Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 1 of 46

UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF NEW YORK 

FEDERAL TRADE COMMISSION, 

Plaintiff, 

-vRCG ADVANCES, LLC et al., 

Defendants. 

20-cv-4432 (JSR) 

OPINION AND ORDER 

JED S. RAKOFF, U.S.D.J. 

Plaintiff, the Federal Trade Commission ("FTC"), alleges that 

defendant Jonathan Braun led a scheme to defraud small businesses 

and to intimidate their owners. This alleged scheme centered on a 

financing arrangement called a "merchant cash advance" agreement 

("MCA" Agreement). Co-defendant RCG Advances, LLC ("RCG") loaned 

a lump sum of cash to a customer; in exchange, the customer 

assigned its future receivables to RCG until the defendants 

collected an agreed-upon amount. The FTC alleges that Mr. Braun, 

both directly and through RCG, swindled customers by lying about 

many of the terms of these advances: the amount of cash RCG would 

loan, the amount of money RCG would collect, and whether the owners 

of RCG's customers would have to personally guarantee their debts. 

And when those customers fell behind on their payments, the FTC 

alleges, Mr. Braun would attempt to collect by making violent 

threats. This scheme, the FTC alleges, violated Section 5(a) of 

1 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 2 of 46

the Federal Trade Commission Act ("FTCA"), as well as Section 521 

of the Gramm-Leach-Billey Act ("GLB Act"). See First Amended 

Complaint ("FAC"), ':lI':lI 33-55, ECF No. 84. 

On April 8, 2022, the FTC moved for summary judgment on its 

claims against Mr. Braun. Since there is no genuine dispute of 

material fact on the essential elements of those claims, the Court 

hereby finds Mr. Braun liable on those claims (Counts I-V). The 

Court will also issue a permanent injunction. The Court, however, 

denies the FTC' s motion for summary judgment on the amount of 

compensatory damages and civil penal ties, as to which further 

proceedings will be necessary. 

I. Factual Background 

It is undisputed that Mr. Braun and his co-defendants 1 

(collectively, the "defendants") entered into MCA Agreements with 

small businesses, in which defendants provided these customers 

with upfront lump-sum amounts in exchange for the right to collect 

the customers' future receivables until defendants recouped a 

contractually specified amount of money. FTC Rule 56.1 Statement 

of Material Facts ("SMF"), ':lI':lI 48, 54-55, 70, ECF No. 109-1. 2 

1 The other defendants in this case, RCG, Ram Capital Funding LLC, 

Robert Giardina, and Tzvi Reich, settled with the FTC. See 1/5/22 

Stipulated Order, ECF No. 102; 6/2/22 Stipulated Order, ECF No. 

127. 

2 Except where indicated, the factual allegations set forth in this 

section are undisputed, for reasons explained below. 

2 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 3 of 46

Specifically, the MCA Agreements contemplate that defendants would 

make daily debits of a specified amount from their customers' bank 

accounts until defendants recouped the entire amount that they 

were owed. Id. i 56. More generally, the contractual agreements 

provide that customers would agree to permit direct debits and 

credits to their bank accounts, give information about their bank 

accounts, grant a lien on their properties, and sign "Affidavit[s] 

of Confession of Judgment." Id. ii 58-62, 64-65. 

Mr. Braun "was an owner, manager, and officer of RCG" and 

exercised his authority to make decisions, establish policies, and 

determine employment practices for all the defendants. Id. ii 27-

29, 31. Specifically, Mr. Braun played an extensive role in the 

formulation and implementation of the MCA Agreements. Mr. Braun 

negotiated the terms of those agreements, exercised his authority 

to "change the fees that consumers were required to pay in order 

to obtain financing," and had final authority to approve the terms 

of those agreements. Id. ii 34-38. Mr. Braun also exercised 

considerable control over the administration of the MCA 

Agreements. Mr. Braun would instruct the other defendants "to 

deposit funds into the bank accounts of one or more consumers," 

monitored whether customers missed payments, "made the ultimate 

decisions about how to service [d]efendants' advances," exercised 

the authority to determine how to handle missed payments, exercised 

the authority to declare a customer in default, and exercised 

3 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 4 of 46

authority over the filing of confessions of judgment ("COJs") 

against customers. Id. ii 39-44. 

There is evidence that Mr. Braun and his co-defendants 

regularly failed to adhere to the contractual terms of the MCA 

Agreements and required customers to agree to contractual terms 

that conflicted with representations that defendants made on their 

website. Defendants over-debited customers' bank accounts, 

withdrawing daily amounts even after the customer had fully repaid 

the amount that defendants were contractually owed. Id. ii 70-96. 

Additionally, even though defendants, on their website, 

represented that there was "no personal guaranty of collateral" 

that was required of the business owners and that there were "No 

Credit or Collateral Requirements," id. ! 97, in actuality, 

defendants required business owners to sign personal guaranties of 

their businesses' performance, agree to be held jointly and 

severally liable in the event of default, and sign COJs confessing 

to judgment in their personal capacities. Id. !! 98-101. Finally, 

even though defendants' website stated that "No Upfront Costs" 

would be charged to customers, in actuality, defendants regularly 

charged their customers for upfront costs by deducting fees from 

the contractually agreed upon, upfront lump-sum amount. Id. 

'' 104-31. 

There is clear evidence that Mr. Braun and his co-defendants 

engaged in other unseemly business practices. Defendants would 

4 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 5 of 46

execute and file COJs against customers without a contractual basis 

for doing so, causing undue emotional and financial hardship to 

businesses and their owners. Id. 11 132-42, 145-56. Often, those 

COJs would contain material misrepresentations. Id. 11 143-44, 

147. Defendants also made threats against their customers in order 

to make collections, inflicting emotional and financial harms upon 

businesses and their owners. Id. 11 157-73. Finally, defendants 

made unauthorized daily withdrawals from their customers' 

accounts. Id. 11 174-89. 

In light of this extensive misconduct, the FTC asserts five 

claims against Mr. Braun. Count One alleges Mr. Braun violated 

Section 5(a) of the FTCA by making false and/or misleading 

statements that the FTC alleges qualify as deceptive acts or 

practices. FAC, 11 36-38. Count Two alleges that Mr. Braun misused 

COJs and thus violated Section 5(a) of the FTCA by engaging in an 

unfair act or practice. Id. 11 39-41. Count Three similarly alleges 

that Mr. Braun engaged in an unfair act or practice, in violation 

of Section 5(a) of the FTCA, by threatening customers to induce 

them to make payments. Id. 11 42-44. Count Four alleges Mr. Braun 

made unauthorized withdrawals from customers' bank accounts, which 

is also an unfair act or practice that violates Section 5(a) of 

the FTCA. Id. 11 45-47. Finally, Count Five alleges Mr. Braun 

violated Section 521 of the GLB Act by making false statements to 

obtain customers' bank account information and then using that 

5 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 6 of 46

information to over-withdraw funds from those customers' bank 

accounts. Id. ~~ 53-54. The FAC requests a panoply of remedies, 

including a permanent injunction, civil penalties for each 

violation of Section 521 of the GLB Act, and a refund of customers' 

money. 

On April 8, 2022, the FTC moved for summary judgment on Mr. 

Braun's liability under Counts One through Five and sought monetary 

J., and injunctive remedies against Mr. Braun. FTC Mot. for Summ. 

ECF No. 109; FTC Mem. in Supp. of Summ. J. ("FTC Mem."), ECF No. 

110. On May 13, 2022, Mr. Braun opposed the FTC' s motion for 

summary judgment, cross-moved to amend his answer to add a statute 

of limitations defense, moved to withdraw his deemed admissions to 

the FTC's requests for admission, and moved the Court to accept 

his late-filed responses to the FTC's requests for admission. Def. 

Cross Mot., ECF. No. 114; Def. Mem. of Law in Opp'n to Mot. for 

119. Summ. J. and in Supp. of Cross-Mot. ("Def. Mem."), ECF No. 

The FTC opposed Mr. Braun's request to withdraw his deemed 

admissions and to file late responses to the FTC's requests for 

admission. FTC Mem. of Law in Opp'n to Def. Mot. to Accept Late 

Filed Resps., ECF No. 123. 

Mr. Braun's request to withdraw his deemed admissions and 

make late-filed responses to the FTC's request for admission was 

denied, but Mr. Braun was permitted to amend his answer to add a 

statute of limitations defense. See 6/13/22 Memo Endorsement, ECF 

6 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 7 of 46

No. resolved 135. Accordingly, all that remains to be is whether, 

on the undisputed facts, the FTC is entitled to summary judgment 

on Counts One through Five and the remedies that are appropriate 

should the Court determine that summary judgment on liability is 

warranted. 

II. Discussion 

"Summary judgment is proper when, after drawing all 

reasonable inferences in favor of a non-movant, no reasonable trier 

Inc. of fact could find in favor of that party." Heublein, v. 

United States, 996 F.2d 1455, 1461 (2d Cir. 1993); see also Fed. 

judgment if the R. Civ. P. 56 (a) ("The court shall grant summary 

movant shows that there is no genuine dispute as to any material 

. fact and the movant is entitled to judgment as a matter of law.") 3 

"A fact is 'material' for these purposes if it 'might affect the 

the suit under the governing law.'" Holtz v. Rockefeller outcome of 

& Co., Inc., 258 F.3d 62, 69 (2d Cir. 2001) (quoting Anderson v. 

Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). "An issue of fact 

a reasonable jury could is 'genuine' if 'the evidence is such that 

return a verdict for the nonmoving party.'" Id. "Genuine issues of 

Heublein, 996 fact are not created by conclusory allegations." 

F.2d at 1461. In making its determination on summary judgment, the 

3 Unless otherwise indicated, case quotations omit all internal 

quotation marks, alterations, footnotes, and citations. 

7 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 8 of 46

Court most "view [ s] the evidence in the light favorable to the 

party opposing summary judgment, draw[s] all reasonable inferences 

in favor of that party, and eschew [ s] credibility assessments." 

New York v. Mountain Tobacco Co., 942 F.3d 536, 541 (2d Cir. 2009). 

As the moving party, it is the FTC's "burden to show that no 

1-800 genuine factual dispute exists." Vt. Teddy Bear Co. v. 

Beargram Co., 373 F.3d 241, 244 (2d Cir. 2004). However, Mr. Braun 

"[t] he mere existence of a scintilla of must show more than 

evidence in support of [his] position." Anderson, 477 U.S. at 252. 

version He "must offer some hard evidence showing that [his] of 

events is not wholly fanciful." Jeffreys v. City of New York, the 

party's 426 F.3d 549, 554 (2d Cir. 2005) "[A] nonmoving selfserving statement, without direct or circumstantial evidence . 

. , is insufficient to def eat a motion for summary judgment." Walker 

v. Carter, 210 F. Supp. 3d 487, 503 (S.D.N.Y. 2016). 

A. Adverse Inferences and Deemed Admissions 

Before to Mr. Braun's liability, the Court addresses turning 

two threshold issues. First, the Court determines whether it should 

draw certain adverse inferences that the FTC requests. Second, the 

how it should treat Mr. Braun's deemed admissions Court determines 

on summary judgment. 

First, the Court will draw adverse inferences against Mr. 

Fifth Braun based on the invocation by his associates of their 

Amendment rights in depositions, investigative hearings, and 

8 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 9 of 46

is requests for admission. Under certain circumstances, the Court 

permitted to draw adverse inferences against Mr. Braun based on 

co-conspirators or associated non-parties invoking the Fifth 

Amendment. See United States v. Dist. Council of N. Y. C. and 

Vicinity of United Bhd. Of Carpenters & Joiners of Am., 832 F. 

Supp. 644, 651-52 (S.D.N.Y. 1993); SEC v. Durante, No. 01 Civ. 

9056, 2013 WL 6800226, at *10-*11 (S.D.N.Y. Dec. 19, 2013), report 

and recommendation adopted, No. 01 Civ. 9056, 2014 WL 5041843 

(S.D.N.Y. Sept. 25, 2014), aff'd, 641 F. App'x 73 (2d Cir. 2016). 

In making that determination, the Court considers the following 

"non-exclusive factors": (1) "[t]he [n]ature of the [r]elevant 

[r]elationships"; (2) "[t]he [d]egree of [c]ontrol of the [p]arty 

[o]ver the [n]on-[p]arty [w]itness"; (3) "[t]he [c]ompatibility of 

the [i]nterests of the [p]arty and the [n]on-[p]arty [w]itness in 

the [o]utcome of the [l]itigation"; and (4) "[t]he [r]ole of the 

[n]on-[p]arty [w]itness in the [l]itigation." LiButti v. United 

States, 107 F.3d 110, 123-24 (2d Cir. 1997). At bottom, "the 

overarching concern is fundamentally whether the adverse inference 

is trustworthy under all of the circumstances and will advance the 

search for the truth." Id. at 124. 

The FTC requests that the Court draw adverse inferences based 

on certain employees of defendants -- Jose Dasilva, Miriam Deutsch, 

Christopher Kim, Ezra Mosseri, and Marcella Rabinovich -- invoking 

hearings. the Fifth Amendment during depositions and investigative 

9 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 10 of 46

No. See Pl. Ex. 26, ECF No. 109-33; Pl. Ex. 29, ECF 109-36; Pl. 

Ex. 30, ECF No. 109-37; Pl. Ex. 31, ECF No. 109-38; Pl. Ex. 32, 

ECF No. 109-39. In the excerpts provided by the FTC, these 

rights employees made blanket assertions of their Fifth Amendment 

when asked anything about the corporate defendants, the employees' 

roles in the business, Mr. Braun's role in the business, the MCA 

Agreements, and the misconduct at the center of this case. 4 The 

Court finds that all the factors counsel in favor of drawing an 

adverse inference. These are employees of the corporate 

defendants, meaning their business bond made it "less likely the 

would. render testimony in order to damage non-party witness 

the relationship," LiButti, 107 F.3d at 123, and Mr. Braun 

effectively controlled the employees and the corporate defendants, 

4 Dasilva about invoked the Fifth Amendment when asked his 

involvement with the MCA Agreements, his interactions with 

customers, his interactions with Braun, Braun's role at the 

corporate defendants and in deals, and the actions that the FTC 

argues violated the FTCA and GLB Act. See Pl. Ex. 26. Deutsch 

similarly invoked the Fifth Amendment when asked about Braun's 

were control over the defendants, how the MCA Agreements 

administered, the fees that were charged, and the misconduct at 

Fifth the center of this case. See Pl. Ex. 29. Kim invoked the 

when asked about the business and identity of the Amendment 

corporate defendants, Braun's involvement and misconduct toward 

customers, and misconduct related to fees. See Pl. Ex. 30. Mosseri 

invoked the Fifth Amendment when asked about the business and his 

role, misconduct related to fees, and business role, Braun's 

practices related to the MCA agreements. See Pl. Ex. 31. Rabinovich 

invoked the Fifth Amendment when asked about the corporate 

Braun's role, the MCA agreements, and the declaring of defendants, 

defaults and issuance of COJs. See Pl. Ex. 32. 

10 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 11 of 46

see SMF, ~~ 27-29, 31, 38-39, 41-44. These employees also faced 

civil and criminal exposure for their involvement in the same 

wrongdoing as Mr. Braun, so their "assertion of the privilege 

advances" both their interests and Mr. Braun's. See LiButti, 107 

F.3d at 123. Finally, these employees had roles in the underlying 

misconduct at issue in this litigation. The Court will accordingly 

draw adverse inferences against Mr. Braun based on these employees' 

invocations of the Fifth Amendment. 

The FTC also requests that the Court draw adverse inferences 

based on the invocation of the Fifth Amendment by Robert Giardina 

(one of Mr. Braun's co-defendants) in response to the FTC' s 

requests for admission. See Pl. Ex. 5, ECF No. 109-7; Pl. Ex. 7, 

ECF No. 109-9. Mr. Giardina invoked his Fifth Amendment rights in 

response to every request for admission, which asked Mr. Giardina 

about the conduct the FTC alleges violated the FTCA and GLB Act, 

his control over defendants' website, and his authority and control 

over defendants. See Pl. Exs. 5, 7. Here, the factors that the 

Court must consider also counsel in favor of drawing an adverse 

inference. Mr. Giardina and Mr. Braun shared a bond of business, 

they are co-defendants in the same litigation so their interests 

are aligned, and Mr. Giardina played a central role in the 

misconduct at the center of this litigation. Although it is not 

clear how much control Mr. Braun exercised over Mr. Giardina, Mr. 

Braun's level of control over the defendants' business practices 

11 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 12 of 46

Court in general renders this factor neutral in the analysis. The 

will therefore draw adverse inferences against Mr. Braun based on 

Mr. Giardina's invocations of the Fifth Amendment. 

Second, the Court will adhere to Judge Kaplan's previous 

decision to not allow Mr. Braun to withdraw his deemed admissions 

or file his responses to the FTC's requests for admission. 5 

Therefore, Mr. Braun's failure to respond to the FTC's requests 

for admission means those requests are deemed admitted. Fed. R. 

Civ. P. 36 (a) (3), (b). Accordingly, the Court will consider those 

facts to be undisputed in analyzing the FTC's motion for summary 

judgment. See, e.g., Donovan v. Carls Drug Co., 703 F.2d 650, 651 

(2d Cir. 1983), rejected on other grounds by McLaughlin v. Richland 

Shoe Co., 486 U.S. 128 (1988); Virga v. Big Apple Constr. & 

Restoration Inc., 590 F. Supp. 2d 467, 471 (S.D.N.Y. 2008) ("For 

purposes of summary judgment, matters admitted under rule 36(a) of 

the Federal Rules of Civil Procedure may be used for summary 

judgment under rule 56."); Broadcast Music, Inc. v. Prana Hosp., 

Inc., 158 F. Supp. 3d 184, 190 n.5 (S.D.N.Y. 2016); Funnekotter v. 

Agric. Dev. Bank of Zim., No. 13 Civ. 1917, 2015 WL 9302560, at *4 

(S.D.N.Y. Dec. 17, 2015). 

5 This case was originally assigned to the Hon. Lewis A. Kaplan 

and was reassigned to the undersigned on October 27, 2022. 

12 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 13 of 46

B. Liability 

a. Count I: Deceptive Acts in Violation of Section 5 of the 

FTCA 

Section 5 of the FTCA prohibits "unfair or deceptive acts or 

practices in or affecting commerce." 15 U.S. C. § 45 (a) The FTC 

must prove three elements to show a deceptive act or practice: 

"(1) a representation, omission, or practice, that (2) is likely 

to mislead consumers acting reasonably under the circumstances, 

and (3) the representation, omission, or practice is material." 

FTC v. LeadClick Media, LLC, 838 F.3d 158, 168 (2d Cir. 2016). 

"[I]ntent to deceive" is not required. Id. See also FTC v. Moses, 

913 F.3d 297, 306 (2d Cir. 2019). 

To show that representations, omissions, or practices were 

misleading to reasonable consumers, the misrepresentations, 

omissions, or practices must be assessed "as a whole;" however, 

"[c]onsumer reliance on express claims is presumptively 

reasonable." See FTC v. Five-Star Auto Club, Inc., 97 F. Supp. 2d 

502, 528 (S.D.N.Y. 2000) See also Murray Space Shoe Corp. v. FTC, 

304 F.2d 270, 272 (2d Cir. 1962) ("In deciding whether petitioner's 

advertising was false and misleading, we are not to look to 

technical interpretation of each phrase, but must look to the 

overall impression these circulars are likely to make on the buying 

public.") 

13 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 14 of 46

"A claim is considered material if it involves information 

important to consumers and, hence, is likely to affect their choice 

of, or conduct regarding a product." FTC v. Med. Billers Network, 

Inc., 543 F. Supp. 2d 283, 304 (S.D.N.Y. 2008). "Information 

concerning prices or charges for goods or services is [considered] 

material." FTC v. Crescent Publ'g Grp., Inc., 129 F. Supp. 2d 311, 

for "[e]xpress 321 (S.D.N.Y. 2001), and materiality is presumed 

representations that are shown to be false." Med. Billers Network, 

2d at 304. The FTC does not need to show "that every 543 F. Supp. 

consumer actually relied upon the misrepresentation to prevail." 

Five-Star Auto Club, Inc., 97 F. Supp. 2d at 530. 

The parties dispute whether the FTC must also show the 

consumers deceptive act "is likely to cause substantial injury to 

which is not reasonably avoidable by consumers themselves and not 

outweighed by countervailing benefits to consumers or to 

competition." See 15 U.S.C. § 45(n). Mr. Braun cites a Second 

Circuit case that appears to endorse his position that this is an 

element of a deceptive act or practices claim, see LeadClick Media, 

there 838 F.3d at 168; however, the Court finds that discussion 

was dicta and therefore not binding on this Court. At issue in 

LeadClick Media was not whether Section 5(n) applies to a deceptive 

that "its act claim; indeed, the appellant in that case conceded 

affiliates engaged in false and deceptive advertising practices." 

Instead, the issue in that case was whether appellant could be 

14 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 15 of 46

in held liable under Section 5 for its participation the deceptive 

scheme. Id. at 168-72. Further illustrating this was dicta, when 

deceptive act claim the Second Circuit restated the standard for a 

under Section 5, in 2019, any reference to Section 5 (n) was 

conspicuously absent. See Moses, 913 F.3d at 306. 

Given that this discussion was dicta, this Court must now 

decide de novo whether Section 5(n) applies to a deceptive act or 

practice claim. The plain terms of Section 5 (n) only apply to 

"The Commission "unfair" acts or practices. See 15 U.S. C. § 45 (n) ( 

declare shall no authority under this section to have 

practice on the grounds that such act or unlawful an act or 

practice is unfair If (emphasis added)). See FTC v. 

Cyberspace.Com LLC, 453 F.3d 1196, 1199 n.2 (9th Cir. 2006). That 

POM Wonderful LLC v. clear statutory language controls. See, e.g., 

Coca-Cola Co., 573 U.S. 102, 112 (2014). Therefore, the Court finds 

practice claim that importing such a requirement into a deceptive 

would be an improper reading of the statute and declines Mr. 

Braun's invitation to do so. 

Turning now to the merits, the factual record is replete with 

evidence that defendants undertook three deceptive acts or 

practices. First, defendants withdrew more money from their 

customers' bank accounts than defendants were entitled to under 

the MCA Agreements. Second, defendants falsely advertised that 

fact personal guaranties were not required, when defendants in 

15 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 16 of 46

Third, required personal guaranties from business owners. 

defendants falsely · represented that the MCA Agreements had no 

upfront fees, even though defendants, in practice, withheld fees 

from the upfront lumpsum that was advanced to their consumers. The 

Court addresses each deceptive act in turn. 

First, the undisputed facts establish that defendants overdebited their customers' bank accounts. The MCA Agreements 

specified the total amount that customers would need to repay 

defendants in exchange for the upfront lumpsum that customers would 

receive. SMF, CJI 7 0. To collect on the amount owed, the MCA 

Agreements authorized defendants to make daily debits from the 

customers' bank accounts until the amount owed was repaid. Id. 

CJI practice of 71. In actuality, however, defendants had a 

withdrawing more than the total amount that was owed from 

customers' bank accounts until customers asked them to stop. Id. 

CJICJI money that 72-76. Defendants thus misrepresented the amount of 

they would withdraw from their customers' bank accounts. 

Furthermore, this misrepresentation was material and would have 

reasonably misled defendants' customers because the representation 

regarding the amount that customers owed was expressly stated in 

the contracts. See SMF, CJI 70; Med. Billers Network, 543 F. Supp. 

528. 2d at 304; Five-Star Auto Club, Inc., 97 F. Supp. 2d at 

Second, the undisputed facts establish that defendants 

falsely advertised on their website that personal guaranties were 

16 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 17 of 46

that not required, when, in fact, they were. Their website stated 

"no personal guaranty of collateral" is required and that there 

are "[n]o [c]redit or [c]ollateral [r]equirements." SMF, 1 97; Pl. 

Ex. 35, Att. C at 28, 31, 36-37, ECF No. 109-42. In actuality, 

however, defendants required customers to sign a "Security 

Agreement and Guaranty" that obligated business owners to 

personally guarantee their businesses' performance of the MCA 

Agreement. SMF, 11 98-99. Sometimes, moreover, defendants included 

a contractual provision allowing defendants to pursue such owners 

in the event of default, id. 1 100, and defendants regularly 

required the business owners to sign COJs in which they confessed 

to judgment "individually and personally," id. 1 101. Finally, in 

practice, defendants enforced the personal guaranties. Id. 11 102-

03. Thus, the statements on defendants' website were false, and 

since those false statements were express, they are presumed to be 

material and customers' reliance on those statement is reasonable. 

Med. Billers Network, 543 F. Supp. 2d at 304; Five-Star Auto Club, 

Inc., 97 F. Supp. 2d at 528. 

Third, the undisputed facts establish that defendants misled 

customers into thinking there were no upfront fees and that they 

would receive a specified upfront lumpsum amount. Their website 

stated there were "No Upfront Costs." SMF, 1 104. And the MCA 

Agreements specified an upfront lumpsum amount that would be paid. 

Id. 11 105, 111-12. However, in practice, defendants deducted fees 

17 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 18 of 46

receiving from the upfront lumpsum amount, resulting in consumers 

less than the total upfront lumpsum amount specified in the MCA 

Agreement. 11106-07. To add insult to injury, defendants would Id. 

also regularly withhold from the upfront lumpsum amount even more 

than the fees. Id. 11 115, 130. Thus, defendants' representations 

would not be charged upfront fees and would receive that customers 

a specified upfront amount are false, and since the representations 

were express, they are material and it is reasonable for a consumer 

to rely upon them. Med. Billers Network, 543 F. Supp. 2d at 304; 

Five-Star Auto Club, Inc., 97 F. Supp. 2d at 528. 

Mr. Braun, for his part, does not dispute that these deceptive 

acts or practices occurred. Rather, he argues that he did not have 

the requisite level of control or participation for the imposition 

of individual liability. 

individual may be held liable under [Section 5 of] the "An 

FTCA for a corporation's deceptive acts or practices if, with 

knowledge of the deceptive nature of the scheme, he either 

participates directly in the practices or acts or has authority to 

control them." Moses, 913 F.3d at 306. There is direct 

participation "when [a defendant] engages in deceptive acts or 

practices that are injurious to customers with at least some 

169-70. knowledge of the deception." LeadClick Media, 838 F.3d at 

A defendant's "[a]uthority to control . can be evidenced by 

active involvement in the business affairs and the making of 

18 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 19 of 46

a corporate policy, including assuming the duties of corporate 

officer." Moses, 913 F.3d at 307. 

To show knowledge, "actual and explicit knowledge of the 

particular deception at issue" is not necessary; instead, 

"knowledge may be established by showing that the indi victual 

defendant had actual knowledge of the deceptive conduct, or was 

an awareness recklessly indifferent to its deceptiveness, or had 

of a high probability of deceptiveness and intentionally avoided 

learning of the truth." Id. "The degree of participation in 

whether [an business affairs is a relevant factor in determining 

individual defendant] had knowledge of [a corporate defendant's] 

wrongful actions." Id. at 309. 

Mr. Braun exercised considerable control over all the 

defendants in this case. He "was an owner, manager, and officer of 

RCG," had decision-making authority for all defendants (including 

to establish policies and employment practices) , the authority 

"created content" for defendants' website, had extensive 

involvement and control over the MCA Agreements, made decisions 

about collecting missed payments, exercised authority to declare 

the customers in default, and exercised authority over filing of 

COJs. SMF, 11 27-29, 31-32, 34-36, 41-44. The evidence shows that 

Mr. Braun personally participated in, and had knowledge of, the 

over-withdrawals. Id. 11 77, 79-96. Furthermore, Mr. Braun's 

(despite knowledge of the securing of personal guaranties 

19 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 20 of 46

advertising to the contrary) is evidenced by his authority and 

involvement with creating content for their website and for the 

MCA Agreements, and his declaring customers in default, including 

an email from Mr. Braun to a consumer stating he would be going 

after the consumer personally. See SMF, ii 32, 34-36, 41-44, 97-

103; Pl. Ex. 35 at 1187, ECF No. 109-51 ("We will be going after 

the company and you personally with our legal team.") . Finally, 

the evidence show that Mr. Braun knew of, and participated in, the 

scheme to deduct upfront fees and not pay the specified upfront 

lumpsum. SMF, ii 34-36, 39, 104-124, 129. 

In an effort to prop up his position, Mr. Braun cites to his 

own declaration (which he submitted twice) . 6 Compare Braun Deel., 

ECF No. 120, with Braun Deel. in Opp'n., ECF No. 120-21. Then, 

citing to his own self-serving declaration, Mr. Braun argues that 

he did not control the corporate defendants and did not participate 

for in or make any of the misrepresentations that are the basis 

the Section 5 claim. See Braun Deel. in Opp' n., ii 4, 14. By 

itself, however, such bare and conclusory testimony does not create 

a genuine dispute of material fact. See, e.g., Adler v. Penn Credit 

Corp., No. 19-CV-7084, 2022 WL 744031, at *9 (S.D.N.Y. Mar. 11, 

6 Although Mr. Braun does not reference it in his opposition brief, 

in his Rule 56.1 Statement Mr. Braun also cites to his own 

testimony at an investigative hearing held by the New York Attorney 

General. See Def. Ex. 3, ECF. No 122-1. To the extent Mr. Braun 

relies on his own conclusory testimony at this hearing, that too 

cannot create a genuine dispute of material fact. 

20 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 21 of 46

2022) [A] without (" non-moving party's self-serving statement, 

direct or circumstantial evidence to support the charge, is 

insufficient to defeat a motion for summary judgment."); Walker, 

WL 210 F. Supp. 3d at 503; Khudan v. Lee, No. 12-cv-8147, 2016 

4735364, at *5 (S.D.N.Y. Sept. 8, 2016). 

Therefore, the FTC has established that the undisputed facts 

acts of show that Mr. Braun, with knowledge of the deceptive 

defendants, both actively participated in, and had authority to 

control, those deceptive acts. It is therefore proper to impose 

the individual liability on Mr. Braun for Count I. Accordingly, 

FTC is entitled to summary judgment on Count I against Mr. Braun. 

b. Count II-IV: Unfair Practices In Violation of Section 5 

of the FTCA 

Counts II through IV assert Mr. Braun violated Section 5 of 

engaging in three unfair business practices. Each count the FTCA by 

is addressed below. 

Section 5(n) states that a practice is unfair when it "causes 

or is likely to cause substantial injury to consumers [that] is 

not reasonably avoidable by consumers themselves and not 

to outweighed by countervailing benefits to consumers or 

competition." 15 U.S.C. § 45(n). See FTC v. Verity Int'l, Ltd., 

335 F. Supp. 2d 479, 498 (S.D.N.Y. 2004) (quoting 15 U.S.C. § 

45(n)). Although the Second Circuit has not had the occasion to 

opine on the meaning of "substantial injury," "reasonably 

21 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 22 of 46

countervailing avoidable," or when an injury is "not outweighed by 

benefits to consumers or to competition," the Court finds the case 

law from other circuits and district courts instructive. 

"An act or practice can cause 'substantial injury' by doing 

a small harm to a large number of people, or if it raises a 

significant risk of concrete harm." FTC v. Neovi, Inc., 604 F.3d 

consumers' 1150, 1157 (9th Cir. 2010). And to "determin[e] whether 

injuries were reasonably avoidable, courts look to whether the 

consumers had a free and informed choice." Id. at 1158. See also 

FTC v. Windward Mktg., Inc., No. Ci v. A 1: 96-CV-615F, 1997 WL 

33642380, at *11 (N.D. Ga. Sept. 30, 1997) ("the Court focuses on 

whether the consumers had a free and informed choice that would 

have enabled them to avoid the unfair practice"). However, "[a]n 

injury is reasonably avoidable if consumers have reason to 

anticipate the impending harm and the means to avoid it, or if 

pursuing, consumers are aware of, and are reasonably capable of 

potential avenues toward mitigating the injury after the fact." 

Davis v. HSBC Bank Nev., N.A., 691 F.3d 1152, 1168-69 (9th Cir. 

benefits when 2012). Finally, an injury is not outweighed by other 

there are "clear adverse consequences for consumers that are not 

accompanied by an increase in services or benefits to consumers or 

1110, by benefits to competition." FTC v. Johnson, 96 F. Supp. 3d 

1151 (D. Nev. 2015). See also FTC v. Pointbreak Media, LLC, 376 F. 

Supp. 3d 1257, 1286 (S.D. Fl. 2019). 

22 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 23 of 46

1. Count II: Misuse of COJs 

undisputed facts show that defendants violated Section 5 The 

by misusing COJs. Defendants mandated that customers (the 

businesses and the businesses' owners) "sign a Confession of 

Judgment confessing judgment in the event of a default of the 

Merchant Agreement." SMF, 1 132. Although the MCA Agreements only 

permitted defendants to execute upon the COJs in limited 

circumstances, defendants filed and executed COJs in situations 

not permitted by the MCA Agreements. Id. 11 133-37. This plainly 

unfair practice caused substantial financial injury to customers, 

including business closures, loss of employees, and difficulty 

obtaining credit. Id. 1 153. Customers could not reasonably avoid 

outside the bounds that this practice because the COJs were filed 

were permissible pursuant to the MCA Agreements. Thus, customers 

or anticipated the filing of the COJs, as could not have avoided 

adhering to the contract would not stop defendants from filing the 

COJs. Finally, it is self-evident that there is no benefit to 

judgments customers or the public when defendants improperly seek 

against unwitting, innocent customers. 

2. Count III: Threats to Consumers 

The undisputed facts show that defendants violated Section 5 

threats to customers. Defendants repeatedly by making improper 

threatened customers, with physical, reputational, and financial 

harm, in order to collect payments. SMF, 11 157-69. This unfair 

23 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 24 of 46

practice substantial including caused injury to customers, 

financial, emotional, and reputational harms. Id. 11 172-73. There 

was no way for customers to reasonably avoid defendants' practice 

reason to know of making improper threats, as customers had no 

they would be threatened if they were unable to make payments under 

the MCA Agreements and defendants appear to have threatened 

is customers at their own caprice and whim. Finally, there 

absolutely no benefit to customers or competition when defendants 

use improper means, such as threats of bodily harm, to collect on 

amounts owed. 

3. Count IV: Unauthorized Withdrawals 

undisputed facts show that defendants violated Section 5 The 

by making unauthorized withdrawals from customers' accounts. 

Although the MCA Agreements only permitted defendants to "debit 

the specific daily amount each business day," defendants regularly 

multiple payments on one business day," including making "withdrew 

unauthorized double debits the day before or after a bank holiday, 

than and defendants also, on occasion, withdrew more the 

contractually permitted daily amount. SMF, 11 17 4-81. And, as 

discussed above, defendants also continued making debits after 

customers had paid the entire amount that was owed to defendants. 

v. See SMF, 11 72-73. That is an unfair practice. See, e.g., FTC 

Wells, 385 F. App'x 712, 713 (9th Cir. 2010) ( "Carrying out 

unauthorized transactions was an unfair practice."). 

24 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 25 of 46

It substantial customers also caused financial injury to 

because more debits were withdrawn than were contractually 

authorized. See SMF, 11 74-75, 180-89. Customers could not avoid 

these unauthorized withdrawals, as the MCA Agreements gave 

customers no reason to expect that these withdrawals would occur. 

to finally, there is no countervailing benefit competition or And 

than they are the customers when defendants withdraw more money 

entitled to contractually. 

Once again, Mr. Braun does not genuinely dispute that any of 

argues that he these unfair trade practices occurred. Instead, he 

cannot be held individually liable for these unfair practices. 

standard Although the Second Circuit has not directly addressed the 

holding an individual liable for a corporate defendant's unfair for 

or acts under Section 5 the FTCA, nothing in LeadClick Media of 

Moses indicates that the standard for imposing individual 

deceptive act or unfair liability would differ based on whether a 

Section 5 of the FTCA. Therefore, the practice is alleged under 

it Court will use the same standard here that used to determine 

individual liability on Mr. whether it was appropriate to impose 

Braun for the corporate defendants' deceptive acts. 

As explained above, the FTC has undisputedly established Mr. 

authority to control defendants. SMF, 11 27-29, 31-32, 34- Braun's 

36, 38-44. The FTC has also established Mr. Braun's personal 

participation in and knowledge of each of the three alleged unfair 

25 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 26 of 46

the acts or practices. First, as it relates to misuse of COJs (the 

basis of Count II), Mr. Braun had direct involvement with the MCA 

Agreements (and thus can fairly be said to know the contractual 

terms) and yet personally directed the filing of COJs in 

that were not contractually proper. See SMF, 11 34- circumstances 

36, 132-41, 144, 146, 150. Second, Mr. Braun personally made 

numerous threats against customers and provided a script to another 

individual that included improper threats; it is also therefore 

fair to deduce from those facts that Mr. Braun had knowledge of 

this unfair practice. SMF, 11 157, 159-63, 165, 168-69, 171. 

Mr. Braun knew of defendants' practice of making Finally, 

unauthorized withdrawals, as evidenced by an email from Mr. Braun 

explicitly instructing another individual not to make a holiday 

debit, as well as by the fact that a customer complained directly 

SMF, 11 179, 182; Pl. to Mr. Braun about the double-debit issue. 

1423-24, ECF No. 109-53; Pl. Ex. 12, 11 19-20, ECF No. Ex. 35 at 

109-14. And, as discussed above, Mr. Braun personally participated 

SMF, 11 77, 79- in, and had knowledge of, the over-withdrawals. 

96. 

Citing to his own self-serving and conclusory declaration 

(again), Mr. Braun argues he had no involvement with the COJs, did 

defendants, and never made any threats. Braun not own or control 

Deel. in Opp'n., 11 4, 14-38. But, as discussed above, such 

material conclusory testimony cannot create a genuine dispute of 

26 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 27 of 46

Braun, fact. the Mr. Therefore, undisputed facts show that with 

knowledge of the unfair acts, both directly participated in those 

acts and had authority to control those acts. 

is entitled to summary judgment on Counts Accordingly, the FTC 

II, III, and IV against Mr. Braun. 

c. Count V: GLB Section 521 

Section 521(a) (2) of the GLB Act makes it unlawful "for any 

person to obtain or attempt to obtain customer information 

of a financial institution relating to another person by 

fictitious, or fraudulent statement or making a false, 

representation to a customer of a financial institution." 15 U.S.C. 

§ 6821(a) (2). The FTC argues that Mr. Braun violated this provision 

the MCA Agreements -- namely by making false representations about 

customers that defendants would collect a specified amount from 

and customers would receive a specified lumpsum upfront -- in order 

customers' bank account information to make withdrawals. to obtain 

facts Mr. Braun for his part does not dispute the underlying of 

Rather, Mr. Braun, relying heavily on legislative the FTC's theory. 

to history, argues that this provision was not intended reach this 

type of misconduct. It appears that no other court has addressed 

of this statutory provision, so the Court will rely on the scope 

the tools of statutory interpretation to determine whether this 

alleges. provision reaches the misconduct that the FTC 

27 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 28 of 46

financial "Customer" and "customer information of a 

defined. "Customer" is defined as ins ti tut ion" are statutorily 

"any person (or authorized representative of a person) to whom the 

ti tut ion provides a product or service, including financial ins 

that of acting as fiduciary." 15 U.S. C. § 68 2 7 ( 1) . Defendants' 

were small businesses, and small businesses are customers 

"persons . " See , e . g . , 1 U . S . C . § 1 ( the term "person 

include[s] corporations, companies, associations, firms, 

joint stock companies, as well as individuals"). partnerships, and 

Neither side appears to contest that these small businesses had 

bank accounts open at financial institutions, and that, therefore, 

statutory provision. defendants' customers are covered by this 

Second, "customer information of a financial institution" is 

defined as "any information maintained by or for a financial 

the ins ti tut ion which is derived from the relationship between 

financial institution and a customer of the financial institution 

U.S.C. is identified with the customer." 15 § 6827(2). Plainly, and 

information that defendants required from customers about the 

their bank accounts -- their routing numbers, bank account numbers, 

and any information needed for accessing and controlling their 

the definition of "customer bank accounts falls within 

information of a financial institution." See SMF, <[[<[[ 60-62. 

The dispute between the parties appears to be about the scope 

The of phrase "false, fictitious, or fraudulent statement." the 

28 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 29 of 46

Section FTC misrepresentations violated argues that the same that 

FTCA, namely, "(1) they would collect a specific amount 5 of the 

from customers' bank accounts to repay their funding to 

would provide customers with a specific customers and (2) that they 

amount of funding," are the "false, fictitious, or fraudulent 

statements" that defendants used to obtain their customers' bank 

that account information. See FTC Mem. at 25. Mr. Braun counters 

because the phrase should not reach that far a House statutory 

Report gives "misrepresenting the identity of the person 

information or otherwise misleading an institution requesting the 

or customer into making unwitting disclosures of such information" 

deceptive." as an example conduct that would be "fraudulent or of 

No. 106-434, at 173 (1999). Mr. Def. Mem. at 19; H.R. Conf. Rep. 

contractual Braun argues never having the intent to perform that 

obligations is different in kind than the false statements that 

(i.e., "impersonation and similar the GLB Act was intended to reach 

fraud"). Def. Mem. at 19-20. 

plain Braun's argument proves too much. The text of the Mr. 

alter statutory provision controls, and legislative history cannot 

Castro-Huerta, the meaning of plain text. See Oklahoma v. 142 the 

S. Ct. 2486, 2496 (2022) ("the text of a law controls over 

any statutory purported legislative intentions unmoored from 

text"). The plain text reaches "false, fictitious, or fraudulent 

limitation statement [ s]" full stop. The Court will not read a 

29 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 30 of 46

be (i.e., the must that means of deception akin to impersonation) 

into the text. Furthermore, even if there is some limit to that 

would be it certainly reaches statements that phrase, 

independently violative of Section 5 of the FTCA (as that provision 

only reaches misleading representations, omissions, or practices). 

the amounts owed and the about As discussed above, the statements 

lumpsum amount that customers would be given were independently 

material, misleading violative of Section 5 of the FTCA as 

misrepresentations. Therefore, given that the undisputed facts 

false statements to induce show that defendants used these 

customers to sign the MCA Agreements and disclose their bank 

account information, which in turn permitted defendants to overaccounts, the FTC has established a withdraw from customers' bank 

violation of Section 521 of the GLB Act. 

ihe question then becomes whether Mr. Braun is individually 

of the GLB Act. of Section 521 liable for defendants' violations 

That raises a threshold issue that appears to be undecided in the 

Second Circuit: what standard applies? The FTC argues that the 

that applies under Section 5 of standard same individual liability 

Act. See FTC Mem. at 26 n.10. Mr. should the the FTCA apply to GLB 

Braun does not respond to this argument or propose that a different 

Al though this is a novel issue in this standard should apply. 

Circuit, the Second Circuit's holding in Moses convinces this Court 

imposing that the is correct that the same standards for FTC 

30 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 31 of 46

imposing individual under to liability Section 5 of the FTCA apply 

liability under Section 521 of the GLB Act. individual 

In Moses, the Second Circuit held that the individual 

the FTCA "applies when the liability standard under Section 5 of 

FTC brings an action to enforce the FDCPA [Fair Debt Collection 

Practices Act]" because: 

be unfair or "[V] iolations of the FDCPA are deemed to 

deceptive acts or practices under the [FTCA]." Jerman v. 

U.S. 573, Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 

577, 130 S.Ct. 1605, 176 L.E.2d 519 (2010); see also 15 

U.S.C. § 16921(a) ("[A] violation of [the FDCPA] shall be 

practice in violation deemed an unfair or deceptive act or 

of" the FTCA and is subject to enforcement "in the same 

[FTC] manner as if the violation had been a violation of a[n] 

trade regulation rule.") The FTC, then, is enforcing the 

pursuant to its authority under the FTCA. And because FDCPA 

the FTC can enforce compliance with the FDCPA only by 

employing the FTCA, and "in the same manner as a violation" 

of the FTCA, 15 U.S.C. § 16921(a), it follows, we conclude, 

applies. that the FTCA individual liability standard 

Moses, 913 F.3d at 307. 

That logic demands that the same result obtain here. Section 

Act states that the FTC can enforce compliance with 522 of the GLB 

with the same Section 521 of the GLB Act "in the same manner and 

Commission has under the Fair Debt 

power and authority as the 

Collection Practice Act . . . to enforce compliance with such Act." 

6822(a). It follows therefore that the same standard 15 U.S.C. § 

for imposing individual liability under the FDCPA should apply to 

has already held claims under the GLB Act, and the Second Circuit 

under Moses that the individual liability standard that applies in 

31 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 32 of 46

that the the standard FDCPA is same individual liability applies 

under Section 5 of the FTCA. Therefore, the Court applies the same 

the individual liability standard that applies under Section 5 of 

FTCA to determine if Mr. Braun is individually liable for 

defendants' violations of the GLB Act. 

As discussed extensively above, Mr. Braun had the authority 

of what the defendants did, to control almost every aspect 

MCA including negotiating approving the terms of the and 

Agreements (which required the disclosure of customers' bank 

account information and included the false statements about the 

specified withdrawal amounts and specified upfront lumpsum 

54-56, amount). SMF, '.lI'.lI 27-29, 31-32, 34-36, 38-44, 59-62. And, 

as discussed above, Mr. Braun also knew about and directly 

participated in over-withdrawing from customers' bank accounts 

and underfunding the MCA Agreements. Id. '.lI'.lI 34-36, 39, 77, 79-96, 

no disputes about 10 4-12 4, 12 9. In his brief, Mr. Braun raises 

a the underlying facts that the FTC claims constituted violation 

there is no genuine dispute of of the GLB Act. Accordingly, 

521 material fact that Mr. Braun is liable under Section of the 

GLB Act. The FTC is the ref ore entitled to summary judgment on 

Count V against Mr. Braun. 

C. Remedies 

Having found Mr. Braun liable on the claims asserted by the 

seeks FTC, the Court now turns to the issue of remedy. The FTC 

32 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 33 of 46

damages, three kinds of remedies: money civil penalties, and a 

permanent injunction. For the reasons discussed below, the Court 

fact that preclude granting finds there are genuine issues of 

summary judgment to the FTC on damages and civil penalties, but 

injunction. the Court will issue a permanent 

a. Compensatory Damages 

The FTC seeks money damages for Mr. Braun's violations of the 

whether the FTC has the authority to GLB Act. The parties dispute 

it has the statutory do so. The Court agrees with the FTC that 

authority to seek monetary relief for violations of the GLB Act. 7 

the FTC to enforce Section 522 (a) of the GLB Act allows 

violated) Section 521 of the GLB Act (the provision that Mr. Braun 

"in the same manner and with the same power and authority" that 

See 15 U.S.C. 6822(a) The the FTC "has under the [FDCPA]." § 

the FTC to use "[a] 11 of [its] FDCPA, meanwhile, authorizes 

functions and powers . . under the FTCA" to enforce compliance 

7 in AMG Capital Management v. FTC The Supreme Court's decision 

does not hold otherwise. There, the Supreme Court held that Section 

which allows the FTC to obtain a "permanent 13 of the FTCA, 

injunction," does not authorize the FTC to obtain "equitable 

monetary relief such as res ti tut ion or disgorgement." AMG Cap. 

141 S. Ct. 1341, 1344 (2021). Unlike the Mgmt., LLC v. FTC, 

provision at issue in AMG, here the FTC invokes a provision of the 

money damages. Compare 15 that explicitly does allow for FTCA 

U.S. C. § 53 (b) (permitting a "permanent injunction"), with 15 

of damages ' In fact, the U.S. C. 5 7b (b) (permitting "the payment 1 ) • 

recognized the difference in language between Supreme Court in AMG 

Section 13 and Section 19. See AMG Cap. Mgmt., 141 S. Ct. at 1348-

49. 

33 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 34 of 46

FDCPA with 16921(a). the it. 15 U.S.C. § Specifically, authorizes 

the FTC to treat a violation of it "in the same manner as if the 

trade violation had been a violation of a Federal Trade Commission 

regulation rule." Id. And, under Section 19 of the FTCA, this 

as is authorized "to grant such relief [it] finds necessary Court 

resulting from the rule 

to redress injury to consumers 

C. violation," including payment of damages." 15 U.S. "the § 5 7b (b) 

(emphasis added). Because GLB violations (like FDCPA violations) 

rule violations, the FTC can seek money damages can be treated like 

against Mr. Braun under Section 19. 

Turning now to the calculation of compensatory damages, the 

compensatory damages that amount parties disagree about the of 

Mr. Braun properly owes. For the reasons discussed below, the 

disputes of material fact that Court finds there are genuine 

preclude summary judgment on compensatory damages. 

McAlvanah's report to argue The initially Dr. FTC submitted 

that it was entitled to $4,847,911 in compensatory damages for 

defendants' overcharging consumers and over-deducting fees. FTC 

FTC reached 

at 33-34; See Pl. Ex. 34, ECF No. 109-41. The Mem. 

accounts this calculation on taking a random sample of from based 

SMF, i 194. Based on a random 

a full data pool of 1,499 customers. 

McAlvanah concluded that 23 accounts sample of 87 accounts, Mr. 

were overcharged, which corresponds to a 26.4% incidence rate. 

that 

Id. i 194; Pl. Ex. i 19. Mr. McAlvanah also concluded 34, 

34 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 35 of 46

195; the overpayment 'JI mean amount was $8,579. SMF, Pl. Ex. 34, 

'JI 2 4. Extrapolating all this to the full data pool of 1,499 

customers, the FTC concluded that 395 customers were overcharged 

a mean of $8,579, which multiplied together would be $3,377,705. 

'JI'JI 194-95. Then, based on a random sample of 52 accounts, SMF, 

that defendants over-deducted fees from Mr. McAlvanah concluded 

18 accounts, which corresponds to a 36.4% incidence rate. Id. 

'JI 196; Pl. Ex. 34, 'JI 32. Mr. McAlvanah also concluded that the 

over-deduction was $2,817. SMF, 'JI 197; Pl. Ex. 34, 'JI 36. 

mean 

Extrapolating this to the full data pool of 1,499 deals, the FTC 

concluded that 518 customers experienced a mean over-deduction in 

together would be $1,459,206. fees of $2,817, which multiplied 

in SMF, 'JI'JI Therefore, the FTC sought $4,874,911 196-97. 

compensatory damages. FTC Mem. at 34. 

there is a However, in opposition, Mr. Braun correctly noted 

three-year statute of limitations imposed on any monetary damages 

that the FTC may recover, see 15 U.S.C. § 57b(d), and that the 

compensatory damages for violations outside that FTC was seeking 

permitted statutory window. Def Mem. at 24-26. The Court then Mr. 

Braun to amend his answer to assert the statute of limitations 

ECF No. defense. See 6/13/22 Memo Endorsement; Amended Answer, 

136. 

In its reply brief, the FTC conceded that there is a threeyear statute of limitations and that it had "inadvertently used 

35 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 36 of 46

of the Defendant's full history misrepresentations to small 

business consumers without accounting for the 3-year limitations 

Supp. of Mot. for Summ. J. period." FTC Reply Mem. in Further 

("FTC Reply Mem."), at 14, ECF No. 129. In an effort to correct 

this fundamental error in its expert's report, the FTC now offers 

a new declaration from Elizabeth Kwok (an FTC investigator) 

deals, "1,354 had at stating that of the full data set of 1,499 

or one payment withdrawn by Defendants on after June 10, least 

'J[ 12, ECF No. 129-1. Using that new number as 2017." Pl. Ex. 37, 

the full data pool and relying on the same incidence rates and 

mean overcollection and over-deduction amounts, the FTC argues 

15. The that its revised amount is $4,381,059. FTC Reply Mem. at 

consider FTC urges Court to exercise its discretion to this the 

newly submitted evidence on reply. 

The Court, however, has concerns. The first concern is 

of submitting a revised and updated expert methodological. Instead 

report from Dr. McAlvanah accounting for the statute of 

limitations, the FTC submitted a declaration containing one 

sentence that concludes 1,354 deals should be considered as within 

Ex. 37, 'J[ 12. The declaration does the statutory period. See Pl. 

not explain how this conclusion was reached, the data that was 

how this establishes that only violations that relied upon, or 

occurred within the statute of limitations will figure into the 

the calculation of damages. Nor does it assure the Court that 

36 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 37 of 46

deals random sample -- which drew from a pool of inside and outside 

statute of limitations period and which was used as the basis the 

for calculating the incidence rate and mean overcollections and 

is still an appropriate sample. It is over-deductions of fees --

not clear if the random sample included deals outside the 

statutory window and it is not clear if its calculations included 

over-deductions and over-collections that occurred outside the 

statutory window. That gives the Court pause because the 

declaration does not explain if there are variations in the 

frequency or amount of over-collections and over-deductions 

between the deals within the statute of limitations period (i.e., 

on or after June 10, 2017) and those deals outside the statute of 

limitations period. 

The making second concern is equitable. By this new revision 

papers and based on new facts, the FTC deprived Mr. in its reply 

contest whether 1,354 is the number of Braun of the ability to 

deals that fall within the statutory period. It also deprived Mr. 

Braun of the ability to contest the methodological soundness of 

the FTC' s new calculation. 8 In essence, the FTC is asking the 

8 report that objects to the Mr. Braun did submit his own expert 

of the FTC's expert report, see Def. Ex. 11, ECF No. methodology 

120-13, but it is inadmissible and cannot be considered on summary 

no indication from the judgment because it is unsworn and there is 

the expert later reaffirmed his opinion in an record that it 

affidavit or at a deposition. See Berk v. St. Vincent's Hosp. and 

2005) ("Courts in Med. Ctr., 380 F. Supp. 2d 334, 352 (S.D.N.Y. 

do Circuit have uniformly held that unsworn expert reports this 

37 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 38 of 46

Court to grant summary judgment based on a fact that Mr. Braun 

never had the chance to dispute. 

Al though the Court agrees with the FTC that the Court has 

discretion to consider new evidence submitted with a reply brief, 

see Compania Del Bajo Caroni (Caromin), C.A. v. Bolivarian Republic 

of Venez., 341 F. App'x 722, 724 (2d Cir. 2009), in these 

circumstances the Court declines to exercise that discretion. The 

FTC's recalculation is not, as the FTC contends, simply a response 

to issues raised in Mr. Braun's opposition. See Toure v. Cent. 

Parking Sys. of N. Y., No. 05 Civ. 5237, 2007 WL 2872455, at *2 

(S.D.N.Y. Sept. 28, 2007) (denying a motion to strike new evidence 

submitted with a reply when they did "not raise new arguments, but 

rather respond to issues raised in opposition or amplify points 

already made on the initial motion"). Rather, it is an entirely 

new argument about the scope of the appropriate damages. The 

initial calculation of damages was for five years and was based on 

1,499 deals; now, the FTC's calculation of damages is for three 

not satisfy the admissibility requirements of Fed. R. Ci v. P. 

56 (e), and cannot be used to defeat a summary judgment motion 

without additional affidavit support."); Richardson v. Corr. Med. 

Care, Inc., 2023 WL 3490904, at *2 (2d Cir. May 17, 2023) 

("subsequent verification or reaffirmation of an unsworn expert's 

report, either by affidavit or deposition, allows the court to 

consider the unsworn expert's report on a motion for summary 

judgment"). However, this indicates that if he had been given the 

chance, Mr. Braun would have contested this revised 1,354 figure, 

further convincing the Court that granting summary judgment on a 

basis of a revised figure that Mr. Braun could not respond to would 

be inequitable. 

38 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 39 of 46

get years and is based on 1,354 deals. The FTC should not a second 

chance to show it is entitled to summary judgment on compensatory 

damages when Mr. Braun had no chance to respond and the underlying 

data that was necessary for the appropriate damages calculations 

surely was available to the FTC at the time of its opening brief. 

See, e.g., D'Alessandro v. Arrow Pharmacy Holdings, LLC, 3:20-CV536, 2023 WL 1967245, at *5 (D. Conn. Feb. 13, 2023) ("It is well 

established that a party cannot attempt to cure deficiencies in 

its moving papers by introducing new evidence in its reply when 

the effect would be to deprive the opposing party of the 

opportunity to respond."); Thompson v. Spota, CV 14-2473, 2018 WL 

6163301, at *26 (E.D.N.Y. Aug. 23, 2018) ("It is plainly improper 

available to submit on reply evidentiary information that was to 

the moving party at the time that it filed its motion and that is 

Aurora necessary in order for that party to meet its burden."); 

Loan Servs., Inc. v. Posner, Posner & Assocs., P.C., 513 F. Supp. 

(S.D.N.Y. 2007) ("To allow plaintiff to then submit new 2d 18, 20 

materials to meet its burden would inappropriately allow plaintiff 

No. a second bite at the summary judgment apple."); Mack v. Hall, 

9:18-CV-0875, 2020 WL 5793438, at *6 (N.D.N.Y. July 27, 2020) 

("Because the affidavit is new evidence, and [the opposing party] 

was not provided with an opportunity to respond to the evidence in 

a sur-reply, the Court will not consider the affidavit."). 

39 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 40 of 46

Given that the evidence in the record would not allow the 

Court to definitively resolve the amount of damages that the FTC 

is entitled to within the statute of limitations period, the Court 

denies summary judgment on compensatory damages. 

b. Penalties 

The FTC also seeks monetary penal ties. Section 5 (m) ( 1) (A) 

authorizes the FTC to recover "a civil penalty in a district court 

of the United States against any person" who violates any trade 

regulation rule "with actual knowledge or knowledge fairly implied 

on the basis of objective circumstances that [his] act is unfair 

or deceptive and is prohibited by such rule." 15 U.S.C. 

§ 4 5 (m) ( 1) (A) . "A defendant is responsible where a reasonable 

person under the circumstances would have known of the existence 

of the provision and that the action charged violated that 

provision." United States v. Nat'l Fin. Servs., Inc., 98 F.3d 131, 

139 (4th Cir. 1996). See also United States v. Dish Network, 

L.L.C., 954 F.3d 970, 978 (7th Cir. 2020) ("But § 45(m) (1) (A) 

includes a variation on an ignorance-of-law defense; a business 

can be liable only if it either knew that the act was unlawful or 

if it should have known that the act was unlawful."). 

Here, the FTC claims that Mr. Braun is subject to this civil 

penalty for his violations of the GLB Act. As explained above, the 

GLB Act is deemed to be a provision of the FTCA for purposes of 

40 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 41 of 46

its enforcement and can be treated as a rule violation, and there 

is no genuine dispute that Mr. Braun violated the GLB Act. 

The sole remaining issue is whether Mr. Braun knowingly 

violated the GLB Act. The FTC identifies two pieces of undisputed 

evidence that, it contends, show that Mr. Braun knew that his 

actions violated the GLB Act. First, in defendants' contract with 

Actum Processing (the merchant processor that they used to execute 

withdrawals from consumers' bank accounts), they expressly agreed 

to comply with all laws, including the GLB Act. SMF, 11 190-92. 

See Pl. Ex. 35, Att. G at 214-15, 218, ECF No. 109-42. Second, Mr. 

Braun directed one of his co-defendants, Mr. Giardina, to sign an 

amendment to a contract that expressly warranted that defendants 

were not subject to investigation or legal proceedings related to 

the GLB Act. SMF, 1 193; Pl. Ex. 35, Att. II at 1448-54, ECF No. 

109-53. 

"[V]iew[ing] th[is] evidence in the light most favorable to" 

Mr. Braun and "draw[ing] all reasonable inferences in favor of" 

Mr. Braun, as the Court must on summary judgment, Mountain Tobacco 

Co., 942 F.3d at 541, the Court concludes these facts are 

insufficient to conclusively establish actual or constructive 

knowledge on summary judgment. This evidence falls short of actual 

knowledge, as it does not definitively establish that Mr. Braun 

knew of the GLB Act and its statutory commands. The issue of 

constructive knowledge is a much closer issue, but the Court finds 

41 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 42 of 46

that a reasonable factfinder could draw competing inferences from 

this evidence, one favorable to the FTC and one favorable to Mr. 

Braun. On the one hand, a reasonable factfinder could infer 

constructive knowledge based on these two facts. On the other hand, 

a reasonable factfinder could also infer Mr. Braun did not have 

constructive knowledge that the GLB Act forbid misrepresenting 

contractual terms to obtain consumers' bank account information 

simply based on two contracts that represented the corporation was 

in compliance with all laws and regulations (including the GLB Act 

among many other laws) and that the corporation was not subject to 

investigation or legal proceedings under the GLB Act or other laws. 

The Court believes this is a quintessential question of fact for 

a factfinder. The Court therefore denies summary judgment to the 

FTC on its entitlement to civil penalties. 

c. Permanent Injunction 

Finally, the FTC seeks a permanent injunction whose terms 

would ( 1) prohibit Mr. Braun from marketing, selling, or 

collecting on ( or assisting others with marketing, selling, or 

collecting on) merchant case advances; ( 2) prohibit him from 

participating in debt collection activities; (3) prohibit him from 

making misrepresentations concerning products or services; ( 4) 

prohibit him from making unauthorized debits, withdrawals, or 

charges; ( 5) require him to dismiss any pending cases against 

customers, terminate any UCC liens against customers, and request 

42 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 43 of 46

removal of negative credit reports issued against customers; (6) 

prohibit him from violating the GLB Act; ( 7) impose monitoring 

conditions that would require Mr. Braun to provide customer 

information, acknowledge receipt of this Court's Order, submit 

compliance reports, and maintain certain records; and (8) permit 

the FTC to monitor Mr. Braun's compliance with this Court's Order. 

See FTC Revised Proposed Order, at 14-17, 20-26, ECF No. 129-2. 

Mr. Braun only objects to the provisions that would ban him from 

making merchant cash advances and from participating in debt 

collection activities and that would require him to dismiss 

pending cases and terminate UCC liens. For the reasons discussed 

below, the Court will issue a permanent injunction but will 

slightly modify the terms the FTC proposes. 

Section 13(b) of the FTCA authorizes this Court to grant a 

permanent injunction against violations "of any provision of law 

enforced by the [FTC]." 15 U.S.C. § 53(b) See FTC v. Bronson 

Partners, LLC, 654 F.3d 359, 365 (2d Cir. 2011) (acknowledging 

Section 13(b) permits the issuance of a permanent injunction). 

The Court can issue a permanent injunction when "there exists some 

cognizable danger of recurrent violation," United States v. W.T. 

Grant Co., 345 U.S. 62 9, 633 (1953), "or some reasonable 

likelihood of future violations," FTC v. Minuteman Press, 53 F. 

Supp. 2d 248, 260 (E.D.N.Y. 1998). See also Med. Billers Network, 

543 F. Supp. 2d at 323. Courts look to a list of factors to 

43 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 44 of 46

"determin[e] whether such danger exists" that "include[s]: 

defendant's scienter, whether the conduct was isolated or 

recurrent, whether defendant is positioned to commit future 

violations, the degree of consumer harm caused by defendant, 

defendant's recognition of his culpability, and the sincerity of 

defendant's assurances (if any) against future violations." FTC 

v. Instant Response Sys., LLC, No. 13 Civ. 00976, 2015 WL 1650914, 

at *10 (E.D.N.Y. Apr. 14, 2015). See also Med. Billers Network, 

543 F. Supp. 2d at 323. 

Here, in light of the egregiousness of Mr. Braun's conduct, 

the seriousness of the harm he inflicted on consumers, his 

continuing denial of his role in the misconduct, and the sheer 

number of times Mr. Braun engaged in misconduct, the Court has no 

trouble finding a permanent injunction prohibiting Mr. Braun from 

making merchant cash advances or participating in debt collection 

activities (as defined the FTC's proposed order) to be 

appropriate. See, e.g., FTC v. Shkreli, 581 F. Supp. 3d 579, 639 

(S.D.N.Y. 2022) (issuing a lifetime industry ban when the 

defendant engaged in "egregious, deliberate, repetitive, longrunning, and ultimately dangerous illegal conduct"). See also FTC 

v. Fed. Check Processing, Inc., 14-CV-122S, 2016 WL 5940485, at 

*4, *7 (W.D.N.Y. Oct. 13, 2016) (issuing an injunction 

"permanently ban[ning] Defendants from engaging in debt collection 

activities or assisting others who do"); Instant Response Sys., 

44 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 45 of 46

LLC, 2015 WL 1650914, at *10 (issuing an injunction banning 

defendant from "engaging in the marketing, promotion or sale of 

medical alert goods or services"); Verity Int'l, 335 F. Supp. 2d 

500 (issuing a permanent injunction "prohibiting defendants ... 

from participating in any capacity in the offering of audiotext 

or videotext services to U.S. consumers"). The Court also finds 

the provisions requiring Mr. Braun to refrain from illegal conduct 

and to request removal of negative credit reports issued against 

customers to be appropriate. The monitoring provisions are also 

appropriate to ensure compliance with the permanent injunction. 

However, Mr. Braun correctly notes that requiring him to 

dismiss any pending cases against consumers and terminate any 

liens imposed against consumers under the UCC would result in a 

windfall for his counterparties. To the extent that Mr. Braun's 

consumers have been harmed by his conduct, they will be 

compensated by the damages that the FTC will likely prove are 

warranted to a factfinder. An additional remedy for past harm, of 

the sort that the FTC envisions, is not required. 

Accordingly, the Court will issue a permanent injunction that 

includes all the terms the FTC proposes except for the terms that 

require Mr. Braun to dismiss any pending case or terminate UCC 

liens. 

45 
Case 1:20-cv-04432-JSR Document 179 Filed 09/27/23 Page 46 of 46

III. Conclusion 

For the foregoing reasons, the Court hereby enters summary 

judgment to the FTC on liability on all claims asserted against 

Mr. Braun. Additionally, the Court enters a permanent injunction, 

the terms of which are identical to the FTC's proposal except for 

excluding the provisions requiring the dismissal of pending 

lawsuits and the termination of UCC liens. However, the Court 

denies the FTC summary judgment on compensatory damages and civil 

penalties. 

SO ORDERED. 

Dated: New York, NY 

September ft, 2023 JED S. RAKOFF, U.S.D.J. 

46