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UNITED STATES DISTRICT COURT
 

EASTERN DISTRICT OF TEXAS
 

SHERMAN DIVISION 

UNITED STATES OF AMERICA,

 Plaintiff, 

v. 

COMMERCIAL RECOVERY SYSTEMS, INC., 

TIMOTHY L. FORD, individually and as an officer 

of COMMERCIAL RECOVERY 

SYSTEMS, INC., AND 

DAVID J. DEVANY, individually and as a former 

officer of COMMERCIAL RECOVERY 

SYSTEMS, INC. 

 Defendants. 

Case No. 15-CV-36 

JUDGE AMOS L. MAZZANT III 

STIPULATED ORDER FOR 

PERMANENT INJUNCTION AND 

CIVIL PENALTY JUDGMENT 

AGAINST DEFENDANT DAVID J. 

DEVANY 

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

Attorney General by the Federal Trade Commission (“Commission”), filed its Complaint for 

Injunctive Relief and Civil Penalties (“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 been 

served with the summons and the Complaint and have filed answers with the Court. (Dkts. #7 & 

#8). Plaintiff and Settling Defendant David J. Devany stipulate to the entry of this Stipulated 

Order for Permanent Injunction and Civil Penalty Judgment Against Defendant David J. Devany 

(“Order”) to resolve all matters in dispute in this action between them. 

THEREFORE, IT IS ORDERED as follows: 

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FINDINGS 

1. This Court has jurisdiction over this matter. 

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

violation of Section 5 of the FTC Act, 15 U.S.C. § 45, and in violation of Section 807 of the 

FDCPA, 15 U.S.C. § 1692e, in connection with debt collection activities. 

3. Settling Defendant neither admits nor denies any of the allegations in the Complaint, 

except as specifically stated in this Order. Only for purposes of this action, Settling Defendant 

admits the facts necessary to establish jurisdiction. 

4. Settling Defendant waives any claim that he 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 agrees to bear his own costs and attorney fees. 

5. Settling Defendant and Plaintiff waive all rights to appeal or otherwise challenge or 

contest the validity of this Order. 

DEFINITIONS 

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

A. “Debt” means any obligation or alleged obligation to pay money arising out of a 

transaction, whether or not such obligation has been reduced to judgment. 

B. “Debt collection activities” means any activity the principal purpose of which is 

to collect or attempt to collect, directly or indirectly, debts owed, or asserted to be owed, or due. 

C. “Debt collector” means any person who uses any instrumentality of interstate 

commerce or the mails in any business the principal purpose of which is the collection of any 

debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or 

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asserted to be owed or due another. The term also includes any creditor who, in the process of 

collecting its own debts, uses any name other than its own which would indicate that a third 

person is collecting or attempting to collect such debts. The term also includes any person to the 

extent such person receives an assignment or transfer of a debt in default solely for the purpose of 

facilitating collection of such debt. 

D. “Defendants” means both the Individual Defendant and the Corporate Defendant, 

individually, collectively, or in any combination. 

1. “Corporate Defendant” means Commercial Recovery Systems, Inc., and 

its successors and assigns. 

2. “Individual Defendants” means David J. Devany and Timothy L. Ford. 

3. “Settling Defendant” means David J. Devany. 

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ORDER 

I. BAN ON DEBT COLLECTION 

IT IS THEREFORE ORDERED that Settling Defendant, whether directly or through an 

intermediary, is permanently restrained and enjoined from: 

A. Participating in debt collection activities; and 

B. Advertising, marketing, promoting, offering for sale, or selling, or assisting others 

engaged in the advertising, marketing, promoting, offering for sale, or selling, of any portfolio of 

consumer or commercial debt or any program that gathers, organizes, or stores consumer 

information relating to a debt or debt collection activities. 

II.	 PROHIBITION AGAINST DECEPTIVE CLAIMS, INCLUDING FALSE 

AND/OR UNSUBSTANTIATED CLAIMS 

IT IS FURTHER ORDERED that Settling Defendant, his 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 

product or service, are permanently restrained and enjoined from: 

A. Making any misrepresentation, or assisting others in making any representation, 

expressly or by implication: 

1. that any person is affiliated with, endorsed or approved by, or otherwise 

connected to any other person, government entity, or other public or commercial 

entity, including an attorney’s office, law firm, or court system; 

2. the nature, expertise, position, or job title of any person who provides any 

product or service; 

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3. any other fact material to consumers concerning a product or service, 

including: the total costs, material restrictions, limitations, conditions, or material 

aspect of its performance, efficacy, nature, or central characteristics. 

B. Making any representation or assisting others in making any representation, 

expressly or by implication, about the benefits, performance, or efficacy of any product or 

service, unless the representation is non-misleading, and, at the time such representation is 

made, Settling Defendant possesses and relies upon competent and reliable evidence that 

is sufficient in quality and quantity based on standards generally accepted in the relevant 

fields, when considered in light of the entire body of relevant and reliable evidence, to 

substantiate that the representation is true. 

III.	 MONETARY JUDGMENT FOR CIVIL PENALTY AND PARTIAL SUSPENSION 

IT IS FURTHER ORDERED that: 

A. Judgment in the amount of FOUR HUNDRED NINETY-SIX THOUSAND 

Dollars ($496,000) is entered in favor of Plaintiff against Settling Defendant as a civil penalty. 

B. Settling Defendant is ordered to pay to Plaintiff, by making payment to the 

Treasurer of the United States, TEN THOUSAND dollars ($10,000), which, as Defendant 

stipulates, his 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. Upon such 

payment, the remainder of the judgment is suspended, subject also to Subsections C, D, and E, 

below. 

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C. The Commission’s and Plaintiff’s agreement to the suspension of part of the 

judgment is expressly premised upon the truthfulness, accuracy, and completeness of Settling 

Defendant’s sworn financial statements and related documents (collectively, “financial 

representations”) submitted to the Commission, namely: 

1. The Financial Statement of Settling Defendant David J. Devany signed on 

July 1, 2016, including the attachments, identified more particularly as Bates 

Numbers Devany 000001-000210; and 

2. Information contained in emails: 

(i) sent from Emil Lippe (emil@texaslaw.com) to Anne LeJeune, cc: Heide 

Herrmann, on Friday, May 13, 2016 at 12:55 p.m. 

(ii) sent from Emil Lippe (emil@texaslaw.com) to Anne LeJeune and 

Heide Herrmann, on Friday, May 13, 2016 at 3:44 p.m. 

(iii) sent from Emil Lippe (emil@texaslaw.com) to Anne LeJeune and 

Heide Herrmann, on Wednesday, May 25, 2016 at 4:30 p.m. 

(iv) the transcript of the Oral Deposition of David Devany on May 25, 

2016, Case No.: 4:15-CV-36 (EDTX). 

D. The suspension of the judgment will be lifted as to Settling Defendant if, upon 

motion by the Commission or Plaintiff, the Court finds that Settling Defendant failed to disclose 

any material asset, materially misstated the value of any asset, or made any other material 

misstatement or omission in the financial representations identified above or that Settling 

Defendant is in default on any obligation under this Section. 

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E. If the suspension of the judgment is lifted, the judgment becomes immediately due 

as to Settling Defendant in the amount specified in Subsection A above (which the parties 

stipulate only for purposes of this Section represents the amount of the civil penalty for the 

violations alleged in the Complaint), less any payment previously made pursuant to this Section, 

plus interest computed from the date of entry of this Order. 

IV. ADDITIONAL MONETARY PROVISIONS 

IT IS FURTHER ORDERED that: 

A. Settling Defendant relinquishes 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. Settling Defendant agrees 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 Settling Defendant, it is not subject to discharge under the Bankruptcy Code pursuant to 11 

U.S.C. § 523(a)(7). 

D. Settling Defendant acknowledges that his Social Security Number, which Settling 

Defendant previously submitted 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. 

V. CONSUMER INFORMATION 

IT IS FURTHER ORDERED that Settling Defendant, his agents, employees, and 

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attorneys, and all other persons in active concert with any of them, who receive actual notice of 

this Order, whether acting directly or indirectly, are permanently restrained and enjoined from: 

A. disclosing, using, or benefitting from consumer information, including the name, 

address, telephone number, email address, social security number, other identifying information, 

or any data that enables access to a consumer’s account (including a credit card, bank account, or 

other financial account), that Settling Defendant obtained prior to entry of this Order in 

connection with third party debt collection; and 

B. failing to destroy such consumer information in all forms in their possession, 

custody, or control within 30 days after entry of this Order. 

Provided, however, that consumer information need not be disposed of, and may be 

disclosed, to the extent requested by a government agency or required by law, regulation, or court 

order. 

VI. COOPERATION 

IT IS FURTHER ORDERED that Settling Defendant must fully cooperate with 

representatives of Plaintiff and the Commission in this case and in any investigation related to or 

associated with the transactions or the occurrences that are the subject of the Complaint. Such 

Defendant must provide truthful and complete information, evidence, and testimony. Such 

Defendant must appear for interviews, discovery, hearings, trials, and any other proceedings that a 

Plaintiff or Commission representative may reasonably request upon 5 days written notice, or 

other reasonable notice, at such places and times as a Plaintiff or Commission representative may 

designate, without the service of a subpoena. 

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VII. ORDER ACKNOWLEDGMENTS 

IT IS FURTHER ORDERED that Settling Defendant obtain acknowledgments of receipt 

of this Order: 

A. Settling 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. 

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

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

or indirectly, must deliver a copy of this Order to: (1) all principals, officers, directors, and LLC 

managers and members; (2) all employees, agents, and representatives who participate in conduct 

related to the subject matter of the Order as specified in Section II; and (3) any business entity 

resulting from any change in structure as set forth in the Section titled Compliance Reporting. 

Delivery must occur within 7 days of entry of this Order for current personnel. For all others, 

delivery must occur before they assume their responsibilities. 

C. From each individual or entity to which Settling Defendant delivered a copy of this 

Order, Settling Defendant must obtain, within 30 days, a signed and dated acknowledgment of 

receipt of this Order. 

VIII. COMPLIANCE REPORTING 

IT IS FURTHER ORDERED that Settling Defendant make timely submissions to the 

Commission: 

A. One year after entry of this Order, Settling Defendant must submit a compliance 

report, sworn under penalty of perjury, and: 

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1. Identify all Settling Defendant’s telephone numbers and all physical, 

postal, email and Internet addresses, including all residences; 

2. Identify Settling Defendant’s 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 Settling Defendant; 

3. Identify all of Settling Defendant’s businesses by all of their names, 

telephone numbers, and physical, postal, email, and Internet addresses; 

4. Describe the activities of each such business, including the goods and 

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

involvement of any other Defendant (which Settling Defendant must describe if he 

knows or should know due to his own involvement); 

5. Describe in detail Settling Defendant’s involvement in each such business, 

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

ownership. 

6. Identify all Settling Defendant’s business activities, including any business 

for which such Defendant performs services whether as an employee or otherwise 

and any entity in which Defendant has any ownership interest; 

7. Describe in detail whether and how Settling Defendant is in compliance 

with each Section of this Order; and 

8. Provide a copy of each Order Acknowledgment obtained pursuant to this 

Order, unless previously submitted to the Commission. 

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B. For 10 years after entry of this Order, Settling Defendant must submit a 

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

1. Name, including aliases or fictitious name, or residence address; or 

2. Title or role in any business activity, including any business for which 

Settling Defendant performs services whether as an employee or otherwise and any 

entity in which Settling Defendant has any ownership interest, and identify the 

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

3. Any designated point of contact; or 

4. The structure of any entity that Settling 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. 

C. Settling 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. 

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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: United States v. Commercial Recovery 

Systems, Inc., X150014. 

IX. RECORDKEEPING 

IT IS FURTHER ORDERED that Settling Defendant must create certain records for 10 

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

Defendant for any business that he, 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 service; and (if applicable) the reason for termination; 

C. Records of all consumer complaints and refund requests concerning the subject 

matter of this Order as specified in Section II, whether received directly or indirectly, such as 

through a third party, and any response; and 

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

Order, including all submissions to the Commission. 

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X. COMPLIANCE MONITORING 

IT IS FURTHER ORDERED that, for the purpose of monitoring Settling Defendant’s 

compliance with this Order, including the financial representations upon which part of the 

judgment was suspended and any failure to transfer any assets as required by this Order: 

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

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

requested 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 Settling Defendant. Settling Defendant must permit representatives 

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

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 Settling 

Defendant or any individual or entity affiliated with Settling Defendant, 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. 

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

consumer reporting agency must furnish consumer reports concerning Settling Defendant, 

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

XI. 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. 

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SO STIPULATED AND AGREED: 

FOR PLAINTIFF: 

THE UNITED STATES OF AMERICA 

BENJAMIN C. MIZER 

Principal Assistant Attorney General 

Civil Division 

United States Department of Justice 

MICHAEL S. BLUME 

Director 

Consumer Protection Branch 

RICHARD GOLDBERG 

Assistant Director 

Consumer Protection Branch 

Lead Attorney 

Ohio Bar No. 0069640 

Consumer Protection Branch 

United States Department of Justice 

Post Office Box 386 

Washington, D.C. 20044 

Phone: (202) 532-4882 

Fax: (202) 514-8742 (facsimile) 

Email: Heide.Herrmann@usdoj.gov 

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FEDERAL TRADE COMMISSION 

DAVID C. SHONKA 

Acting General Counsel 

DAMA J. BROWN 

, Attorney 

Texas Bar N . 24054286 

Southwest Region 

1999 Bryan Street, Suite 2150 

Dallas, Texas 7520 l 

Phone: (214) 979-9371 

Fax: (214) 953-3079 

Email: alejeune@ftc.gov 

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pp

600 N. Pearl Street, Suite 2460 

Dallas, Texas 75201 

Phone: (214)855-1850 

Fax: (214) 720-6074 

Email: emil@texaslaw.com 

COUNSEL FOR DAVID J. DEV ANY 

DEFENDANT: DAVID J. DEV ANY 

Date: 7-6-/6 

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