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1 STUARTF. DELERY 

Acting Assistant Attorney General 

2 Civil Division 

U.S. Department of Justice 

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4 ALAN J. PHELPS 

Trial Attorney 

5 Consumer Protection Branch 

U.S. Department of Justice 

6 P.O. Box 386 

Washington, DC 20044 

7 Telephone: 202-307-6154 

Fax: 202-514-8742 

8 Email: alan.phelps~usdoj .gov 

DC Bar No.: 47593 

9 Attorneys for Plaintiff 

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IN THE UNITED STATES DISTRICT COURT 

FOR THE SOUTHERN DISTRICT OF CALIFORNIA 

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UNITED STATES OF AMERICA, 14 

15 Plaintiff, 

16 v. 

17 DIRECT LENDING SOURCE, INC., 

a corporation, 

18 BAILEY & ASSOCIATES ADVERTISING, 

19 INC., a corporation, 

VIRTUAL LENDING SOURCE, LLC, 

20 a limited liability company, 

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ROBERT M. BAILEY, JR., individually and ) 

22 as an officer of DIRECT LENDING SOURCE, ) 

INC., BAILEY & ASSOCIATES ) 

23 ADVERTISING, INC., and VIRTUAL ) 

LENDING SOURCE, LLC, and ) 

24 LINDA GIORDANO, individually and as an 

25 officer of DIRECT LENDING SOURCE, INC., 

BAILEY & ASSOCIATES ADVERTISING, 

26 INC., and VIRTUAL LENDING SOURCE, 

LLC, 

27 Defendants. 

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1 

Civil Action No. 

STIPULATED FINAL 

JUDGMENT AND ORDER 

FOR CIVIL PENALTIES, 

PERMANENT INJUNCTION, 

AND OTHER EQUITABLE 

RELIEF 
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Plaintiff, the United States of America, acting upon notification and authorization to the 

Attorney General by the Federal Trade Commission ("FTC" or "Commission"), is concurrently 

filing its Complaint herein, which alleges that Defendants Direct Lending Source, Inc., Bailey & 

Associates Advertising, Inc., Virtual Lending Source, LLC, Robert M. Bailey, Jr., and Linda 

Giordano have engaged in violations of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 

1681-1681 x, and in unfair or deceptive acts or practices in violation of Section 5 of the Federal 

Trade Commission Act ("FTC Act"), 15 U.S.C. § 45(a) and (n). The parties have agreed to entry 

of this Stipulated Final Judgment and Order for Civil Penalties, Permanent Injunction, and Other 

Equitable Relief ("Order") to resolve all matters in dispute in this action without trial or 

adjudication of any issue of law or fact herein. Defendant has waived service of the Summons 

and Complaint. 

THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED as 

follows: 

FINDINGS 

1. This Court has jurisdiction over the subject matter of this case and over 

Defendants Direct Lending Source, Inc., Bailey & Associates Advertising, Inc., Virtual Lending 

Source, LLC, Robert M. Bailey, Jr., and Linda Giordano. 

2. Venue in this district is proper under 15 U.S.c. § 53(b), and 28 U.S.C. 

§§ 1391 (b) - (c) and 1395(a). 

3. On June 22, 2011, Bailey & Associates Advertising, Inc. filed a voluntary petition 

for relief under Chapter 11 of the Bankruptcy Code, 11 U.S.C. § 101 et seq., in the United States 

Bankruptcy Court for the Western District of Texas, EI Paso Division, Case No. 11-31202-hcm 

("Bankruptcy Case"). On October 26, 2011, the Bankruptcy Case was converted to a Chapter 7 

liquidation case and 1. Marshall Miller was appointed as the Bankruptcy Trustee. 

4. If the Bankruptcy Case is pending as of the date of entry of this Order, then this 

action against Defendant Bailey & Associates Advertising, Inc., including the entry of judgment 

and enforcement of a judgment other than a money judgment, is not stayed by 11 U.S.C. § 

362(a)(1),(2),(3) or (6) because it is an action brought by the United States pursuant to referral by 

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1 the Commission, to enforce the Commission's police and regulatory power as a governmental 

2 unit pursuant to 11 U.S.C. § 362(b)(4) and thus falls within an exemption to the automatic stay. 

3 5. The acts and practices of Defendants are in or affecting commerce, as 

4 "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44. 

5 6. The Complaint states claims upon which relief may be granted against 

6 Defendants under sections 5(a), 5(n), 13(b), and 16(a) of the Federal Trade Commission Act, 15 

7 U.S.C. §§ 45(a), 45(n), 53(b), and 56(a); and under sections 604(f), 607(e)(I), 607(e)(2), 

8 615(d)(3), and 621 of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681b(f), 1681e(e)(1), 

9 1681e(e)(2), 1681m(d)(3), and 1681s. 

10 7. Defendants make no admissions to the allegations in the Complaint except for the 

11 facts necessary to establish jurisdiction and as otherwise specifically stated in this Order. 

12 8. Defendants waive: (a) all rights to seek appellate review or otherwise challenge 

13 or contest the validity of this Order; (b) any claim Defendants may have against the Commission, 

14 its employees, representatives, or agents that relate to the matter stated herein; ( c) all claims 

15 under the Equal Access to Justice Act, 28 U.S.C. § 2412, as amended by Pub. L. 104-121, 110 

16 Stat. 847, 863-64 (1996); and (d) any rights to attorneys' fees that may arise under said provision 

17 of law. 

18 9. The Bankruptcy Trustee has obtained bankruptcy court approval to enter into this 

19 Order and take any and all actions necessary to implement the terms and conditions of this Order 

20 applicable to Bailey & Associates Advertising, Inc. 

21 10. Entry of this Order is in the public interest. 

22 DEFINITIONS 

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11. For the purpose of this Order: 

a. "Individual Defendants" means Robert M. Bailey, Jr. and Linda Giordano. 

b. 

c. 

"Corporate Defendants" means Direct Lending Source, Inc.; Bailey & 

Associates Adveliising, Inc.; Viliual Lending Source, LLC; and their 

successors and assigns. 

"Defendants" means all of the Individual Defendants and the Corporate 

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Defendants, individually, collectively, or in any combination. Provided 

that, Bailey & Associates Advertising, Inc. is excluded from the definition 

of "Defendants" and "Corporate Defendants" as follows: 

(i) for purpose of Section I of this Order, and 

(ii) for purposes of Sections III-VI ofthis Order, but only for the 

period from the date of entry of this Order until the date the 

Bankruptcy Case is closed, unless the Bankruptcy Trustee obtains 

authorization from the bankruptcy cOUli to operate the business of 

Bailey & Associates Advertising, Inc. pursuant to 11 U.S.C. § 721 

or abandons property of the estate to Bailey & Associates 

Advertising, Inc. pursuant to 11 U.S.C. § 554 before the 

Bankruptcy Case is closed, in which case Section III-VI of this 

Order shall apply to Bailey & Associates Advertising, Inc. as of the 

date such an event occurs. 

The definitions set forth in the FCRA, 15 U.S.C. § 1681a, which is 

attached as Attachment A to this order, shall apply. 

"Debt relief product or service" means any product, service, plan, or 

program represented, expressly or by implication, to renegotiate, settle, or 

in any way alter the terms of payment or other terms of the debt or 

obligation, including but not limited to a tax debt or obligation, between a 

person and one or more unsecured creditors or debt collectors, including 

but not limited to, a reduction in the balance, interest rate, or fees owed by 

a person to an unsecured creditor or debt collector by any person other 

than the unsecured creditor who holds the debt at issue. 

"Mortgage assistance relief product or service" means any product, 

service, plan, or program, offered or provided to the consumer in exchange 

for consideration, expressly or by implication, to assist or attempt to assist 

the consumer with any of the following: 

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g. 

1. stopping, preventing, or postponing any mortgage or deed of trust 

foreclosure sale for the consumer's dwelling, any repossession of 

the consumer's dwelling, or otherwise saving the consumer's 

dwelling from foreclosure or repossession; 

2. negotiating, obtaining, or arranging a modification of any term of a 

dwelling loan, including a reduction in the amount of interest, 

principal balance, monthly payments, or fees; 

3. obtaining any forbearance or modification in the timing of 

payments from any dwelling loan holder or servicer on any 

dwelling loan; 

4. negotiating, obtaining, or arranging any extension ofthe period of 

time within which the consumer may: (a) cure his or her default on 

a dwelling loan, (b) reinstate his or her dwelling loan, (c) redeem a 

dwelling, or (d) exercise any right to reinstate a dwelling loan or 

redeem a dwelling; 

5. obtaining any waiver of an acceleration clause or balloon payment 

contained in any promissory note or contract secured by any 

dwelling; or 

6. negotiating, obtaining, or arranging: (a) a short sale of a dwelling, 

(b) a deed-in-lieu of foreclosure, or ( c) any other disposition of a 

dwelling loan other than a sale to a third party that is not the 

dwelling loan holder. 

"Prescreening" or "prescreened list" shall refer to the process and the 

resulting lists covered by Sections 603(1), 604( c), 604( e), or 615( d) of the 

FCRA. 15 U.S.C. §§ 1681a(1), 1681b(c), 1681b(e), or 1681m(d). 

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Case 3:12-cv-02441-DMS-BLM Document 3-1 Filed 10/11/12 Page 6 of 34

1 ORDER 

2 I. CIVIL PENALTY 

3 IT IS ORDERED that: 

4 A. Defendants shall pay to Plaintiff, pursuant to Section 621 (a) of the FCRA, 15 

5 U.S.C. § 1681s(a), a civil penalty in the amount of one million, two hundred thousand dollars 

6 ($1,200,000). 

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B. 

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Defendants shall pay the judgment in Section LA in installments as follows: 

1. Within seven (7) business days of the date of service of this Order, 

Defendants' shall turn over two hundred thousand dollars ($200,000) 

("First Installment") to the Treasurer of the United States by wire transfer 

in accordance with instmctions provided by the Consumer Protection 

Branch, Civil Division, U.S. Department of Justice, Washington, D.C. 

20530, for appropriate disposition. Written confirmation of the wire 

transfer shall be delivered in accordance with the procedures specified by 

the Consumer Protection Branch, Civil Division, U.S. Department of 

Justice, Washington, D.C. 20530. 

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After the First Installment, Defendants shall pay to the Treasurer of the 

United States the remaining balance of one million dollars ($1,000,000) in 

two yearly installments of one-half (~) of the remaining balance plus 

interest ("Yearly Installments"); 

The interest shall be computed on the unpaid balance and from the entry 

date of this Order pursuant to 28 U.S.C. § 1961; and 

The first Yearly Installment shall be paid no later than one year from the 

date of entry of this Order, and the second Yearly Installment shall be paid 

no later than two years from the date of entry of this Order. 

To effect the civil penalty payments required by Section LB., the Court directs that 

27 Defendants shall transfer such funds in the form of a wire transfer to the Treasurer of the United 

28 States. Written confirmation of the wire transfer shall be delivered in accordance with the 

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1 procedures specified by the Consumer Protection Branch, Civil Division, U.S. Department of 

2 Justice, Washington, D.C. 20530. 

3 D. In the event of any default in any payment required by this order, which default 

4 continues for ten (10) days beyond the due date of the payment, the entire unpaid penalty, together 

5 with interest, as computed pursuant to 28 U.S.C. § 1961 from the date of default to the date of 

6 payment, shall immediately become due and payable, and the Commission shall be entitled to 

7 exercise immediately any and all rights and remedies against Defendants and their assets to collect 

8 the full amount of the judgment and interest thereon, less any amounts already paid. Along these 

9 lines, in the event of any default in payment, Defendants will consent to any judicial sale of the 

10 Collateral. 

11 E. As security for the payments required by Section I.B., Defendants, individually 

12 and on behalf of their respective successors and assigns, hereby grant the Commission liens on 

13 and security interests in the real and/or personal property described in Attachment B to this Order, 

14 together with all dwelling houses, other structures, improvements, appurtenances, hereditaments, 

15 and other rights appertaining or belonging thereto, or which hereafter may be added or attached 

16 thereto, and all replacements, substitutions therefore or thereto, and proceeds thereof, whether 

17 presently existing or hereafter arising (collectively, the "Collateral"). 

18 Defendants shall be responsible for timely payment of all taxes, fees, association dues, and 

19 all other attendant expenses related to maintenance and ownership of the Collateral until such 

20 time as the Collateral is sold or auctioned. Defendants are required to continue and maintain in 

21 full force insurance coverage on the Collateral. 

22 Defendants expressly agree that the Collateral does not consist of any homestead 

23 properties. 

24 Defendants represent and acknowledge that the Commission is relying on the material 

25 representations that the Individual Defendants are the sole owners in fee simple of the Collateral, 

26 title to the Collateral is marketable, and the Collateral currently is not encumbered by any other 

27 lien, mortgage, deed of trust, assignment, pledge, security interest or other interest except as set 

28 forth in Attachment B to this Order. Defendants agree to subordinate any liens, mortgages, deeds 

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1 of trust, assignments, pledges, security interests, or other interests that Defendants have in the 

2 Collateral to the liens and security interests granted herein to the Commission. Defendants further 

3 agree that as of the date on which they sign this Order they shall refrain from transferring, 

4 converting, encumbering, selling, assigning, or otherwise disposing of the Collateral, except with 

5 the express prior written permission of counsel for the Commission or in accordance with the 

6 release provisions of this Order. 

7 Defendants shall cooperate fully with the Commission and be responsible (at their 

8 expense, through counsel reasonably acceptable to the Commission) for preparing, executing, and 

9 recording the necessary instruments and documents, including but not limited to financing 

10 statements and continuation statements, taking whatever additional actions the Commission 

11 deems reasonably necessary or desirable to perfect, evidence, and continue its liens on and 

12 security interest in the Collateral, and paying all related fees and costs, including but not limited to 

13 attorneys' fees and filing fees. To this end, on July 2, 2012, Defendants prepared (at their 

14 expense), executed, and delivered to the Commission documents granting liens on the property 

15 listed on Attachment B. These documents were recorded (at their expense) on July 2, 2012. 

16 Defendants shall be responsible for paying all fees and costs relaying to the preparation, 

17 execution, delivery, filing, recording, continuation, and termination of the liens and security 

18 interests granted herein, including but not limited to attorneys' fees and filing fees. 

19 F. Defendants relinquish all dominion, control, and title to the funds paid to the 

20 fullest extent permitted by law. Defendants shall make no claim to or demand for return of the 

21 funds, directly or indirectly, through counselor otherwise. 

22 G. Defendants agree that the facts as alleged in the Complaint filed in this action 

23 shall be taken as true, without further proof, in any subsequent civil litigation filed by or on behalf 

24 of the Commission to enforce its rights to any payment or money judgment pursuant to this Order, 

25 including but not limited to a nondischargeability complaint in any bankruptcy case. Defendants 

26 agree that the judgment represents a civil penalty owed to the United States Government, is not 

27 compensation for actual pecuniary loss, and, therefore, as to the Defendants, it is not subject to 

28 discharge under the Bankruptcy Code pursuant to 11 U.S.C. § 523(a)(7), and that this Order shall 

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1 have collateral estoppel effect for such purposes. This Section is not, and is not intended to be, 

2 construed as an admission by Defendants of the facts alleged in the Complaint with respect to any 

3 claims or demands by any third parties. 

4 H. Proceedings initiated under this Part are in addition to, and not in lieu of, any other 

5 civil or criminal penalties that may be provided by law, including any other proceedings Plaintiff 

6 may initiate to enforce this Order. 

7 1. In accordance with 31 U.S.C. § 7701, Defendants are hereby required, unless they 

8 have done so already, to furnish to the Commission their taxpayer identification numbers and/or 

9 social security numbers, which shall be used for the purposes of collecting and reporting on any 

10 delinquent amount arising out of Defendants' relationship with the government. 

11 II. PROHIBITED BUSINESS ACTIVITIES 

12 IT IS FURTHER ORDERED that Defendants, and their officers, agents, representatives, 

13 and employees, and all persons in active concert or participation with any of them who receive 

14 actual notice of this Order by personal service or otherwise, are hereby permanently restrained and 

15 enjoined, directly or through any entity, from: 

16 A. Using or obtaining consumer reports for any purpose not authorized under section 

17 604 of the FCRA, 15 U.S.C. § 1681b, as prohibited by section 604(f) of the FCRA, 15 U.S.C. 

18 §1681b(f). 

19 B. Failing to disclose to the consumer reporting agency that originally furnishes a 

20 report that Defendants procure for purposes of reselling the report: the identity of the end-user of 

21 the report (or information) and each permissible purpose under section 604 [§ 1681 b] for which 

22 the report is furnished to the end-user of the report (or information), pursuant to section 607(e)(1) 

23 of the FCRA, 15 U.S.c. § 1681e(e)(1). 

24 C. Failing to establish and comply with reasonable procedures designed to ensure 

25 that a report (or information), procured for purposes of reselling the report, is resold by 

26 Defendants only for a purpose for which the report may be furnished under section 604 [§ 1681 b], 

27 including by: 

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resold and that resells or provides the report (or information) to any other 

person: (i) identifies each end user of the resold report (or information); (ii) 

certifies each purpose for which the report (or information) will be used; 

and (iii) certifies that the report (or information) will be used for no other 

purpose; and 

Before reselling the report, failing to make reasonable efforts to verifY the 

identifications and certifications above as required by section 607(e)(2) of 

the FCRA, 15 U.S.C. § 1681e(e)(2). 

For any firm offer of credit, failing to maintain on file the criteria used to select 

10 the consumer to receive the offer, all criteria bearing on credit worthiness that are the basis for 

11 determining whether or not to extend credit pursuant to the offer, and any requirement for the 

12 furnishing of collateral as a condition of the extension of credit, until the expiration ofthe 3-year 

13 period beginning on the date on which the offer is made to the consumer for any consumer whose 

14 consumer report is used in connection with any credit transaction that is not initiated by that 

15 consumer, as required by section 615(d)(3) of the FCRA, 15 U.S.C. § 1681m(d)(3). 

16 E. Using or selling consumer reports in connection with solicitations for debt relief 

17 products or services, or mortgage assistance relief products or services, offered by entities that 

18 charge advance fees. 

19 III. ORDER ACKNOWLEDGMENTS 

20 IT IS FURTHER ORDERED that Defendants obtain acknowledgments of receipt of this 

21 Order: 

22 A. Each Defendant, within 7 days of entry of this Order, must submit to the 

23 Commission an acknowledgment of receipt of this Order sworn under penalty of perjury. 

24 B. For 5 years after entry of this Order, each Individual Defendant for any business 

25 that such Defendant, individually or collectively with any other Defendant, is the majority owner 

26 or directly or indirectly controls, and each Corporate Defendant, must deliver a copy of this Order 

27 to: (1) all principals, officers, directors, and managers; (2) all employees, agents, and 

28 representatives who participate in conduct related to the subject matter of the Order; and (3) any 

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1 business entity resulting from any change in structure as set forth in the Section titled Compliance 

2 Reporting. Delivery must occur within 7 days of entry of this Order for current personnel. To all 

3 others, delivery must occur before they assume their responsibilities. 

4 C. From each individual or entity to which a Defendant delivered a copy of this Order, 

5 that Defendant must obtain, within 30 days, a signed and dated acknowledgment of receipt of this 

6 Order. 

7 IV. COMPLIANCE REPORTING 

8 IT IS FURTHER ORDERED that Defendants make timely submissions to the 

9 Commission: 

10 A. 180 days after entry of this Order, each Defendant must submit a compliance 

11 report, sworn under penalty of perjury. 

12 1. Each Defendant must: (a) designate at least one telephone number and an 

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email, physical, and postal address as points of contact, which 

representatives of the Commission and Plaintiff may use to communicate 

with Defendant; (b) identify all of that Defendant's businesses by all of 

their names, telephone numbers, and physical, postal, email, and Internet 

addresses; (c) describe the activities of each business, including the 

products and services offered, the means of advertising, marketing, and 

sales, and the involvement of any other Defendant (which Individual 

Defendants must describe if they know or should know due to their own 

involvement); (d) describe in detail whether and how that Defendant is in 

compliance with each Section of this Order; and (e) provide a copy of each 

Order Acknowledgment obtained pursuant to this Order, unless previously 

submitted to the Commission; 

Additionally, each Individual Defendant must: (a) identify all telephone 

numbers and all email, Internet, physical, and postal addresses, including 

all residences; (b) identify all titles and roles in all business activities, 

including any business for which such Defendant performs services 

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whether as an employee or otherwise and any entity in which such 

Defendant has any ownership interest; and ( c) describe in detail such 

Defendant's involvement in each such business, including title, role, 

responsibilities, participation, authority, control, and any ownership. 

For 20 years following entry of this Order, each Defendant must submit a 

6 compliance notice, sworn under penalty of peljury, within 14 days of any change in the following: 

7 1. Each Defendant must report any change in: (a) any designated point of 

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contact; or (b) the structure of any Corporate Defendant or any entity that 

Defendant has any ownership interest in or directly or indirectly controls 

that may affect compliance obligations arising under this Order, including: 

creation, merger, sale, or dissolution of the entity or any subsidiary, parent, 

or affiliate that engages in any acts or practices subject to this Order; 

Additionally, each Individual Defendant must report any change in: (a) 

name, including aliases or fictitious name, or residence address; or (b) title 

or role in any business activity, including any business for which such 

Defendant performs services whether as an employee or otherwise and any 

entity in which such Defendant has any ownership interest, and identify its 

name, physical address, and Internet address, if any. 

Each Defendant must submit to the Commission notice of the filing of any 

20 bankruptcy petition, insolvency proceeding, or any similar proceeding by or against such 

21 Defendant within 14 days of its filing. 

22 D. Any submission to the Commission required by this Order to be sworn under 

23 penalty of perjury must be true and accurate and comply with 18 U.S.C. § 1746, such as by 

24 concluding: "I declare under penalty of perjury under the laws of the United States of America 

25 that the foregoing is true and conect. Executed on: __ " and supplying the date, signatory's full 

26 name, title (if applicable), and signature. 

27 E. Unless otherwise directed by a Commission representative in writing, all 

28 submissions to the Commission pursuant to this Order must be emailed to DEbrief@ftc.gov or 

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1 sent by overnight courier (not the U.S. Postal Service) to: Associate Director for Enforcement, 

2 Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, 

3 Washington, DC 20580. The subject line must begin: FTC v. Direct Lending Source, Inc, Bailey 

4 & Associates Advertising, Inc., Virtual Lending Source, LLC, Robert Bailey & Linda Giordano. 

5 V. RECORDKEEPING 

6 IT IS FURTHER ORDERED that Defendants must create certain records for 20 years 

7 after entry of the Order, and to retain each such record for 5 years. Specifically, Corporate 

8 Defendants and each Individual Defendant for any business in which that Defendant, individually 

9 or collectively with any other Defendants, is a majority owner or directly or indirectly controls, 

10 must maintain the following records: 

11 A. Accounting records showing the revenues from all goods or services sold, all costs 

12 incurred in generating those revenues, and the resulting net profit or loss; 

13 B. Personnel records showing, for each person providing services, whether as an 

14 employee or otherwise, that person's: name, addresses, and telephone numbers; job title or 

15 position; dates of service; and, if applicable, the reason for termination; 

16 C. Customer files showing the names, addresses, telephone numbers, dollar amounts 

17 paid, and the quantity and description of goods or services purchased; 

18 D. Copies of each unique prescreened solicitation used in Defendants' pre screening 

19 operation; 

20 E. Files containing the names, addresses, telephone numbers, and all certifications 

21 made by persons pursuant to section II.C.1. of this Order, and all materials considered by 

22 Defendants in connection with their verification of the identity of the persons and verification of 

23 the celiifications made under section II. C.l. of this Order, as required by section II. C.2. of this 

24 Order; 

25 F. Consumer complaints (whether received in written or electronic form, directly, 

26 indirectly, or through any third party), and any responses to those complaints, whether in written 

27 or electronic form, that relate to Defendants' activities as alleged in the Complaint and 

28 Defendant's compliance with the provisions of this Order; 

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1 G. Copies of all training materials and marketing materials that relate to Defendants' 

2 activities as alleged in the Complaint and Defendants' compliance with the provisions of this 

3 Order; 

4 H. Copies of all subpoenas and other communications with law enforcement entities 

5 or personnel, whether in written or electronic form, if such documents bear in any respect on 

6 Defendants' use or sale of consumer reports or other personal information of consumers; and 

7 1. All records necessary to demonstrate full compliance with each provision of this 

8 Order, including all submissions to the Commission. 

9 VI. COMPLIANCE MONITORING 

10 IT IS FURTHER ORDERED that, for the purpose of monitoring Defendants' compliance 

11 with this Order: 

12 A. Within 14 days of receipt of a written request from a representative of the 

13 Commission or Plaintiff, each Defendant must: submit additional compliance reports or other 

14 requested information, which must be sworn under penalty of perjury; appear for depositions; and 

15 produce documents, for inspection and copying. The Commission and Plaintiff are also 

16 authorized to obtain discovery, without further leave of court, using any of the procedures 

17 prescribed by Federal Rules of Civil Procedure 29,30 (including telephonic depositions), 31, 33, 

18 34,36,45, and 69. 

19 B. For matters concerning this Order, the Commission and Plaintiff are authorized to 

20 communicate directly with each Defendant. Defendant must permit representatives of the 

21 Commission and Plaintiff to interview any employee or other person affiliated with any Defendant 

·22 who has agreed to such an interview. The person interviewed may have counsel present. 

23 C. The Commission and Plaintiff may use all other lawful means, including posing, 

24 through their representatives, as consumers, suppliers, or other individuals or entities, to 

25 Defendants or any individual or entity affiliated with Defendants, without the necessity of 

26 identification or prior notice. Nothing in this Order limits the Commission's lawful use of 

27 compulsory process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.c. §§ 49, 57b-1. 

28 

14 
12cv02441

Case 3:12-cv-02441-DMS-BLM Document 3-1 Filed 10/11/12 Page 15 of 34

1 VII. RETENTION OF JURISDICTION 

2 IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for 

3 purposes of construction, modification, and enforcement of this Order. 

4 VIII. COSTS AND ATTORNEYS' FEES 

5 IT IS FURTHER ORDERED that each party shall bear its own costs and attorneys' fees 

6 incurred in connection with this action. 

7 The parties hereby stipulate to the entry of the foregoing Order, which shall constitute a 

8 final Order in this action. 

9 

10 IT IS SO ORDERED: 

11 Dated this ___ day of ________ , 2012. 

12 

13 

14 

UNITED STATES DISTRICT ruDGE 

15 The parties, by their respective counsel, hereby consent to the terms and conditions of the 

16 Stipulated Order as set forth above and consent to the entry thereof. 

17 II 

18 II 

19 II 

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15 
12cv02441

Case 3:12-cv-02441-DMS-BLM Document 3-1 Filed 10/11/12 Page 16 of 34

1 

2 

3 

4 ROBERT 

and as an officer of 

5 Source, Inc. and Vi 

6 

7 

Source, LLC 

S: 

8 II~~~~~~~~~~ ____ ~~ __ 

9 

10 

:~ LdANO, individually and as 

an officer of Direct Lending Source, 

:: Inc. ZUal Lending Source, LLC 

16 AJf' 

17 LINDA GIORDANO, as an officer of 

Bailey & Associates Advertising, Inc., after 

18 the date the bankruptcy case is closed. 

19 

201l~~~~~~~~~~~ __ __ 

21 

22 

23 

24 J. MARSHALL MILLER 

Solely in his capacity as Bankruptcy 

25 Trustee of Bailey & Associates 

Advertising, Inc. 

26 

27 

28 

16 
12cv02441

Case 3:12-cv-02441-DMS-BLM Document 3-1 Filed 10/11/12 Page 17 of 34

1 

2 FOR THE DEFENDANTS: 

3 

4 

5 ROBERT M. BAILEY, JR., individually 

and as an officer of Direct Lending 

6 Source, Inc. and Virtual Lending 

7 

8 

Source, LLC 

9 II"""~"".,."",........"...-...... ..,.,..........-;,.....-y;,,.--------.v~- ROBERT M. BAILEY, JR., as an officer of 

10 Bailey & Associates Advertising, Inc., after 

the date the Bankruptcy Case is closed. 

11 

12 

13 

14 LINDA GIORDANO, individually and as 

an officer of Direct Lending Source, 

15 Inc. and Virtual Lending Source, LLC 

16 

17 

18 LINDA GIORDANO, as an officer of 

Bailey & Associates Advertising, Inc., after 

19 the date the Bankruptcy Case is closed. 

20 

21 II~~~~~~~ ____________ _ 

JAMES CHAREQ 

22 Hudson Cook, LLP 

Att for Defendants 

23 

SHALL MILLER 

S, lely in his capacity as Bankruptcy 

26 Trustee of Bailey & Associates 

Advertising, Inc. 

27 

28 

16 
12cv02441

Case 3:12-cv-02441-DMS-BLM Document 3-1 Filed 10/11/12 Page 18 of 34

1 

2 

3 

4 FOR THE FEDERAL TRADE COMMISSION: 

5 MANEESHA MITHAL, 

Associate Director, Division of 

6 Privacy and Identity Protection 

7 ROBERT SCHOSHINSKI 

Assistant Director, Division of Privacy 

8 and Identity Protection 

9 

lOKA~orney 11 KATHERINE WHITE, Attorney 

AMANDA KOULOUSIAS, Attorney 

12 Federal Trade Commission 

601 New Jersey Avenue, N.W. 

13 Suite NJ-3158 

-Washington, D.C. 20001 

14 202-326-3250 (Armstrong) 

202-326-2878 (White) 

15 202-326-3334 (Koulousias) 

202-326-3629 (fax) 

16 karmstrong@ftc.gov (Armstrong) 

kwhite@ftc.gov (White) 

17 akoulousias@ftc.gov (Koulousias) 

18 

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26 

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28 

17 
12cv02441

Case 3:12-cv-02441-DMS-BLM Document 3-1 Filed 10/11/12 Page 19 of 34

FOR THE PLAINTIFF 

2 UNITED STATES OF AMERICA: 

3 

4 STUART F. DELERY 

Acting Assistant Attorney General 

5 Civil Division 

United States Department of Justice 

6 

7 MAAME EWUSI-MENSAH FRlMPONG 

Deputy Assistant Attorney General 

8 Civil Division 

9 MICHAEL BLUME 

Director 

10 Consumer Protection Branch 

11 

12 

13 

ALAN PHELPS 

14 Tri~r Attorney 

Consumer Protection Branch 

15 U.S. Department of Justice 

P.O. Box 386 

16 Washington, D.C. 20044 

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28 18 
12cv02441

Case 3:12-cv-02441-DMS-BLM Document 3-1 Filed 10/11/12 Page 20 of 34

1 § 603. Definitions; rules of construction [15 U.S.C. § 1681a] 

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(a) 

(b) 

(c) 

(d) 

Definitions and rules of construction set forth in this section are applicable for the 

purposes of this title. 

The term "person" means any individual, partnership, corporation, trust, estate, 

cooperative, association, government or governmental subdivision or agency, or 

other entity. 

The term "consumer" means an individual. 

Consumer Report 

(1) 

(2) 

In general. The term "consumer report" means any written, oral, or other 

communication of any information by a consumer reporting agency 

bearing on a consumer's credit worthiness, credit standing, credit capacity, 

character, general reputation, personal characteristics, or mode of living 

which is used or expected to be used or collected in whole or in pmi for 

the purpose of serving as a factor in establishing the consumer's eligibility 

for 

(A) 

(B) 

(C) 

credit or insurance to be used primarily for personal, family, or 

household purposes; 

employment purposes; or 

any other purpose authorized under section 604 [§ 1681b]. 

Exclusions. Except as provided in paragraph (3), the term "consumer 

report" does not include 

(A) subject to section 624, any 

(i) report containing information solely as to transactions or 

experiences between the consumer and the person making 

Attachment A 

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Case 3:12-cv-02441-DMS-BLM Document 3-1 Filed 10/11/12 Page 21 of 34

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(3) 

the report; 

(ii) communication of that information among persons related 

by common ownership or affiliated by corporate control; or 

(iii) communication of other information among persons related 

by common ownership or affiliated by corporate control, if 

it is clearly and conspicuously disclosed to the consumer 

that the information may be communicated among such 

persons and the consumer is given the opportunity, before 

the time that the information is initially communicated, to 

direct that such information not be communicated among 

such persons; 

(B) any authorization or approval of a specific extension of credit 

directly or indirectly by the issuer of a credit card or similar device; 

(C) any report in which a person who has been requested by a third 

party to make a specific extension of credit directly or indirectly to 

a consumer conveys his or her decision with respect to such 

request, if the third party advises the consumer of the name and 

address of the person to whom the request was made, and such 

person makes the disclosures to the consumer required under 

section 615 [§ 1681m]; or 

(D) a communication described in subsection (0) or (x). 

Restriction on sharing of medical information. Except for information or 

any communication of information disclosed as provided in section 

604(g)(3), the exclusions in paragraph (2) shall not apply with respect to 

information disclosed to any person related by common ownership or 

Attachment A 

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Case 3:12-cv-02441-DMS-BLM Document 3-1 Filed 10/11/12 Page 22 of 34

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(e) 

(f) 

(g) 

(h) 

affiliated by corporate control, if the information is-

(A) 

(B) 

(C) 

medical infonnation; 

an individualized list or description based on the payment 

transactions of the consumer for medical products or services; or 

an aggregate list of identified consumers based on payment 

transactions for medical products or services. 

The term "investigative consumer report" means a consumer report or portion 

thereof in which information on a consumer's character, general reputation, 

personal characteristics, or mode of living is obtained through personal interviews 

with neighbors, friends, or associates of the consumer reported on or with others 

with whom he is acquainted or who may have knowledge concerning any such 

items of information. However, such information shall not include specific factual 

information on a consumer's credit record obtained directly from a creditor of the 

consumer or from a consumer reporting agency when such information was 

obtained directly from a creditor of the consumer or from the consumer. 

The term "consumer reporting agency" means any person which, for monetary 

fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in 

part in the practice of assembling or evaluating consumer credit information or 

other information on consumers for the purpose of furnishing consumer reports to 

third parties, and which uses any means or facility of interstate commerce for the 

purpose of preparing or furnishing consumer reports. 

The term "file," when used in connection with information on any consumer, 

means all of the information on that consumer recorded and retained by a 

consumer reporting agency regardless of how the information is stored. 

The tenn "employment purposes" when used in connection with a consumer 

Attachment A 

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Case 3:12-cv-02441-DMS-BLM Document 3-1 Filed 10/11/12 Page 23 of 34

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report means a report used for the purpose of evaluating a consumer for 

employment, promotion, reassignment or retention as an employee. 

(i) The term "medical information" -

(k) 

(1) means infonnation or data, whether oral or recorded, in any form or 

medium, created by or derived from a health care provider or the 

consumer, that relates to-

(2) 

(A) the past, present, or future physical, mental, or behavioral health or 

condition of an individual; 

(B) the provision of health care to an individual; or 

(C) the payment for the provision of health care to an individual. 

does not include the age or gender of a consumer, demographic 

information about the consumer, including a consumer's residence address 

or e-mail address, or any other information about a consumer that does not 

relate to the physical, mental, or behavioral health or condition of a 

consumer, including the existence or value of any insurance policy. 

Definitions Relating to Child Support Obligations 

(1) 

(2) 

The "overdue support" has the meaning given to such term in section 

666(e) of title 42 [Social Security Act, 42 U.S.C. § 666(e)]. 

The term "State or local child support enforcement agency" means a State 

or local agency which administers a State or local program for establishing 

and enforcing child support obligations. 

Adverse Action 

(1) Actions included. The tenn "adverse action" 

(A) has the same meaning as in section 70 1 (d)(6) of the Equal Credit 

Opportunity Act; and 

Attachment A 

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Case 3:12-cv-02441-DMS-BLM Document 3-1 Filed 10/11/12 Page 24 of 34

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(B) means 

(i) a denial or cancellation of, an increase in any charge for, or 

a reduction or other adverse or unfavorable change in the 

terms of coverage or amount of, any insurance, existing or 

applied for, in connection with the underwriting of 

insurance; 

(ii) a denial of employment or any other decision for 

employment purposes that adversely affects any current or 

prospective employee; 

(iii) a denial or cancellation of, an increase in any charge for, or 

any other adverse or unfavorable change in the terms of, 

any license or benefit described in section 604(a)(3)(D) 

[§ 1681b]; and 

(iv) an action taken or determination that is 

(1) made in connection with an application that was 

made by, or a transaction that was initiated by, any 

consumer, or in connection with a review of an 

account under section 604(a)(3)(F)(ii)[§ 1681b]; 

and 

(II) adverse to the interests of the consumer. 

Applicable findings, decisions, commentary, and orders. For purposes of 

any determination of whether an action is an adverse action under paragraph 

(l)(A), all appropriate final findings, decisions, commentary, and orders 

issued under section 701(d)(6) of the Equal Credit Opportunity Act by the 

Bureau or any court shall apply. 

Attachment A 

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Case 3:12-cv-02441-DMS-BLM Document 3-1 Filed 10/11/12 Page 25 of 34

1 (I) 

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The term "firm offer of credit or insurance" means any offer of credit or insurance 

to a consumer that will be honored if the consumer is determined, based on 

information in a consumer report on the consumer, to meet the specific criteria use 

to select the consumer for the offer, except that the offer may be further conditioned 

on one or more of the following: 

(1) The consumer being determined, based on information in the consumer's 

application for the credit or insurance, to meet specific criteria bearing on 

credit worthiness or insurability, as applicable, that are established 

(A) before selection of the consumer for the offer; and 

(B) for the purpose of determining whether to extend credit or insurance 

pursuant to the offer. 

(2) Verification 

(A) that the consumer continues to meet the specific criteria used to 

select the consumer for the offer, by using information in a 

consumer report on the consumer, information in the consumer's 

application for the credit or insurance, or other information bearing 

on the credit worthiness or insurability of the consumer; or 

(B) of the inform"ation in the consumer's application for the credit or 

insurance, to determine that the consumer meets the specific criteria 

bearing on credit worthiness or insurability. 

(3) The consumer furnishing any collateral that is a requirement for the 

extension of the credit or insurance that was 

(A) established before selection of the consumer for the offer of credit 

or insurance; and 

(B) disclosed to the consumer in the offer of credit or insurance. 

Attachment A 

24 
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Case 3:12-cv-02441-DMS-BLM Document 3-1 Filed 10/11/12 Page 26 of 34

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(m) 

(n) 

(0) 

The term "credit or insurance transaction that is not initiated by the consumer" 

does not include the use of a consumer report by a person with which the consumer 

has an account or insurance policy, for purposes of 

(1) reviewing the account or insurance policy; or 

(2) collecting the account. 

The term "State" means any State, the Commonwealth of Puerto Rico, the District 

of Columbia, and any territory or possession of the United States. 

Excluded communications. A communication is described in this subsection if it is 

a communication 

(1) 

(2) 

(3) 

(4) 

(5) 

that, but for subsection (d)(2)(D), would be an investigative consumer 

report; 

that is made to a prospective employer for the purpose of 

(A) 

(B) 

procuring an employee for the employer; or 

procuring an opportunity for a natural person to work for the 

employer; 

that is made by a person who regularly performs such procurement; 

that is not used by any person for any purpose other than a purpose 

described in subparagraph (A) or (B) of paragraph (2); and 

with respect to which 

(A) the consumer who is the subject of the communication 

(i) consents orally or in writing to the nature and scope of the 

communication, before the collection of any information for 

the purpose of making the communication; 

(ii) consents orally or in writing to the making of the 

communication to a prospective employer, before the 

Attachment A 

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Case 3:12-cv-02441-DMS-BLM Document 3-1 Filed 10/11/12 Page 27 of 34

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making of the communication; and 

(iii) in the case of consent under clause (i) or (ii) given orally, is 

provided written confinnation of that consent by the person 

making the communication, not later than 3 business days 

after the receipt of the consent by that person; 

(B) the person who makes the communication does not, for the purpose f 

making the communication, make any inquiry that if made by a 

prospective employer of the consumer who is the subject of the 

communication would violate any applicable Federal or State equal 

employment opportunity law or regulation; and" 

(C) the person who makes the communication 

(i) discloses in writing to the consumer who is the subject of 

the commupjcation, not later than 5 business days after 

receiving any request from the consumer for such 

disclosure, the nature and substance of all infonnation in 

the consumer's file at the time of the request, except that the 

sources of any infonnation that is acquired solely for use in 

making the communication and is actually used for no other 

purpose, need not be disclosed other than under appropriate 

discovery procedures in any court of competent jurisdiction 

in which an action is brought; and 

(ii) notifies the consumer who is the subject of the 

communication, in writing, of the consumer's right to request 

the infonnation described in clause (i). 

The tenn "consumer reporting agency that compiles and maintains files on 

Attachment A 

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Case 3:12-cv-02441-DMS-BLM Document 3-1 Filed 10/11/12 Page 28 of 34

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(q) 

consumers on a nationwide basis" means a consumer reporting agency that regularl 

engages in the practice of assembling or evaluating, and maintaining, for the 

purpose of furnishing consumer reports to third parties bearing on a consumer's 

credit worthiness, credit standing, or credit capacity, each of the following regardin 

consumers residing nationwide: 

(1) Pub lic record information. 

(2) Credit account information from persons who furnish that information 

regularly and in the ordinary course of business. 

Definitions relating to fraud alerts. 

(1) 

(2) 

The term "active duty military consumer" means a consumer in military 

service who-

(A) is on active duty (as defined in section 101(d)(1) of title 10, United 

States Code) or is a reservist performing duty under a call or order to 

active duty under a provision of law referred to in section 10 1 (a)( 13) 

of title 10, United States Code; and 

(B) is assigned to service away from the usual duty station of the 

consumer. 

The terms "fraud alert" and "active duty alert" mean a statement in the file 

of a consumer that -

(A) 

(B) 

notifies all prospective users of a consumer report relating to the 

consumer that the consumer may be a victim of fraud, including 

identity theft, or is an active duty military consumer, as applicable; 

and 

is presented in a manner that facilitates a clear and conspicuous view 

of the statement described in subparagraph (A) by any person 

Attachment A 

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Case 3:12-cv-02441-DMS-BLM Document 3-1 Filed 10/11/12 Page 29 of 34

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(r) 

(3) 

(4) 

(5) 

requesting such consumer report. 

The term "identity theft" means a fraud committed using the identifying 

information of another person, subject to such further definition as the 

Bureau may prescribe, by regulation. 

The term "identity theft report" has the meaning given that term by rule of 

the Bureau, and means, at a minimum, a report -

(A) that alleges an identity theft; 

(B) 

(C) 

that is a copy of an official, valid report filed by a consumer with an 

appropriate Federal, State, or local law enforcement agency, 

including the United States Postal Inspection Service, or such other 

government agency deemed appropriate by the Bureau; and 

the filing of which subjects the person filing the report to criminal 

penalties relating to the filing of false information if, in fact, the 

information in the report is false. 

The term "new credit plan" means a new account under an open end credit 

plan (as defined in section 103(i) of the Truth in Lending Act) or a new 

credit transaction not under an open end credit plan. 

Credit and Debit Related Terms 

(1) 

(2) 

(3) 

The term "card issuer" means -

(A) 

(B) 

a credit card issuer, in the case of a credit card; and 

a debit card issuer, in the case of a debit card. 

The term "credit card" has the same meaning as in section 103 of the Truth 

in Lending Act. 

The term "debit card" means any card issued by a financial institution to a 

consumer for use in initiating an electronic fund transfer from the account 

Attachment A 

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(s) 

(t) 

(u) 

(v) 

(w) 

(x) 

of the consumer at such financial institution, for the purpose of 

transferring money between accounts or obtaining money, property, labor, 

or services. 

(4) The terms "account" and "electronic fund transfer" have the same 

meanings as in section 903 of the Electronic Fund Transfer Act. 

(5) The terms "credit" and "creditor" have the same meanings as in section 

702 of the Equal Credit Opportunity Act. 

The term "Federal banking agency" has the same meaning as in section 3 of the 

Federal Deposit Insurance Act. 

The term "financial institution" means a State or National bank, a State or Federal 

savings and loan association, a mutual savings bank, a State or Federal credit 

union, or any other person that, directly or indirectly, holds a transaction account 

(as defined in section 19(b) of the Federal Reserve Act) belonging to a consumer. 

The term "reseller" means a consumer reporting agency that--

(l) assembles and merges information contained in the database of another 

consumer reporting agency or multiple consumer reporting agencies 

concerning any consumer for purposes of furnishing such information to 

any third party, to the extent of such activities; and 

(2) does not maintain a database of the assembled or merged information from 

which new consumer reports are produced. 

The term "Commission" means the Federal Trade Commission. 

The term "Bureau" means the Bureau of Consumer Financial Protection. 

The term "nationwide specialty consumer reporting agency" means a consumer 

reporting agency that compiles and maintains files on consumers on a nationwide 

basis relating to--

Attachment A 

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Case 3:12-cv-02441-DMS-BLM Document 3-1 Filed 10/11/12 Page 31 of 34

1 (1) medical records or payments; 

2 (2) residential or tenant history; 

3 (3) check writing history; 

4 (4) employment history; or 

5 (5) insurance claims. 

6 (y) Exclusion of Certain Communications for Employee Investigations 

7 (1) A communication is described in this subsection if--

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(A) 

(B) 

(C) 

(D) 

but for subsection (d)(2)(D), the communication would be a 

consumer report; 

the communication is made to an employer in connection with an 

investigation of-

(i) suspected misconduct relating to employment; or 

compliance with Federal, State, or local laws and 

regulations, the rules of a self-regulatory organization, or 

any preexisting written policies of the employer; 

the communication is not made for the purpose of investigating a 

consumer's credit worthiness, credit standing, or credit capacity; 

and 

the communication is not provided to any person except--

(i) 

(ii) 

to the employer or an agent of the employer; 

to any Federal or State officer, agency, or department, or 

any officer, agency, or department of a unit of general local 

government; 

(iii) to any self-regulatory organization with regulatory authority 

Attachment A 

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(2) 

(3) 

over the activities of the employer or employee; 

(iv) as otherwise required by law; or 

(v) pursuant to section 608. 

Subsequent disclosure. After taking any adverse action based in whole or 

in part on a communication described in paragraph (1), the employer shall 

disclose to the consumer a summary containing the nature and substance 

of the communication upon which the adverse action is based, except that 

the sources of information acquired solely for use in preparing what would 

be but for subsection (d)(2)(D) an investigative consumer report need not 

be disclosed. 

For purposes of this subsection, the term "self-regulatory organization" 

includes any self-regulatory organization (as defined in section 3(a)(26) of 

the Securities Exchange Act of 1934), any entity established under title I 

of the Sarbanes-Oxley Act of 2002, any board of trade designated by the 

Commodity Futures Trading Commission, and any futures association 

registered with such Commission. 

Attachment A 

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Property Address 

141 AirStream Lane 

Tavernier, Florida 

181 AirStream Lane 

Tavernier, Florida 

29517 Flying Cloud 

Big Pine, Florida 

75 N. Bay Drive 

Key Largo, Florida 

Legal Description 

Lot 7, Block 3, of Amended and 

Extended Plat of Vacation Village, 

according to the Plat thereof, as 

recorded in Plat Book 5, at Page 69, of 

the Public Records of Monroe County, 

Florida. 

Lot 12, Block 3, of Amended Plat of 

Vacation Village, according to the Plat 

thereof, as recorded in Plat Book 5, at 

Page 69, of the Public Records of 

Monroe County, Florida. 

Lot 31, Block 4, of PINE CHANNEL 

ESTATES, SECTION 2, according to 

the Plat thereof, as recorded in Plat 

Book 6, at Page 2, of the Public 

Records of Monroe County, Florida. 

Lot 14 and the Easterly 25 feet of Lot 

13, Block 1, SUNSET POINT, 

according to the Plat thereof, as 

recorded in Plat Book 2, at Page 81, of 

the Public Records of Monroe County, 

Florida. 

Attachment B 

32 

Owner Encumbrance 

Linda None 

Giordano 

Linda None 

Giordano 

Linda None 

Giordano 

Linda None 

Giordano 
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Case 3:12-cv-02441-DMS-BLM Document 3-1 Filed 10/11/12 Page 34 of 34

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126 S. Bay Drive 

Key Largo, Florida 

! 

Lot 48, Block 1, of AMENDED PLAT Linda None 

OF BAY HARBOR, according to the Giordano 

Plat thereof, as recorded in Plat Book 

2, at Page 91, of the Public Records of 

Monroe County, Florida. 

Attachment B 

33