In yet another example of the “scam people and play dumb when caught” defense not working, a preliminary injunction has been granted against Scott Chandler, Louis Gatto and Thomas Dluca.

The three defendants were sued by the FTC last month as top earners in the Bitcoin Funding Team, My7Network and JetCoin scams.

After their assets were frozen via a Temporary Restraining Order, defendants Chandler and Gatto filed “you can’t sue us, we knew nothing!” objections.

Thomas Dluca failed to file any response and appears to have gone into hiding.

Chandler, Gatto and Pinkston’s objections were dismissed after the court conducted a review of evidence submitted by the FTC.

A report recommending a preliminary injunction be granted by Magistrate Judge Snow was also a heavily weighed factor.

Based on these two key components of the case, the court found

a preliminary injunction is appropriate, the FTC is likely to succeed on the merits (and) injunctive relied is in the public interest.

Specifically with respect to Gatto and Chandler’s objection that the asset freeze ‘is not narrowly tailored to their individual circumstances’, the court found

the FTC has offered sufficient evidence to justify the requested
asset freeze under the (required) standards.

Consequently, the Court concludes that the scope of the asset freeze is appropriate.

In defiance of the granted TRO, Gatto and Chandler had also refused to provide the FTC with documents.

Amusingly, Gatto and Chandler claimed compliance with the TRO would be a ‘broad all-encompassing search for incriminating information‘.

Here’s how that argument fared;

The Court concludes that the requested production is already narrowly tailored: the FTC requests only “documents, computer equipment, and electronically stored information . . . that contains information about Defendants’ operation or promotion of Bitcoin Funding Team, My7Network, JetCoin, or any other money-making opportunity that Defendants promoted or in which Defendants participated since January 1, 2014.”

To the extent that Defendants Gatto and Chandler argue that the mandatory production may lead to a criminal investigation, “[i]t has long been established that a person may be required to produce specific documents, even though they contain incriminating information.”

Consequently, the Court concludes that the scope of the production is appropriate.

If the production of documents detailing Gatto and Chandler’s scamming people out of millions of dollars leads to a criminal investigation, so be it.

As per the April 16th order, a preliminary injunction has been granted against Scott Chandler, Louis Gatto and Thomas Dluca.

As per the injunction, the court found Chandler, Gatto and Dluca have committed multiple violations of the FTC Act.

As a result of these violations, Chandler, Gatto and Dluca received ill-gotten gains and ‘consumers nationwide … suffer(ed) harm including economic injury‘.

The injunction prohibits Chandler, Gatto and Dluca from

Engaging in, participating in, or assisting others in engaging in or participating in, any Marketing Program that:

1. Pays compensation for recruiting new members;

2. Encourages or incentivizes members to purchase goods or services to maintain eligibility for bonuses, rewards, or commissions rather than for resale or personal use;

3. Pays any compensation related to the purchase or sale of goods or services unless the majority of such compensation is derived from sales to or purchases by Persons who are not members of the Marketing Program; or

4. Constitutes a pyramid scheme or Ponzi scheme;

B. Misrepresenting, or assisting others in misrepresenting, expressly or by implication, that Defendants’ Marketing Programs are structured to operate as bona fide moneymaking opportunities; and

C. Misrepresenting, or assisting others in misrepresenting, expressly or by implication, any Material fact, including, but not limited to, that consumers who participate in a Marketing Program will or are likely to receive substantial income.

Chandler, Gatto and Dluca’s assets are to remain frozen.

They have been given three days to identify and submit asset details to the FTC.

This includes any attempts to squirrel away stolen money in cryptocurrency wallets;

Provide (the FTC), within three (3) days of receiving a copy of this Order, a sworn statement setting forth the cryptographic hash value, time stamp, transaction data, public addresses or other information sufficient to identify, locate, and track cryptocurrency in any blockchain or distributed ledger technology system that is belonging to, for the use or benefit of, under the control of, or subject to access by any Defendant.

The future of Chandler, Gatto and Dluca’s scamming careers is also in question, as the injunction requires them to “prominently display” the following message on “any website” they use to promote “any Marketing Program”;

The Federal Trade Commission (FTC) has filed a lawsuit against Thomas Dluca, Louis Gatto, and Scott Chandler, individually and doing business as Bitcoin Funding Team, My7Network, or JetCoin, alleging that they have engaged in deceptive practices in connection with the advertising, marketing, and promotion of purported money-making opportunities.

The United States District Court for the Southern District of Florida has issued a Preliminary Injunction prohibiting the alleged practices.

You may obtain additional information directly from the Federal Trade Commission.

The above paragraph must be accompanied with a link to the FTC website.

Neither Chandler, Gatto or Dluca are permitted to launch their own companies either, without disclosing full details of the opportunity to the FTC.

The FTC is currently in negotiations with Eric Pinkston regarding the asset freeze component of the TRO.

A separate order addressing Pinkston is expected on or around April 20th.