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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 1 of 30 

JOSEPH H. HUNT 

Assistant Attorney General, Civil Division 

United States Department of Justice 

DAVID M. MORRELL 

Deputy Assistant Attorney General 

GUSTAV W. EYLER 

Director, Consumer Protection Branch 

SPEARE I. HODGES 

Trial Attorney, Consumer Protection Branch 

450 5th Street NW, Suite 6400S 

Washington, DC 20044 

(202) 532-0295 

Speare.I.Hodges@usdoj.gov 

ROBIN L. WETHERILL 

Division of Privacy and Identity Protection 

Bureau of Consumer Protection 

Federal Trade Commission 

600 Pennsylvania Avenue, NW 

Washington, DC 20580 

(202) 326-2220 

rwetherill@ftc.gov 

DAVID LINCICUM 

Division of Privacy and Identity Protection 

Bureau of Consumer Protection 

Federal Trade Commission 

600 Pennsylvania Avenue, NW 

Washington, DC 20580 

(202) 326- 2773 

dlincicum@ftc.gov 

Attorneys for Plaintiff 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 1 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 2 of 30 

UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF CALIFORNIA 

OAKLAND DIVISION 

UNITED STATES OF AMERICA, 

Plaintiff, 

v. 

MORTGAGE SOLUTIONS FCS, INC., a 

corporation, also d/b/a Mount Diablo Lending, 

and 

RAMON WALKER, individually and as an officer 

of Mortgage Solutions FCS, Inc., 

Defendants. 

Case No. 4:20-cv-00110 

[Proposed] STIPULATED ORDER 

FOR PERMANENT INJUNCTION, 

CIVIL PENALTIES, AND OTHER 

RELIEF 

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

Attorney General by the Federal Trade Commission (“Commission” or “FTC”), filed its 

Complaint for Permanent Injunction and Other Equitable Relief ( “Complaint”), for a permanent 

injunction, civil penalties, and other equitable relief in this matter, pursuant to Sections 13(b) and 

16(a)(1) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 53(b) and 56(a)(1). 

Defendants have waived service of the summons and the Complaint. Plaintiff and Defendants 

stipulate to the entry of this Stipulation and Order (“Order”) to resolve all matters in dispute in 

this action between them. 

THEREFORE, IT IS ORDERED as follows: 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 2 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 3 of 30 

FINDINGS 

1. This Court has jurisdiction over this matter. 

2. The Complaint charges that Defendants participated in deceptive and unfair acts or 

practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45; violated the Fair Credit 

Reporting Act, 15 U.S.C. §§ 1681-1681x (the “FCRA”); violated the rule regarding the Privacy 

of Consumer Financial Information (“Regulation P”), 12 C.F.R. Part 1016, issued pursuant to 

Title V, Subtitle A, of the Gramm-Leach-Bliley Act (“GLB Act”), 15 U.S.C. §§ 6801-6804; and 

violated of the rule regarding the Standards for Safeguarding Customer Information (“Safeguards 

Rule”), 16 C.F.R. Part 314, issued pursuant to Title V, Subtitle A, of the Gramm-Leach-Bliley 

Act (“GLB Act”), 15 U.S.C. §§ 6801(b), 6805(b)(2). Specifically, the Complaint charges that 

Defendants failed to accurately disclose their privacy practices, failed to develop and implement 

an adequate information security program, and improperly disclosed customers’ sensitive 

personal financial information. 

3. Defendants neither admit nor deny any of the allegations in the Complaint, except as 

specifically stated in this Order. Only for purposes of this action, Defendants admit the facts 

necessary to establish jurisdiction. 

4. Defendants waive any claim that they may have under the Equal Access to Justice Act, 28 

U.S.C. § 2412, concerning the prosecution of this action through the date of this Order, and agree 

to bear their own costs and attorney fees. 

5. Defendants and Plaintiff waive all rights to appeal or otherwise challenge or contest the 

validity of this Order. 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 3 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 4 of 30 

DEFINITIONS 

or the purpose of this Order, the following definitions apply: 

. “Clear(ly) and Conspicuous(ly)” means that a required disclosure is reasonably 

nderstandable and designed to call attention to the nature and significance of the information in 

he notice, including in all of the following ways: 

1. In any communication that is solely visual or solely audible, the disclosure must be made

through the same means through which the communication is presented. In any 

communication made through both visual and audible means, such as a television 

advertisement, the disclosure must be presented simultaneously in both the visual and audible 

portions of the communication even if the representation requiring the disclosure is made in 

only one means. 

2. A visual disclosure, by its size, contrast, location, the length of time it appears, and other 

characteristics, must stand out from any accompanying text or other visual elements so that it 

is easily noticed, read, and understood. 

3. An audible disclosure, including by telephone or streaming video, must be delivered in a 

volume, speed, and cadence sufficient for ordinary consumers to easily hear and understand it

4. In any communication using an interactive electronic medium, such as the Internet or 

software, the disclosure must be unavoidable. 

5. The disclosure must use diction and syntax understandable to ordinary consumers and 

must appear in each language in which the representation that requires the disclosure appears. 

6. The disclosure must comply with these requirements in each medium through which it is 

received, including all electronic devices and face-to-face communications. 

7. The disclosure must not be contradicted or mitigated by, or inconsistent with, anything 

F

A

u

t

. 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 4 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 5 of 30 

else in the communication. 

8. When the representation or sales practice targets a specific audience, such as children, the 

elderly, or the terminally ill, “ordinary consumers” includes reasonable members of that 

group. 

B. “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 part For a Permissible Purpose. 

C. “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. 

D. “Corporate Defendant” means Mortgage Solutions FCS, Inc., also doing business as 

Mount Diablo Lending, and its successors and assigns. 

E. “Covered Business” means Corporate Defendant, any business that Corporate Defendant 

controls, directly or indirectly, and any business that Individual Defendant controls, directly or 

indirectly. 

F. “Covered Incident” means any instance in which any United States federal, state, or 

local law or regulation requires a Covered Business or Individual Defendant, to notify any U.S. 

federal, state, or local government entity that Nonpublic Personal Information collected or 

received, directly or indirectly, by a Covered Business from or about an individual consumer 

was, or is reasonably believed to have been, accessed, acquired, or shared without authorization. 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 5 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 6 of 30 

G. “Customer Relationship” means a continuing relationship between a consumer and a 

business under which the business provides one or more Financial Services to the consumer that 

are to be used primarily for personal, family, or household purposes. 

H. “Defendants” means the Individual Defendant and the Corporate Defendant, 

individually, collectively, or in any combination. 

I. “Excepted Disclosures” means disclosures of Nonpublic Personal Information made: 

1. In connection with: 

a. Servicing or processing a financial product or service that a consumer requests or 

authorizes; 

b. Maintaining or servicing the consumer’s account with a Covered Business, or with 

another entity as part of a private label credit card program or other extension of 

credit on behalf of such entity; or 

C. A proposed or actual securitization, secondary market sale (including sales of 

servicing rights), or similar transaction related to a transaction of the consumer. 

2. To protect the confidentiality or security of Defendants’ records pertaining to the 

consumer, service, product, or transaction; 

3. To protect against or prevent actual or potential fraud, unauthorized transactions, claims, 

or other liability; 

4. For required institutional risk control or for resolving consumer disputes or inquiries; 

5. To persons holding a legal or beneficial interest relating to the consumer; 

6. To persons acting in a fiduciary or representative capacity on behalf of the consumer; 

7. To provide information to insurance rate advisory organizations, guaranty funds or 

agencies, agencies that are rating Defendants, persons that are assessing Defendants’ 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 6 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 7 of 30 

compliance with industry standards, and Defendants’ attorneys, accountants, and auditors; 

8. To the extent specifically permitted or required under provisions of law, to law 

enforcement agencies, self-regulatory organizations, or for an investigation on a matter 

related to public safety; 

9. To a Consumer Reporting Agency; 

10. In connection with a proposed or actual sale, merger, transfer, or exchange of all or a 

portion of a business or operating unit if the disclosure of Nonpublic Personal Information 

concerns solely consumers of such business or unit; 

11. To comply with Federal, state, or local laws, rules and other applicable legal 

requirements; 

12. To comply with a properly authorized civil, criminal, or regulatory investigation, or 

subpoena or summons by Federal, state, or local authorities; or 

13. To respond to judicial process or government regulatory authorities having jurisdiction 

over Defendants for examination, compliance, or other purposes as authorized by law. 

J. “Financial Service” means: 

1. Extending credit and servicing loans. Making, acquiring, brokering, or servicing loans or 

other extensions of credit (including factoring, issuing letters of credit and accepting drafts) 

for the company’s account or for the account of others; 

2. Activities related to extending credit. Any activity usual in connection with making, 

acquiring, brokering or servicing loans or other extensions of credit, including: 

a. Real estate and personal property appraising. Performing appraisals of real estate 

and tangible and intangible personal property, including securities. 

b. Arranging commercial real estate equity financing. Acting as intermediary for the 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 7 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 8 of 30 

financing of commercial or industrial income-producing real estate by arranging for the 

transfer of the title, control, and risk of such a real estate project to one or more investors, 

if the bank holding company and its affiliates do not have an interest in, or participate in 

managing or developing, a real estate project for which it arranges equity financing, and 

do not promote or sponsor the development of the property. 

c. Asset management, servicing, and collection activities. Engaging under contract 

with a third party in asset management, servicing, and collection of assets of a type that 

an insured depository institution may originate and own, if the company does not engage 

in real property management or real estate brokerage services as part of these services. 

d. Real estate settlement servicing. Providing real estate settlement services. 

3. Leasing personal or real property. Leasing personal or real property or acting as agent, 

broker, or adviser in leasing such property if: 

a. The lease is on a nonoperating basis; 

b. The initial term of the lease is at least 90 days; 

c. In the case of leases involving real property: 

i. At the inception of the initial lease, the effect of the transaction will yield 

a return that will compensate the lessor for not less than the lessor’s full 

investment in the property plus the estimated total cost of financing the 

property over the term of the lease from rental payments, estimated tax 

benefits, and the estimated residual value of the property at the expiration 

of the initial lease; and 

ii. The estimated residual value of property shall not exceed 25 percent of the 

acquisition cost of the property to the lessor. 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 8 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 9 of 30 

4. Financial and investment advisory activities. Acting as investment or financial advisor to 

any person, including (without, in any way, limiting the foregoing): 

a. Serving as investment adviser to a registered investment company, including 

sponsoring, organizing, and managing a closed-end investment company; 

b. Furnishing general economic information and advice, general economic statistical 

forecasting services, and industry studies; or 

c. Providing educational courses, and instructional materials to consumers on 

individual financial management matters; 

5. Credit insurance. Acting as principal, agent, or broker for insurance (including home 

mortgage redemption insurance) that is: 

a. Directly related to an extension of credit by the bank holding company or any of 

its subsidiaries; and 

b. Limited to ensuring the repayment of the outstanding balance due on the 

extension of credit in the event of the death, disability, or involuntary unemployment of 

the debtor. 

K. “For a Permissible Purpose” means: 

1. In connection with a credit transaction involving the consumer whose report is to be 

obtained or used and involving the extension of credit to, or review or collection of an 

account of, that consumer; or 

2. For employment purposes; or 

3. In connection with the underwriting of insurance involving the consumer; or 

4. In connection with a determination of the consumer’s eligibility for a license or other 

benefit granted by a governmental instrumentality required by law to consider an applicant’s 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 9 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 10 of 30 

financial responsibility or status; or 

5. In connection with a valuation of, or an assessment of the credit or prepayment risks 

associated with, an existing credit obligation; or 

6. Otherwise in connection with a legitimate business need for the information— 

a. In connection with a business transaction that is initiated by the consumer; or 

b. To review an account to determine whether the consumer continues to meet the 

terms of the account. 

. “Individual Defendant” means Ramon Walker. 

. “Information Security Program” means a comprehensive policy that is written in one 

r more readily accessible parts and contains administrative, technical, and physical safeguards 

hat are appropriate to Defendants’ size and complexity, the nature and scope of Defendants’ 

ctivities, and the sensitivity of any customer information at issue. 

. “Nonpublic Personal Information” means 

1. Personally Identifiable Financial Information; 

2. Any list, description, or other grouping of consumers (and publicly available information 

pertaining to them) that is derived using any Personally Identifiable Financial Information 

that is not publicly available. 

. “Opt Out Notice” means a Clear and Conspicuous notice that accurately explains 

onsumers’ right to opt out of disclosures of Nonpublic Personal Information to nonaffiliated 

hird parties. Such notice must state:

1. That Defendants disclose or reserve the right to disclose Nonpublic Personal Information 

about the consumer to a nonaffiliated third party; 

2. That the consumer has the right to Opt Out of that disclosure; and 

L

M

o

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N

O

c

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PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 10 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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3. A reasonable means by which the consumer may exercise the Opt Out right. 

. “Opt Out” means to direct that Defendants not disclose Nonpublic Personal Information 

bout that consumer to a nonaffiliated third party, except for Excepted Disclosures. 

. “Personally Identifiable Financial Information” means any information: 

1. That a consumer provides to Defendants to obtain a Financial Service from Defendants; 

2. About a consumer resulting from any transaction involving a Financial Service between 

Defendants and the consumer; or 

3. That Defendants otherwise obtain about a consumer in connection with providing a 

Financial Service to that consumer. 

. “Privacy Notice” means a Clear and Conspicuous notice that accurately reflects the 

efendant’s privacy policies and practices and that Defendants provide to a consumer not later 

han upon entering into a Customer Relationship with the consumer or, in any event, before 

isclosing any Nonpublic Personal Information about the consumer to any nonaffiliated third 

arty unless the disclosure is an Excepted Disclosure. Such notice shall include, at a minimum, 

I. The categories of Nonpublic Personal Information that Defendants collect; 

2. The categories of Nonpublic Personal Information that Defendants disclose; 

3. The categories of affiliates and nonaffiliated third parties to whom Defendants disclose 

Nonpublic Personal Information, other than parties to whom Defendants make Excepted 

Disclosures; 

4. The categories of Nonpublic Personal Information about Defendants’ former customers 

that Defendants disclose and the categories of affiliates and nonaffiliated third parties to 

whom Defendants disclose Nonpublic Personal Information about former customers, other 

than those parties to whom Defendants make only Excepted Disclosures; 

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a

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p

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PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 11 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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5. A separate statement of the categories of information Defendants disclose to Service 

Providers and the categories of Service Providers with whom Defendants have contracted; 

6. An explanation of the consumer’s right to opt out of the disclosure of Nonpublic Personal 

Information to nonaffiliated third parties, including the method(s) by which the consumer may 

exercise that right at that time and any disclosures to which the right does not apply; and 

7. Defendants’ policies and practices with respect to protecting the confidentiality and 

security of Nonpublic Personal Information. 

S. “Service Provider” means a nonaffiliated third party to which Defendants disclose 

Nonpublic Personal Information so that the third party can perform services for Defendants or 

functions on Defendants’ behalf, and with whom Defendants have entered into a contractual 

agreement that prohibits the third party from disclosing or using the information other than to 

carry out the purposes for which Defendants disclosed the information, including for a use that 

would qualify the disclosure as an Excepted Disclosure in the ordinary course of business. 

Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 12 of 30 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 12 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 13 of 30 

ORDER 

I. PROHIBITION AGAINST MISREPRESENTING PRIVACY PRACTICES 

IT IS ORDERED that Defendants, Defendants’ officers, agents, employees, and 

attorneys, and all other persons in active concert or participation with any of them, who receive 

actual notice of this Order, whether acting directly or indirectly, in connection with promoting or 

offering for sale any good or service, are permanently restrained and enjoined from 

misrepresenting, expressly or by implication, Defendants’ privacy and data security practices, 

including whether, how, and for what purposes Defendants collect, use, transfer, and/or disclose 

personal information about consumers. 

II. INJUNCTION CONCERNING USING OR OBTAINING CONSUMER REPORTS 

IT IS FURTHER ORDERED that Defendants and Defendants’ officers, agents, 

employees, and attorneys, and all other persons in active concert or participation with any of 

them, who receive actual notice of this Order, whether acting directly or indirectly, in connection 

with the sale of any good or service, are hereby permanently restrained and enjoined from using 

or obtaining a Consumer Report for any purpose other than For a Permissible Purpose. 

III. INJUNCTION CONCERNING THE PROVISION OF PRIVACY NOTICES 

IT IS FURTHER ORDERED that Defendants and Defendants’ officers, agents, 

employees, and attorneys, and all other persons in active concert or participation with any of 

them, who receive actual notice of this Order, whether acting directly or indirectly, in connection 

with Defendants’ provision of any Financial Service are hereby permanently restrained and 

enjoined from failing to provide a Privacy Notice to each consumer with whom Defendants form 

a Customer Relationship or about whom Defendants make a disclosure of Nonpublic Personal 

Information, other than an Excepted Disclosure, to a nonaffiliated third party. 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 13 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 14 of 30 

IV. PROHIBITION AGAINST IMPROPER DISCLOSURE OF NONPUBLIC 

PERSONAL INFORMATION 

IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents, employees, 

and attorneys, and all other persons in active concert or participation with any of them, who 

receive actual notice of this Order, whether acting directly or indirectly, in connection with 

Defendants’ provision of any Financial Service, are permanently restrained and enjoined from 

disclosing to any nonaffiliated third party any Nonpublic Personal Information about a consumer 

unless 

A. The disclosure is to a Service Provider or is an Excepted Disclosure; or 

B. Defendants have: 

1. Clearly and Conspicuously disclosed to the consumer, separate and apart from any 

“privacy policy,” “data use policy,” “statement of rights and responsibilities” page, or other 

similar document, including any notice provided pursuant to Provision III of this order: (1) 

the categories of nonpublic personal information that will be disclosed to such third parties 

and (2) the identity or specific categories of such third parties; and 

2. Obtained the relevant consumer’s affirmative express consent. 

V. MANDATED INFORMATION SECURITY PROGRAM 

IT IS FURTHER ORDERED that each Covered Business shall not transfer, sell, share, 

collect, maintain, or store Nonpublic Personal Information unless the Covered Business 

establishes and implements, and thereafter maintains, a comprehensive Information Security 

Program that protects the security, confidentiality, and integrity of such Nonpublic Personal 

Information. To satisfy this requirement, each Covered Business must, at a minimum: 

A. Document in writing the content, implementation, and maintenance of the Information 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 14 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 15 of 30 

Security Program; 

B. Provide the written program and any evaluations thereof or updates thereto to a senior 

officer responsible for its Information Security Program at least once every twelve (12) months 

and promptly after a Covered Incident; 

C. Designate a qualified employee or employees to coordinate and be responsible for the 

Information Security Program; 

D. Assess and document, at least once every twelve (12) months and promptly following a 

Covered Incident, internal and external risks to the security, confidentiality, or integrity of 

Personal Information that could result in the unauthorized disclosure, misuse, loss, theft, 

alteration, destruction, or other compromise of such information; 

E. Design, implement, maintain, and document safeguards that control the internal and 

external risks to the security, confidentiality, or integrity of Nonpublic Personal Information 

identified in response to sub-Provision VI.D. Each safeguard shall be based on the volume and 

sensitivity of the Personal Information that is at risk, and the likelihood that the risk could be 

realized and result in the unauthorized access, collection, use, alteration, destruction, or 

disclosure of the Personal Information. 

F. Assess, at least once every twelve (12) months and promptly following a Covered 

Incident, the sufficiency of any safeguards in place to address the risks to the security, 

confidentiality, or integrity of Nonpublic Personal Information, and modify the Information 

Security Program based on the results; 

G. Test and monitor the effectiveness of the safeguards at least once every twelve (12) 

months and promptly following a Covered Incident, and modify the Information Security 

Program based on the results; 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 15 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 16 of 30 

H. Select and retain service providers capable of safeguarding Nonpublic Personal 

Information they access through or receive from each Covered Business, and contractually 

require service providers to implement and maintain safeguards for Personal Information; and 

I. Evaluate and adjust the Information Security Program in light of any changes to its 

operations or business arrangements, a Covered Incident, or any other circumstances that 

Defendants know or have reason to know may have an impact on the effectiveness of the 

Information Security Program. At a minimum, each Covered Business must evaluate the 

Information Security Program at least once every twelve (12) months and modify the 

Information Security Program based on the results. 

VI. INFORMATION SECURITY ASSESSMENTS BY A THIRD PARTY 

IT IS FURTHER ORDERED that, in connection with compliance with Provision VI of 

this Order titled Mandated Information Security Program, Defendants must obtain, for each 

Covered Business, initial and biennial assessments (“Assessments”): 

A. The Assessments must be obtained from a qualified, objective, independent third-party 

professional (“Assessor”), who: (1) uses procedures and standards generally accepted in the 

profession; (2) conducts an independent review of the Information Security Program; and (3) 

retains all documents relevant to each Assessment for five (5) years after completion of such 

Assessment and will provide such documents to the Commission within ten (10) days of receipt 

of a written request from a representative of the Commission. No documents may be withheld 

on the basis of a claim of confidentiality, proprietary or trade secrets, work product protection, 

attorney client privilege, statutory exemption, or any similar claim. 

B. For each Assessment, Defendants shall provide the Associate Director for Enforcement 

for the Bureau of Consumer Protection at the Federal Trade Commission with the name and 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 17 of 30 

affiliation of the person selected to conduct the Assessment, which the Associate Director shall 

have the authority to approve in his sole discretion. 

C. The reporting period for the Assessments must cover: (1) the first 180 days after the 

issuance date of the Order for the initial Assessment; and (2) each 2-year period thereafter for ten 

(10) years after issuance of the Order for the biennial Assessments. 

D. Each Assessment must: (1) determine whether each Covered Business has implemented 

and maintained the Information Security Program required by Provision VI of this Order, titled 

Mandated Information Security Program; (2) assess the effectiveness of each Covered Business’s 

implementation and maintenance of sub-Provisions VI.A-I; (3) identify any gaps or weaknesses 

in the Information Security Program; and (4) identify specific evidence (including, but not 

limited to documents reviewed, sampling and testing performed, and interviews conducted) 

examined to make such determinations, assessments, and identifications, and explain why the 

evidence that the Assessor examined is sufficient to justify the Assessor’s findings. No finding 

of any Assessment shall rely solely on assertions or attestations by a Covered Business’s 

management. The Assessment shall be signed by the Assessor and shall state that the Assessor 

conducted an independent review of the Information Security Program, and did not rely solely on 

assertions or attestations by a Covered Business’s management. 

E. Each Assessment must be completed within sixty (60) days after the end of the reporting 

period to which the Assessment applies. Unless otherwise directed by a Commission 

representative in writing, Defendants must submit each Assessment to the Commission within 

ten (10) days after the Assessment has been completed via email to DEbrief@ftc.gov or by 

overnight courier (not the U.S. Postal Service) to Associate Director for Enforcement, Bureau of 

Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 18 of 30 

DC 20580. The subject line must begin, “FTC v. Mortgage Solutions FCS, Inc., FTC File No. 

1823199.” All subsequent biennial Assessments shall be retained by Defendants until the order 

is terminated and provided to the Associate Director for Enforcement within ten (10) days of 

request. 

VII. COOPERATION WITH THIRD PARTY INFORMATION SECURITY 

ASSESSOR 

IT IS FURTHER ORDERED that Defendants, whether acting directly or indirectly, in 

connection with any Assessment required by Provision VII of this Order titled Information 

Security Assessments by a Third Party, must: 

A. Disclose all material facts to the Assessor, and must not misrepresent in any manner, 

expressly or by implication, any fact material to the Assessor’s: (1) determination of whether 

Defendants have implemented and maintained the Information Security Program required by 

Provision VI of this Order, titled Mandated Information Security Program; (2) assessment of the 

effectiveness of the implementation and maintenance of sub-Provisions VI.A-I; or (3) 

identification of any gaps or weaknesses in the Information Security Program; and 

B. Provide or otherwise make available to the Assessor all information and material in their 

possession, custody, or control that is relevant to the Assessment for which there is no reasonable 

claim of privilege. 

VIII. ANNUAL CERTIFICATION 

IT IS FURTHER ORDERED that, in connection with compliance with Provision VI of 

this Order titled Mandated Information Security Program, Defendants shall: 

A. One year after the issuance date of this Order, and each year thereafter, provide the 

Commission with a certification from a senior corporate manager, or, if no such senior corporate 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 18 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 19 of 30 

manager exists, a senior officer of each Covered Business responsible for each Covered 

Business’s Information Security Program that: (1) each Covered Business has established, 

implemented, and maintained the requirements of this Order; (2) each Covered Business is not 

aware of any material noncompliance that has not been (a) corrected or (b) disclosed to the 

Commission; and (3) includes a brief description of any Covered Incident. The certification 

must be based on the personal knowledge of the senior corporate manager, senior officer, or 

subject matter experts upon whom the senior corporate manager or senior officer reasonably 

relies in making the certification. 

B. Unless otherwise directed by a Commission representative in writing, submit all annual 

certifications to the Commission pursuant to this Order via email to DEbrief@ftc.gov or by 

overnight courier (not the U.S. Postal Service) to Associate Director for Enforcement, Bureau of 

Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, 

DC 20580. The subject line must begin, “FTC v. Mortgage Solutions FCS, Inc., FTC File No. 

1823199.” 

IX. COVERED INCIDENT REPORTS 

IT IS FURTHER ORDERED that Defendants, for any Covered Business, within a 

reasonable time after the date of discovery of a Covered Incident, but in any event no later than 

ten (10) days after the date the Covered Business first notifies any U.S. federal, state, or local 

government entity of the Covered Incident, must submit a report to the Commission. The report 

must include, to the extent possible: 

A. The date, estimated date, or estimated date range when the Covered Incident occurred; 

B. A description of the facts relating to the Covered Incident, including the causes of the 

Covered Incident, if known; 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 20 of 30 

C. A description of each type of information that triggered the notification obligation to the 

U.S. federal, state, or local government entity; 

D. The number of consumers whose information triggered the notification obligation to the 

U.S. federal, state, or local government entity; 

E. The acts that the Covered Business has taken to date to remediate the Covered Incident 

and protect Personal Information from further exposure or access, and protect affected 

individuals from identity theft or other harm that may result from the Covered Incident; and 

F. A representative copy of each materially different notice required by U.S. federal, state, 

or local law or regulation and sent by the Covered Business or any of its clients to consumers or 

to any U.S. federal, state, or local government entity. 

Unless otherwise directed by a Commission representative in writing, all Covered Incident 

reports to the Commission pursuant to this Order must be emailed to DEbrief@ftc.gov or sent by 

overnight courier (not the U.S. Postal Service) to Associate Director for Enforcement, Bureau of 

Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, 

DC 20580. The subject line must begin, “FTC v. Mortgage Solutions FCS, Inc., FTC File No. 

1823199.” 

X. MONETARY JUDGMENT FOR CIVIL PENALTY 

IT IS FURTHER ORDERED that: 

A. Judgment in the amount of one hundred and twenty thousand dollars ($120,000) is 

entered in favor of Plaintiff against Individual Defendant and Corporate Defendant, jointly and 

severally, as a civil penalty. 

B. Defendants are ordered to pay to Plaintiff, by making payment to the Treasurer of the 

United States, one hundred and twenty thousand dollars ($120,000), which, as Defendants 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 21 of 30 

stipulate, their undersigned counsel holds in escrow for no purpose other than payment to 

Plaintiff. Such payment must be made within 7 days of entry of this Order by electronic fund 

transfer in accordance with instructions previously provided by a representative of Plaintiff. 

XI. ADDITIONAL MONETARY PROVISIONS 

IT IS FURTHER ORDERED that: 

A. Defendants relinquish dominion and all legal and equitable right, title, and interest in all 

assets transferred pursuant to this Order and may not seek the return of any assets. 

B. The facts alleged in the Complaint will be taken as true, without further proof, in any 

subsequent civil litigation by or on behalf of the Commission, including in a proceeding to 

enforce its rights to any payment or monetary judgment pursuant to this Order. 

C. Defendants agree that the judgment represents a civil penalty owed to the government of 

the United States, is not compensation for actual pecuniary loss, and, therefore, as to the 

Individual Defendants, it is not subject to discharge under the Bankruptcy Code pursuant to 11 

U.S.C. § 523(a)(7). 

D. Defendants acknowledge that their Taxpayer Identification Numbers (Social Security 

Numbers or Employer Identification Numbers), which Defendants must submit to the 

Commission, may be used for collecting and reporting on any delinquent amount arising out of 

this Order, in accordance with 31 U.S.C. §7701. 

XII. ORDER ACKNOWLEDGMENTS 

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

Order: 

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

acknowledgment of receipt of this Order sworn under penalty of perjury. 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 21 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 22 of 30 

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

uch Defendant, individually or collectively with any other Defendants, is the majority owner or 

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

o: (1) all principals, officers, directors, and LLC managers and members; (2) all employees 

aving managerial responsibilities for conduct related to the subject matter of the Order and all 

gents and representatives who participate in conduct related to the subject matter of the Order; 

nd (3) any business entity resulting from any change in structure as set forth in the Section titled 

ompliance Reporting. Delivery must occur within 7 days of entry of this Order for current 

ersonnel. For all others, delivery must occur before they assume their responsibilities. 

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

efendant must obtain, within 30 days, a signed and dated acknowledgment of receipt of this 

rder. 

XIII. COMPLIANCE REPORTING 

IT IS FURTHER ORDERED that Defendants make timely submissions to the 

ommission: 

. One year after entry of this Order, each Defendant must submit a compliance report, 

worn under penalty of perjury: 

1. Each Defendant must: (a) identify the primary physical, postal, and email address and 

telephone number, as designated 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 goods and 

services offered, and the involvement of any other Defendant (which Individual Defendants 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 23 of 30 

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. 

2. Additionally, each Individual Defendant must: (a) identify all telephone numbers and all 

physical, postal, email and Internet addresses, including all residences; (b) identify all 

business activities, 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 (c) describe in detail such Defendant’s involvement in each such 

business, including title, role, responsibilities, participation, authority, control, and any 

ownership. 

. For 15 years after entry of this Order, each Defendant must submit a compliance 

otice, sworn under penalty of perjury, within 14 days of any change in the following: 

1. Each Defendant must report any change in: (a) any designated point of contact; or (b) the 

structure of any Corporate Defendant or any entity that Defendant has any ownership interest 

in or controls directly or indirectly 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. 

2. 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 

the name, physical address, and any Internet address of the business or entity. 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 24 of 30 

C. Each Defendant must submit to the Commission notice of the filing of any bankruptcy 

petition, insolvency proceeding, or similar proceeding by or against such Defendant within 14 

days of its filing. 

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

perjury must be true and accurate and comply with 28 U.S.C. § 1746, such as by concluding: “I 

declare under penalty of perjury under the laws of the United States of America that the 

foregoing is true and correct. Executed on: _____” and supplying the date, signatory’s full 

name, title (if applicable), and signature. 

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

the Commission pursuant to this Order must be emailed to DEbrief@ftc.gov or sent by overnight 

courier (not the U.S. Postal Service) to: Associate Director for Enforcement, Bureau of 

Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, 

DC 20580. The subject line must begin: FTC v. Mortgage Solutions FCS, Inc., FTC File No. 

1823199. 

XIV. RECORDKEEPING 

IT IS FURTHER ORDERED that Defendants must create certain records for fifteen (15) 

years after entry of the Order, and retain each such record for five (5) years. Specifically, 

Corporate Defendant and each Individual Defendant for any business that such Defendant, 

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

indirectly, must create and retain the following records: 

A. Accounting records showing the revenues from all goods or services sold; 

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

or otherwise, that person’s: name; addresses; telephone numbers; job title or position; dates of 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 24 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 25 of 30 

service; and (if applicable) the reason for termination; 

C. Copies or records of all consumer complaints and refund requests related to the subject 

matter of this Order, whether received directly or indirectly, such as through a third party, and 

any response; 

D. For five (5) years after the date of preparation of each Assessment required by this Order, 

all materials and evidence that the Assessor considered, reviewed, relied upon or examined to 

prepare the Assessment, whether prepared by or on behalf of Respondents, including all plans, 

reports, studies, reviews, audits, audit trails, policies, training materials, and assessments, and 

any other materials concerning Respondents’ compliance with related Provisions of this Order, 

for the compliance period covered by such Assessment; 

E. For five (5) years from the date received, copies of all subpoenas and other 

communications with law enforcement, if such communications relate to Respondents’ 

compliance with this Order; 

F. For five (5) years from the date created or received, all records, whether prepared by or 

on behalf of Respondents, that tend to show any lack of compliance by Respondents with this 

Order; and 

G. All records necessary to demonstrate full compliance with each provision of this Order, 

including all submissions to the Commission. 

XV. COMPLIANCE MONITORING 

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

with this Order: 

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

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

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 25 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 26 of 30 

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

documents for inspection and copying. The Commission and Plaintiff are also authorized to 

obtain discovery, without further leave of court, using any of the procedures prescribed by 

Federal Rules of Civil Procedure 29, 30 (including telephonic depositions), 31, 33, 34, 36, 45, 

and 69. 

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

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

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

Defendant who has agreed to such an interview. The person interviewed may have counsel 

present. 

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

its representatives as consumers, suppliers, or other individuals or entities, to Defendants or any 

individual or entity affiliated with Defendants, without the necessity of identification or prior 

notice. Nothing in this Order limits the Commission’s lawful use of compulsory process, 

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

D. Upon written request from a representative of the Commission or Plaintiff, any consumer 

reporting agency must furnish consumer reports concerning Individual Defendants, pursuant to 

Section 604(1) of the Fair Credit Reporting Act, 15 U.S.C. §1681b(a)(1). 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 26 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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II 

_______________________________ 

Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 27 of 30 

XVI. RETENTION OF JURISDICTION 

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

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

SO ORDERED this day of , 2020. 

DONNA M. RYU 

UNITED STATES MAGISTRATE JUDGE 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 27 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 28 of 30 

SO STIPULATED AND AGREED: 

FOR PLAINTIFF: 

THE UNITED STATES OF AMERICA 

JOSEPH H. HUNT 

Assistant Attorney General 

Civil Division 

DAVID M. MORRELL 

Deputy Assistant Attorney General 

Gustav W. Eyler 

Director 

Consumer Protection Branch 

/s/ Speare Hodges____________ 

Speare I. Hodges 

Trial Attorney, Consumer Protection Branch 

U.S. Department of Justice 

P.O. Box 386 

Washington, DC 20044 

(202) 532-0295 

Speare.I.Hodges@usdoj.gov 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 28 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 29 of 30 

FEDERAL TRADE COMMISSION 

/S/ 

Robin Wetherill, Attorney 

Federal Trade Commission 

600 Pennsylvania Ave, NW 

Washington, DC 20580 

Mail Stop CC-8232 

202-326- 2220 

202-326- 3392 (fax) 

rwetherill@ftc.gov 

/S/ 

David Lincicum, Attorney 

Federal Trade Commission 

600 Pennsylvania Ave, NW 

Washington, DC 20580 

Mail Stop CC-8232 

202-326- 2773 

202-326- 3392 (fax) 

dlincicum@ftc.gov 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 29 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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FOR DEFENDANTS: 

· 7 J ., ,,I'••' / '~ (.~··:z== 

Liana W. Chen 

Kronenberger Rosenfeld, LLP 

150 Post Street, Suite 520 

San Francisco, CA 94108 

(415) 955-1155 

(415) 955-1 158 (fax) 

Date: /0/1 f fCj 

~";5~ Date: 10 ·· t -If 

Karl Kronenberger 

KronenbergeT Rosenfeld, LLP 

150 Post Street, Suite 520 

San Francisco, CA 94108 

(415) 955-1155 

(415) 955-1158 (fax) 

karl@krinternetlaw.com 

COUNSEL for Mortgage Solutions FCS, fuc. and Ramon Walker 

olutions FCS, Inc. and Ramon Walker 

Date: /0/7 /22,o('f r 7 

Case 4:20-cv-00110-DMR Document 4 Filed 01/07/20 Page 30 of 30 

PROPOSED STIPUALTED ORDED FOR CIVIL PENALTIES, Case No. 4:20-cv-00110; 30