credible on its face because its claims are outlandish and unsupported by any other evidence. former 0 1 convincing evidence of fraud. The Court cannot say that it is highly probable that FTC attorneys falsified testimony based only on a disputed declaration. B. Handling of Evidence by the Receiver Defendants also ask the Court to set aside its preliminary injunction order because the Receiver has exceeded the scope of his authority, favored the government, tampered with evidence, and falsified documents. (Dkt. no. at -.) The

6 It is unclear what legal theory Defendants rely upon to connect the alleged misconduct with PI Order. To the extent that Defendants are arguing Court, Defendants have failed to provide clear and convincing evidence unconscionable plan or scheme which is designed to improperly influence the court in its d Pizzuto, F.d at. Some of already been presented to the Court and resolved. (Dkt. nos., 0,.) erver claims access to s and the the PI Order. unrelated to the remaining claims about bias toward the government are also PI Order. In sum, though Defendants present a number of 1 offensive allegations regarding the Receiver, these allegations are 1 1 motion to set aside judgement for fraud on the court. the PI Order and not properly considered in a 1 1 III. CONCLUSION The Court notes that the parties made several arguments and cited to several 0 1 cases not discussed above. The Court has reviewed these arguments and cases and determines that they do not warrant discussion as they do not affect the outcome of the single remaining issue in. It is therefore ordered injunction (dkt. no. ) is denied. DATED THIS 1th day of November 01. MIRANDA M. DU UNITED STATES DISTRICT JUDGE