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Case No. 4:18-cv-00806-SBA

EX PARTE APPL’N SEEKING COMPLIANCE WITH PRELIMINARY INJUNCTION

Sanjay Bhandari (SBN 181920)

McNamara Smith LLP

655 West Broadway, Suite 1600

San Diego, California 92101

Telephone: 619-269-0400

Facsimile: 619-269-0401

Email: sbhandari@mcnamarallp.com

Attorneys for Court-appointed Receiver,

Thomas W. McNamara

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

OAKLAND DIVISION

FEDERAL TRADE COMMISSION,

Plaintiff,

vs.

AMERICAN FINANCIAL BENEFITS 

CENTER, a corporation, also d/b/a AFB and 

AF STUDENT SERVICES; AMERITECH 

FINANCIAL, a corporation; FINANCIAL 

EDUCATION BENEFITS CENTER, a 

corporation; and BRANDON DEMOND 

FRERE, individually and as an officer of 

AMERICAN FINANCIAL BENEFITS 

CENTER, AMERITECH FINANCIAL, and 

FINANCIAL EDUCATION BENEFITS 

CENTER,

Defendants.

Case No. 4:18-cv-00806-SBA

RECEIVER’S EX PARTE APPLICATION 

SEEKING COMPLIANCE WITH 

PRELIMINARY INJUNCTION AND 

ORDER TO SHOW CAUSE AS TO WHY 

DEFENDANT BRANDON FRERE 

SHOULD NOT BE HELD IN CIVIL 

CONTEMPT; MEMORANDUM OF 

POINTS AND AUTHORITIES IN 

SUPPORT THEREOF

JUDGE: Hon. Saundra Brown Armstrong

Case 4:18-cv-00806-SBA Document 189 Filed 12/04/18 Page 1 of 10
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1 Case No. 4:18-cv-00806-SBA

EX PARTE APPL’N SEEKING COMPLIANCE WITH PRELIMINARY INJUNCTION

Pursuant to L.R. 7-10 and the Modified Preliminary Injunction Order (ECF No. 187, the 

“PI Order”), § VII.F, Receiver Thomas W. McNamara hereby applies ex parte for an Order to 

Show Cause as to Why Defendant Brandon Frere Should Not Be Held in Civil Contempt. 

Within three hours of the Court clerk alerting the parties’ counsel that an order on the FTC’s 

Motion for Preliminary Injunction was imminent, Defendant Brandon Frere liquidated two of the 

Corporate Defendants’ bank accounts. He transferred $400,000 from Defendant American 

Financial Benefits Center (“AFBC”)’s and Defendant Financial Education Benefits Center

(“FEBC”)’s bank accounts to himself, his family, and one of his attorneys. The Receiver has 

requested that Defendant return these funds, but he has not done so.1 

The PI Order provides that where “any person fails to deliver or transfer any Asset or 

Document, or otherwise fails to comply with any provision of this Section [entitled Transfer of 

Receivership Property to Receiver], the Receiver may file an Affidavit of Non-Compliance and 

motion seeking compliance or a contempt citation.” PI Order § VII. Pursuant to the PI Order, 

the Receiver requests that the Court enter an order requiring Frere to immediately return the 

$400,000 he withdrew from the Corporate Defendants’ bank accounts, and that he be charged a 

fine in the amount of $5,000 per day until the contempt is purged. The Receiver further requests 

that the Court hold Frere liable to the Receivership Estate for compensation for any actual 

damages suffered, including the Receiver’s attorneys’ fees and expenses in bringing the ex parte

application.

Relief is sought ex parte to shorten the time in which this matter is heard. Such expedited 

relief is sought because there is ongoing contempt that threatens to cause continued violation of 

the Court’s Orders.

Notice of this application has been provided to counsel for Frere who acknowledged 

receipt of the notice, but did not state whether or not they would oppose the ex parte application.

///

 

1 Notably, at the same time he was transferring hundreds of thousands of dollars for his benefit, 

Defendant Frere made no provision to pay his employees their outstanding pre-receivership 

wages, which for two weeks of work totaled roughly $175,000. 

Case 4:18-cv-00806-SBA Document 189 Filed 12/04/18 Page 2 of 10
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2 Case No. 4:18-cv-00806-SBA

EX PARTE APPL’N SEEKING COMPLIANCE WITH PRELIMINARY INJUNCTION

Notice of this application has also been provided to counsel for the FTC, who support the 

application.

Because civil contempt requires that the alleged contemnor receive an opportunity to 

respond and to be heard at an in-person hearing prior to any finding of contempt, a briefing and 

hearing schedule should be set to allow Frere a full and fair opportunity to be heard.

This ex parte application is supported by this application, the accompanying 

memorandum of points and authorities, the declaration of Thomas W. McNamara, all pleadings 

and papers on file in this action, and upon such other matters as may be presented to the Court at 

the time of the hearing. A proposed order is attached hereto.

Dated: December 4, 2018 MCNAMARA SMITH LLP

By: /s/ Sanjay Bhandari

Attorneys for Court-appointed Receiver,

Thomas W. McNamara

Case 4:18-cv-00806-SBA Document 189 Filed 12/04/18 Page 3 of 10
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1 Case No. 4:18-cv-00806-SBA

EX PARTE APPL’N SEEKING COMPLIANCE WITH PRELIMINARY INJUNCTION

MEMORANDUM OF POINTS AND AUTHORITIES

Thomas W. McNamara, in his capacity as the Court-appointed Receiver (the “Receiver”) 

for Defendants American Financial Benefits Center (“AFBC”), Ameritech Financial

(“Ameritech”), and Financial Education Benefits Center (“FEBC” and, collectively with AFBC 

and Ameritech, the “Corporate Defendants”), respectfully submits his memorandum of points 

and authorities in support of his motion for issuance of an order to show cause why Defendant 

Brandon Frere (“Frere,” and collectively with the Corporate Defendants, “Defendants”) should 

not be held in contempt of court based on his violation of this Court’s orders.

I.

INTRODUCTION

This action was commenced by the Federal Trade Commission (the “FTC”) on February 

7, 2018, against Defendants. After extensive briefing by the parties, this Court granted the 

FTC’s Motion for Preliminary Injunction and appointed a receiver last Thursday afternoon, 

November 29, 2018 at roughly 2:30 pm.2 The Receiver was appointed as receiver for the 

Corporate Defendants pursuant to the PI Order. The PI Order provides that the Receiver is to 

take possession and control of the assets of the Corporate Defendants with the full powers of an 

equity receiver. Since being appointed, the Receiver has taken exclusive custody of each 

location from which the Corporate Defendants operate their businesses and is in the process of 

preparing a preliminary report for the Court.

Frere drained FEBC’s and AFBC’s bank accounts, withdrawing $400,000 of funds 

belonging to the Receivership Estate, after learning that the Court would be issuing an Order on 

the FTC’s Motion for Preliminary Injunction. He has since refused to return the funds to the 

Corporate Defendants. His conduct violates the terms of the PI Order, which requires that 

“Defendants, and any other person with possession, custody, or control of property of, or records 

relating to, the Corporate Defendants shall . . . fully cooperate with and assist the Receiver in 

 

2 Given the Court’s intimate familiarity with this matter (as demonstrated in the Court’s Order 

Granting Motion for Preliminary Injunction (ECF No. 186) and the PI Order (ECF No. 187)), the 

Receiver will not repeat the allegations or procedural history of the case here.

Case 4:18-cv-00806-SBA Document 189 Filed 12/04/18 Page 4 of 10
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2 Case No. 4:18-cv-00806-SBA

EX PARTE APPL’N SEEKING COMPLIANCE WITH PRELIMINARY INJUNCTION

taking and maintaining possession, custody, or control of the Assets and Documents of the

Corporate Defendants and immediately transfer or deliver to the Receiver possession, custody,

and control of . . . [a]ll Assets held by or for the benefit of the Corporate Defendants.” PI Order 

§ VII.

By this motion, the Receiver respectfully requests that the Court issue an order to show 

cause why Frere should not be held in contempt of Court based on his failure to comply with the 

Court’s orders.

II.

FACTUAL BACKGROUND

After learning he had been appointed in the afternoon of November 29, the Receiver 

spoke with the parties via conference call at approximately 6:00 p.m. The following morning, on 

November 30, the Receiver met with defense counsel at the Corporate Defendants’ Rohnert Park 

offices. Over the course of that day, the Receiver took control of the Corporate Defendants’ 

assets, including bank accounts; confirmed that electronic data was protected and preserved; and 

suspended automatic customer billing. The Receiver has since begun the process of reviewing 

the companies’ files and interviewing employees. 

In the course of reviewing the Corporate Defendants’ financial records on Friday, 

November 30, the Receiver discovered that Frere had withdrawn a total of $400,000 from FEBC 

and AFBC bank accounts ($200,000 from each) in the afternoon of November 29, the very day 

the Receiver was appointed.

Having investigated those transfers, the Receiver has determined that Frere withdrew 

these funds before the PI Order was entered, but after the Court clerk alerted the parties that an 

Order on the PI Motion was forthcoming. Having spoken to both FTC and Defense counsel, the 

Receiver understands that the Court clerk separately called both counsel at roughly 11:00 a.m. to 

inform them that the Initial Case Management Conference (“CMC”) would be moved as an 

Order on the FTC’s Motion for Preliminary Injunction would soon issue. The Receiver further 

understands that at about 11:40 a.m. the Clerk’s Notice Continuing the CMC (ECF No. 185) was 

issued. Approximately two hours later, Frere emptied the bank accounts of two the Corporate 

Case 4:18-cv-00806-SBA Document 189 Filed 12/04/18 Page 5 of 10
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3 Case No. 4:18-cv-00806-SBA

EX PARTE APPL’N SEEKING COMPLIANCE WITH PRELIMINARY INJUNCTION

Defendants, transferring $400,000 to his personal bank account, his family members, and one of 

his attorneys. Around 1:45 p.m. PT a series of transfers were made from accounts belonging to 

AFBC and FEBC. The amounts transferred were as follows:

 $7,500 was transferred to Justin Frere, Frere’s brother. Declaration of Thomas W. 

McNamara (“McNamara Decl.”) ¶¶ 7, 13.

 $9,000 was transferred to Cameron Henry, a former employee of Defendants and 

a partial owner of one or more of the Corporate Defendants. Id. ¶¶ 8, 14.

 $15,000 was transferred to Andre and Gloria Frere, Frere’s parents. Id. ¶¶ 9, 15.

 $268,500 was transferred to a savings account belonging to Frere. Id. ¶¶ 10, 16.

 $100,000 was transferred to Frere’s counsel. Id. ¶ 11.

The transferees have one thing in common: their connection to Frere. Frere withdrew 

these assets, which belong to the Receivership Estate, and furtively transferred them to friends, 

family, his counsel, and his own savings account less than one hour before the PI Order was 

entered. Frere violated the PI Order in so doing, and he has since refused to return the funds. 

The Receiver now seeks to have these assets returned to their rightful owner – the Receivership 

Estate.

III.

LEGAL STANDARD RE: CIVIL CONTEMPT

Compliance with a preliminary injunction may be enforced through contempt

proceedings. Reynolds v. Roberts, 207 F.3d 1288, 1298 (11th Cir. 2000). A court’s ability to 

punish contempt is thought to be an inherent and integral element of its power and has deep 

historical roots. Sigety v. Abrams, 632 F.2d 969, 976 (2nd Cir. 1980). The relief granted in civil 

contempt proceedings is compensatory or conditional. General Signal Corp. v. Donallco, Inc., 

787 F.2d 1376, 1380 (9th Cir. 1986). Such relief often takes the form of a fine in the amount of 

the damage sustained by the moving party. Yanish v. Barber, 232 F.2d 939, 944 (9th Cir. 1956). 

Such relief can also include an award of costs and attorney fees. N.Y. State Nat’l Org. for 

Women v. Terry, 159 F.3d 86, 96 (2nd Cir. 1998). A “purge” provision, like the one the 

Receiver has requested here, is typical of the civil contempt process, as it allows “the contemnor 

Case 4:18-cv-00806-SBA Document 189 Filed 12/04/18 Page 6 of 10
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4 Case No. 4:18-cv-00806-SBA

EX PARTE APPL’N SEEKING COMPLIANCE WITH PRELIMINARY INJUNCTION

. . . to purge the contempt and obtain his release by committing an affirmative act.” See United 

States v. United Mine Workers, 330 US. 258, 305 (1947); see also Hicks v. Feiock, 485 US. 624, 

632 (1988) (“[A] fine that would be payable to the court is . . . remedial when the defendant can 

avoid paying the fine simply by performing the affirmative act required by the court’s order”). 

To obtain a citation of contempt, the moving party need not demonstrate that the contemnor 

acted with intent to violate an injunction, and good faith is not a defense to failure to comply 

with a court’s order. McComb v. Jacksonville Paper Co., 336 U.S. 187, 191-93 (1949); Peppers 

v. Barry, 873 F.2d 967, 968-69 (6th Cir. 1989).

IV.

ARGUMENT

Given the timeline and Frere’s furtive withdrawals after he became aware an Order 

would be issued on the FTC’s Motion for Preliminary Injunction, it can be inferred that Frere 

intended to avoid being bound by the terms of the Order. Frere knew the forthcoming Order 

could require him to turn over the assets of his businesses to a receiver. Moreover, Frere refused

to return the Corporate Defendants’ assets even after he was put on notice by the Receiver on the 

following day that those assets belonged to the Receivership Estate, which is contemptuous 

conduct in and of itself. See PI Order § VII. 

The PI Order bars any interference with assets of the Corporate Defendants or the

Receiver’s efforts to obtain such assets. See PI Order § X. The term “assets” is broadly defined 

in the PI Order as “any legal or equitable interest in, right to, or claim to, any property, wherever 

located and by whomever held.” Id. at 2. The PI Order instructs:

Defendants, and their officers, agents, employees, and those persons or 

entities in active concert or participation with any of them who receive actual 

notice of this Order, and any other person served with a copy of this Order, are 

hereby restrained and enjoined from directly or indirectly:

A. Interfering with the Receiver’s efforts to manage, or take custody, 

control, or possession of, the Assets or Documents subject to the receivership;

B. Transacting any of the business of the Corporate Defendants;

C. Transferring, receiving, altering, selling, encumbering, pledging, 

assigning, liquidating, or otherwise disposing of any Assets owned, controlled, or 

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5 Case No. 4:18-cv-00806-SBA

EX PARTE APPL’N SEEKING COMPLIANCE WITH PRELIMINARY INJUNCTION

in the possession or custody of, or in which an interest is held or claimed by, the 

Corporate Defendants; or

D. Refusing to cooperate with the Receiver or the Receiver’s duly 

authorized agents in the exercise of their duties or authority under any order of 

this Court.

Id. § X.

The PI Order directs the Receiver to “[t]ake exclusive custody, control, and possession of 

all Assets and Documents of the Corporate Defendants, or in the possession, custody, or under 

the control of, any Corporate Defendant, wherever situated,” and empowers the Receiver “to sue 

for, collect, and receive all Assets of the Corporate Defendants and of other persons or entities 

whose interests are now under the direction, possession, custody, or control of the Corporate 

Defendants.” Id. § VI.B-C.

Frere violated these provisions of the PI Order. As is described above, the bank accounts 

belonging to AFBC and FEBC holds, or held, money that belongs to the Receivership Estate. 

Once appointed, the Receiver gained (and continues to have) access to and control over those 

accounts. Scant minutes before the Receiver’s appointment, however, Frere transferred a total of 

$400,000 out of these accounts. Beyond the violation of the PI Order in taking the $400,000 in 

Corporate funds in the first instance, Frere violated the PI Order when he refused to return the 

funds the following day, after the Receiver informed Frere’s counsel that the withdrawn funds 

were assets belonging to the Receivership Estate. Frere used his access to AFBC and FEBC to 

interfere with the Receiver’s attempts to administer the estate, and has refused to return assets 

that rightfully belong to the Receivership Estate.

3

///

///

 

3

In the Order Granting Motion for Preliminary Injunction, the Court expressed concern about 

the substantial compensation received by Frere and the distributions he directed to others, 

including family members, given that such “expenditures deplete the assets that may be available 

for consumer redress.” ECF No. 186 at 26. It appears that compensation taken by Frere and the 

distributions to his family members are vastly larger than the Court knew of at the time of the 

Order. See id. at 24 n.11 (noting that Frere had transferred over $3.164 million to himself and 

$864,000 to family and family-owned businesses). Our initial review of the records reveals that

Frere has received more than $7.1 million since February of 2017. In other words, Defendant 

Frere has received more than $10.2 million from the Corporate Defendants since 2015.

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V.

RELIEF SOUGHT BY RECEIVER ON 

BEHALF OF RECEIVERSHIP ESTATE

Defendant Frere should be ordered to show cause why he should not be held in contempt 

of court based on his interference with this Court’s exclusive possession and control of the 

Corporate Defendants’ assets. Frere should be ordered to pay the Receivership Estate the 

$400,000 that was held by AFBC and FEBC, plus attorneys’ fees and costs that have been 

incurred by the Receiver. Frere should be allowed to purge himself of his contempt of court if he

or other persons or companies that Frere controls transfer such sums to the Receiver’s account

within ten (10) days after entry of the order of contempt.

VI.

CONCLUSION

For the reasons described above, the Receiver respectfully submits that his motion should 

be granted. 

Dated: December 4, 2018 MCNAMARA SMITH LLP

By: /s/ Sanjay Bhandari

Attorneys Court-appointed Receiver,

Thomas W. McNamara

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Case No. 4:18-cv-00806-SBA

CERTIFICATE OF SERVICE

CERTIFICATE OF SERVICE

I hereby certify that on the 4th day of December, 2018, the foregoing document 

(RECEIVER’S EX PARTE APPLICATION SEEKING COMPLIANCE WITH 

PRELIMINARY INJUNCTION AND ORDER TO SHOW CAUSE AS TO WHY 

DEFENDANT BRANDON FRERE SHOULD NOT BE HELD IN CIVIL CONTEMPT; 

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF) was 

electronically transmitted to the Clerk’s Office using the CM/ECF System for filing, and for 

transmittal of a Notice of Electronic Filing to all counsel of record who are deemed to have 

consented to electronic service via the Court’s CM/ECF system.

/s/ Sanjay Bhandari

Sanjay Bhandari

Case 4:18-cv-00806-SBA Document 189 Filed 12/04/18 Page 10 of 10