Case 1:11-cv JEM Document 77 Entered on FLSD Docket 07/06/2011 Page 1 of 14 UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA

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1 Case 1:11-cv JEM Document 77 Entered on FLSD Docket 07/06/2011 Page 1 of 14 UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA FEDERAL TRADE COMMISSION, and STATE OF FLORIDA, OFFICE OF THE ATTORNEY GENERAL, Miami Division CASE NO CIV-MARTINEZ/MCALILEY v. Plaintiffs, VGC CORPORATION OF AMERICA, a Florida Corporation, also d/b/a All Dream(s) Vacations, All Dreams Travel, Five Star(s) Vacations, 5 Star(s) Vacations, Total Tours, and Travel & Tours Corp., ALL DREAM VACATIONS CORP., a Florida Corporation, also d/b/a All Dreams Vacations, VIOLETA GONZALEZ, a/k/a Violeta Rojas, individually, and as an officer of VGC Corporation of America, CESAR A. GONZALEZ, individually, and as an officer of VGC Corporation of America, SAMIR JOSE SAER RODRIGUEZ, a/k/a Samir Saer, individually, and as an officer of VGC Corporation of America and All Dream Vacations Corp., Defendants. / RECEIVER JONATHAN E. PERLMAN S VERIFIED UNOPPOSED MOTION TO EXPAND RECEIVERSHIP Jonathan E. Perlman, Esq., the court-appointed Receiver (the Receiver ) of VGC Corporation of America d/b/a All Dream(s) Vacations, All Dreams Travel, Five Star(s) Vacations, 5 Star(s) Vacations, Total Tours, and Travel & Tours Corp. ( VGC ) and All Dream

2 Case 1:11-cv JEM Document 77 Entered on FLSD Docket 07/06/2011 Page 2 of 14 Vacations Corporation d/b/a All Dreams Vacations ( All Dreams ) (collectively the Receivership Entities ), by and through undersigned counsel, files this Verified Unopposed Motion to Expand Receivership (the Motion ) and moves this Court to expand the Receivership to include All Dream Tours, LLC and states the following in support thereof: 1 I. INTRODUCTION This Court previously granted the Plaintiffs application for a temporary and preliminary injunction restraining orders against Defendants VGC, All Dreams, Cesar Gonzalez, Violeta Gonzalez, Samir Saer Rodriguez, and all affiliates they control (the Defendants ). [DE 16]. This Court also appointed Jonathan E. Perlman, Esq., as receiver over the Receivership Entities. By this motion, the Receiver seeks entry of an order expanding or clarifying that the receivership includes All Dream Tours, LLC ( All Dream Tours ), an affiliate of the Receivership Entities, holding a substantial portion of Defendants liquid assets. Because All Dream Tours is an affiliate controlled by the individual Defendants, it would appear to already be included within the Receivership. See DE 57, Section VIII. In an abundance of caution, the Receiver files this motion seeking and order confirming and/or expanding the Receivership to include All Dream Tours. The principals of the Receivership Entities are two couples, Violeta and Cesar Gonzalez and Samir Saer Rodriguez ( Saer Rodriguez ) and Fiorella Vila ( Vila ). Saer Rodriguez and Vila reside and have a child together. The two couples received regular distributions from the Receivership Entities. The Gonzalez defendants received their 50% profit payments or 1 The Receiver previously filed his Motion to Expand Receivership on June 29, 2011 [DE 71] but undersigned counsel inadvertently omitted a reference to the conferral with Defense counsel as required by the local rules. As such, this Court denied the Receiver s motion without prejudice. [DE 75]. Undersigned counsel has since conferred with counsel for Defendants, including new counsel for Defendant Samir Saer Rodriguez and All Dream Vacations, who do not object to the relief requested herein. 2

3 Case 1:11-cv JEM Document 77 Entered on FLSD Docket 07/06/2011 Page 3 of 14 distributions through VGC. Saer Rodriguez and Vila received their 50% profit payments or distributions through All Dreams and All Dream Tours. The Receivership Entities also paid for each of the four individual s automobiles. Saer Rodriguez and Vila are both officers and control persons of All Dream Tours. Because the Defendants own and operate All Dream Tours as part of a common enterprise, and its assets are, in fact, proceeds from the sales of All Dream Vacations Corporation, the motion to expand should be granted. II. PROCEDURAL HISTORY On May 16, 2011, this Court entered an Ex Parte Temporary Restraining Order with Asset Freeze ( TRO ) against VGC, All Dreams, and the Individual Defendants, freezing assets belonging to any of the Defendants including, but not limited to, All Dream Tours, LLC. [DE 16]. In addition, this Court appointed Jonathan E. Perlman, Esq. as temporary receiver over the Receivership Entities. On June 16, 2011, after a show cause hearing on June 14, 2011, this Court entered an Order Granting Preliminary Injunction (the Preliminary Injunction Order ). [DE 57]. As alleged in the Complaint for Injunctive and Other Relief (the Complaint ) [DE 3] in this case, since at least 2008 Defendants have been engaged in deceptive and abusive marketing practices that trick consumers into believing they won a vacation prize, and further deceiving them into paying money to claim this prize that few consumers ever receive. The Plaintiffs allege that the Defendants wrongful conduct has caused consumers to pay Defendants as much as $12.5 million dollars in a little over two years. In connection with his preliminary investigation of the Receivership Defendants, the Receiver has identified All Dream Tours as an entity inextricably intertwined with the business 3

4 Case 1:11-cv JEM Document 77 Entered on FLSD Docket 07/06/2011 Page 4 of 14 and financial affairs of the Receivership Entities. The Receiver has reason to believe that hundreds of thousands of dollars were diverted and absconded by the Defendants through assets owned or controlled by All Dream Tours. Based upon the foregoing facts, the Receiver has a reasonable basis to believe that All Dream Tours will play a significant role in the collection of receivership assets, thereby requiring expansion of the Receivership and Preliminary Injunction to include All Dream Tours, LLC. III. FACTUAL BACKGROUND In executing his duties under the TRO, the Receiver and his staff of professionals took possession of the offices of VGC and All Dreams located in Doral, Florida on May 17, Based upon the records obtained, the witness interviews conducted, and additional evidence provided by the Plaintiffs and the Receiver s professionals, the Receiver files the instant motion against All Dream Tours, LLC. Since its inception in September 2009, All Dream Tours has received $278, of consumer funds from the Receivership Entities. Record evidence of this total, including copies of cancelled checks for transfers made by All Dreams, VGC and Five Star Corporation of America (a d/b/a of VGC) to All Dream Tours, is attached as Composite Ex. A. All Dream Tours is wholly owned and controlled by the Defendant Saer Rodriguez and his girlfriend, Vila. The corporate records of All Dream Tours on file with the Florida Secretary of State, Department of Corporations ( Sunbiz ) attached as Ex. B, reflect All Dream Tours, LLC is a member managed limited liability company organized by Saer Rodriguez and Vila in August Defendant Saer Rodriguez is a Member/Manager of the company and Vila is a Member and serves as the Registered Agent for the company. The company address is the residential address of Saer Rodriguez and Vila. 4

5 Case 1:11-cv JEM Document 77 Entered on FLSD Docket 07/06/2011 Page 5 of 14 All Dream Tours and the Receivership Entities retained the same accountant. Pursuant to this Court s Order, the Receiver obtained the files of the Receivership Entities from its former accountant, Jose Villar, CPA. In addition, counsel for the Receiver spoke with the accountant regarding the tax records provided and learned that Mr. Villar is also the accountant for All Dream Tours. The records provided by the accountant reflect ownership of All Dream Tours as belonging to Saer Rodriguez and Vila, each owning 50% of the company. Further, as confirmed by the accountant, the sole source of income for All Dream Tours is the Receivership Entities as reflected in both the 2009 and 2010 U.S. Income Tax Returns prepared by the accountant. The U.S. Income Tax Returns for All Dream Tours reflects the Receivership Entities as the sole source of income for the company in 2009 and A copy of the 2009 U.S. Income Tax Return for All Dream Tours (the 2009 Tax Return ) is attached as Ex. C. The gross receipts of $42,325 reflected on line 1a of the 2009 Tax Return is the sum amount of the checks issued by the Receivership Entities to All Dream Tours for calendar year Likewise, the gross receipts of $148,331 reflected on line 1a of the 2010 U.S. Income Tax Return for All Dream Tours (the 2010 Tax Return ), attached as Ex. D, is the sum amount of the checks issued by the Receivership Entities to All Dream Tours for calendar year In addition, the Profit and Loss Statement for All Dream Tours for calendar year 2010, attached as Ex. E, confirms that the Receivership Entities were the sole source of income for All Dream Tours in Finally, the Receiver has reviewed the Transaction Detail by Account provided by the accountant for calendar year 2011 which reflects consumer funds flowed into All Dream Tours through the Receivership Entities. This report is attached as Ex. F and shows all deposits to All Dream Tours came from various Receivership Entities, the sole source of the company s income. 5

6 Case 1:11-cv JEM Document 77 Entered on FLSD Docket 07/06/2011 Page 6 of 14 Further evidence of the relationship between All Dream Tours, the Receivership Entities, the Defendant Saer Rodriguez and his girlfriend, Vila, is the fact that both Saer Rodriguez and Vila are signatories on several of the Receivership Entity bank accounts as well as the All Dream Tours accounts. Specifically, Saer Rodriguez is a signatory on the VGC bank accounts as evidenced by the signature card from Wachovia Bank reflecting Saer Rodriguez as an authorized signatory, attached hereto as Ex. G, and the All Dreams bank account as evidenced by the signature card attached hereto as Ex H. Saer Rodriguez is also a signatory on the All Dreams account at Bank of America as evidenced by the signature card and corporate resolution, attached hereto as Composite Ex. I, reflecting Saer Rodriguez as President and authorized signatory for All Dreams. Similarly, Vila is a signatory on the Bank of America account for All Dream Tours, a copy of the signature card and corporate resolution for All Dream Tours is attached as Ex. J, as well as the Wachovia bank accounts for each of the Receivership Entities. See Ex. G and H supra. Finally, Vila is an officer, director or control person of All Dream Tours and All Dreams. While Vila served as an officer and director of All Dream Tours as described above, she also served as a manager of All Dreams. Vila s role in the Receivership Entities is corroborated by the statements made to the Receiver by Saer Rodriguez. On the day of the Receiver s immediate access to the Defendants premises, Saer Rodriguez agreed to an interview with the Receiver and his team. Saer Rodriguez admitted that while he supervised the sales agents, his girlfriend, Vila, played an active role in the All Dreams enterprise and also supervised personnel. This is confirmed by several memos on All Dreams Vacations letterhead that the Receiver and his team found on the premises. For example, in a memo dated September 30, 2010, attached as Ex. K, Vila advises sales agents and verifiers of the confidential nature of consumer information and 6

7 Case 1:11-cv JEM Document 77 Entered on FLSD Docket 07/06/2011 Page 7 of 14 documents, and in a welcome letter to customers, attached as Ex. L, Vila holds herself out as Gerente de Control de Calidad (Quality Control Manager) for All Dreams Vacations. For all of the foregoing reasons, this Court should find that All Dream Tours is an alterego company of the Receivership Entities. The Receiver has also learned that All Dream Tours through the use of consumer funds has made all payments towards the purchase of a 2009 BMW X6, a company asset reflected on both the 2009 Tax Return and the 2010 Tax Return. (See Form 4562 for Ex. C and D supra). In reviewing the bank statements for the All Dream Tours account held at Bank of America, the Receiver has identified monthly payments of $ to BMW Bank of North America dating as far back as March A copy of the bank records reflecting the monthly payments is attached as Composite Ex. M. The payment dates and amount are consistent with the terms of the BMW Financial Services Motor Vehicle Retail Installment Contract executed by Vila for a 2009 BMW X6 purchased for $71, A copy of the contract is attached as Ex. N. Accordingly, upon the Court s granting of this motion, the Receiver will seek immediate turnover of the vehicle, a company asset of this additional receivership entity. In light of the co-identity of officers and principals, the relationship between the officers and principals and the commingling of funds between All Dream Tours and the Receivership Entities, it is imperative that this Court intercede by expanding the Receivership to include All Dream Tours. Further, this Court should grant the Receiver full and exclusive power and authority over the business affairs, funds, and assets of All Dream Tours, in order to avoid the sale or transfer of company assets, including the 2009 BMW X6, which remains under Saer Rodriguez exclusive control. 7

8 Case 1:11-cv JEM Document 77 Entered on FLSD Docket 07/06/2011 Page 8 of 14 The Receiver has identified $59, in assets derived from consumer funds on deposit in accounts held by All Dream Tours. This represents a significant amount of the total assets identified thus far by the Receiver as belonging to the Receivership Estate which total approximately $500,000. Notably, all of these funds together amount to far less than needed to pay back consumers and administer the Receivership Estate. MEMORANDUM OF LAW It is well-established that federal courts have broad discretion to determine relief in an equity receivership. See SEC v. Elliot, 953 F.2d 1560, 1566 (11th Cir. 1992) see also FTC v. United States Oil & Gas Corp., 748 F.2d 1431, (11th Cir.1984) (under section 13(b) a district court may exercise its inherent equitable power); FTC v. Amy Travel Service, Inc., 875 F.2d 564, (7th Cir.) (in a proceeding under section 13(b) district court has the power to order any ancillary equitable relief necessary to effectuate its grant of authority), cert. denied, 493 U.S. 954, 110 S.Ct. 366, 107 L.Ed.2d 352 (1989). Such discretion may be properly exercised in the form of expansion of a receivership where a party seeking expansion establishes a commingling of funds, intertwined business operations, the use of the corporation as an instrumentality or conduit for a single venture, utilization of an identical business address, identical offices and addresses, co-identity of officers, co-identity of directors and principals or the disregard of legal formalities and the failure to maintain arm s length relationships among related entities. See SEC v. Elmas Trading Corp., 620 F. Supp. 231, 234 (D. Nev. 1985). In determining whether or not to extend a receivership to include related entities, a federal court has broad discretion to disregard corporate separateness and form and give effect to the substance of the enterprise. Id. Indeed, as the court in Elmas Trading noted, [f]ederal analysis gives less respect to the corporate form than does the strict common-law alter ego doctrine. Id. 8

9 Case 1:11-cv JEM Document 77 Entered on FLSD Docket 07/06/2011 Page 9 of 14 Moreover, the overarching goal behind a proposed receivership expansion should be to ensure that all available assets are brought within the receivership and may properly be distributed to creditors and, as such, the court should employ a more flexible approach in determining whether to expand the receivership to include additional entities. As set forth supra, the bank records, tax information and corporate records uncovered thus far from All Dream Tours and the Receivership Entities illustrate numerous and significant transfers of funds between the companies. Moreover, Saer Rodriguez is an officer, manager or control person of All Dream Tours, All Dreams and VGC as is his girlfriend, Vila. Given the interconnectedness and commonality of the individuals and the evident commingling of funds, it is critical that this Court expand the Receivership to include All Dream Tours. RELIEF REQUESTED Under the express terms of the Preliminary Injunction Order, the Receiver is authorized to take immediate possession of all property of every kind of the Receivership Defendants, as well as any affiliates or subsidiaries controlled by any of the Receivership Defendants. The Receiver is also expressly authorized to institute actions or other proceedings as he deems necessary and advisable to preserve or recover the assets of the Receivership Defendants. Based upon the foregoing, the Receiver submits that sufficient cause exists to expand the powers and scope of the Preliminary Injunction to include All Dream Tours, LLC as a party under the Preliminary Injunction. The Receiver s counsel has conferred with counsel for Plaintiffs, the Federal Trade Commission and the State of Florida, Office of the Attorney General, and represents that Plaintiffs agree to the relief sought herein. 9

10 Case 1:11-cv JEM Document 77 Entered on FLSD Docket 07/06/2011 Page 10 of 14 The Receiver s counsel has conferred with counsel for Defendants and represents that Defendants have no objection to the relief sought herein. WHEREFORE, Receiver Jonathan E. Perlman, Esq. respectfully requests that this Court enter an order expanding the Preliminary Injunction Order [DE 57] to include All Dream Tours, LLC together with such other and further relief as this Court deems just and proper. Dated: July 6, 2011 Miami, Florida Respectfully submitted, s/carmen Contreras-Martinez. Carmen Contreras-Martinez Florida Bar No.: ccontreras@gjb-law.com GENOVESE JOBLOVE & BATTISTA, P.A. 100 Southeast Second Street, 44 th Floor Miami, Florida Telephone: (305) Facsimile: (305) Attorneys for Receiver Jonathan E. Perlman, Esq. 10

11 Case 1:11-cv JEM Document 77 Entered on FLSD Docket 07/06/2011 Page 11 of 14 VERIFICATION I hereby declare under penalty of perjury that the facts supporting this Verified Motion to Expand Receivership are true, accurate and correct. s/jonathan E. Perlman Jonathan E. Perlman, Esq., Receiver 11

12 Case 1:11-cv JEM Document 77 Entered on FLSD Docket 07/06/2011 Page 12 of 14 CERTIFICATE OF SERVICE I hereby certify that on July 6, 2011, I electronically filed the foregoing document with the Clerk of the Court using CM/ECF. I also certify that the foregoing document is being served this day on all counsel of record and entities identified on the attached Service List in the manner specified, either via transmission of Notices of Electronic Filing generated by CM/ECF or in some other authorized manner for those counsel or parties who are not authorized to receive electronically Notices of Electronic Filing. s/ Carmen Contreras-Martinez Attorney 12

13 Case 1:11-cv JEM Document 77 Entered on FLSD Docket 07/06/2011 Page 13 of 14 SERVICE LIST Federal Trade Commission et al. v. VGC Corporation of America et al. Case No CIV-MARTINEZ/MCALILEY United States District Court, Southern District of Florida Carmen Contreras-Martinez, Esq. Genovese Joblove & Battista, P.A. Miami Tower, 44 th Floor 100 Southeast 2nd Street Miami, FL Telephone: (305) Facsimile: (305) Attorneys for Jonathan E. Perlman, Esq. as Court Appointed Receiver for the Corporate Defendants Served via CM/ECF Willard K. Tom General Counsel Valerie M. Verduce, Esq. Ambar J. Carvalho, Esq. Federal Trade Commission 225 Peachtree Street, suite 1500 Atlanta, GA Telephone: (404) (Verduce) (404) (Carvalho Facsimile: (404) Attorneys for Plaintiff Federal Trade Commission Served via CM/ECF Pamela Jo Bondi Attorney General Allison Finn Office of the Attorney General Economic Crimes Division The Capitol, PL-01 Tallahassee, FL Telephone: (850) Facsimile: (850) Attorneys for Plaintiff State of Florida, Office of the Attorney General Served via CM/ECF 13

14 Case 1:11-cv JEM Document 77 Entered on FLSD Docket 07/06/2011 Page 14 of 14 Miguel Armenteros Miguel Armenteros, P.A Brickell Avenue, Suite 600 Miami, FL Telephone: (305) Facsimile: (305) Attorney for Defendants VGC Corporation of America, Violeta Gonzalez, Cesar Gonzalez Served via CM/ECF Jose Berrio Berrio & Berrio P.A Brickell Avenue, Suite A-1 Miami, Florida Telephone: (305) Facsimile: (305) Attorney for Defendants Samir Saer Rodriguez and All Dream Vacations Corporation Served via CM/ECF Jonathan E. Perlman Genovese Joblove & Battista, P.A. Miami Tower, 44 th Floor 100 Southeast 2nd Street Miami, FL Telephone: (305) Facsimile: (305) Receiver for the Corporate Defendants Served via CM/ECF /337 14