IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

 

FEDERAL TRADE COMMISSION, 

 Plaintiff, 

 v. 

KEVIN TRUDEAU, 

 Defendant. 

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Case No. 03-C-3904 

Hon. Robert W. Gettleman 

FTC’S MOTION TO MODIFY THE RECEIVERSHIP ORDER TO PREVENT 

TRUDEAU FROM FUNDING HIS PERSONAL LIVING EXPENSES WITH ASSETS 

NEEDED TO COMPENSATE HIS VICTIMS 

I. INTRODUCTION

Although Trudeau has a right to personal living expenses, the FTC asks the Court to 

prevent him from using receivership assets to fund those expenses unless he contributes to the 

receivership estate through legitimate employment. As the Court is aware, in Think 

Achievement, the Seventh Circuit held that, after a court determined frozen assets are “necessary 

to compensate the victims of the fraud for their losses, [the contemnor] had no right to use any 

part of the frozen money for his own purposes[.]” 312 F.3d 259, 262 (7th Cir. 2002) (emphasis 

added). In Think Achievement, those “purposes” included “defending . . . against criminal 

charges,” see id., but there is no rational distinction between using money needed to compensate 

consumers to pay a contemnor’s personal legal expenses, and using redress funds to pay a 

contemnor’s personal living expenses. Although the FTC does not object to Trudeau keeping 

money necessary for personal living expenses if he earns it through legitimate employment, he 

has no right to a de facto pension funded with his victims’ money.1 

 

 1 Put differently, the Court should modify the order to authorize the Receiver to provide 

Trudeau a monthly allowance equal to the lesser of the amount he needs for ordinary living 

expenses and the amount he earns legitimately. 

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II. BACKGROUND 

On July 26, the Court found Trudeau in contempt a third time, accepted the FTC’s 

proposed findings of fact and law, and froze Trudeau’s assets along with the assets of various 

companies he controls. DE729. The Court subsequently entered a more detailed order placing 

the frozen assets in a receivership. See DE742 (Aug. 7, 2013). In accordance with the order, the 

Receiver allowed Trudeau at least $4,676 in monthly living expenses (equivalent to an after-tax 

salary of more than $56,000 a year).2 PXA:1. The FTC did not object to the Receiver’s first 

monthly payment to Trudeau, but reserved its right to move to prevent Trudeau from funding 

personal living expenses with money necessary to compensate his victims. 

III. ARGUMENT 

Once a court determines that a contemnor’s assets are “necessary to compensate the 

victims of the fraud for their losses,” the contemnor no longer “ha[s] [a] right to use any part of 

the frozen money for his own purposes[.]” Think Achievement, 312 F.3d at 262. Think 

Achievement’s principle is straightforward and intuitive: once the money at issue is found to 

belong to consumers—as the Court has found here—the contemnor no longer has any right to the 

money. See id.; see also Caplin & Drysdale, Chartered v. United States, 491 U.S. 617, 618 

(1989) (“A defendant has no Sixth Amendment right to spend another person’s money for 

services rendered by an attorney[.]”) (emphasis added); SEC v. Cherif, 933 F.2d 403, 416-17 (7th 

Cir.1991) (holding that a criminal defendant may not “spend another person’s money” to retain 

counsel) (quotation omitted) (emphasis added). There is no difference between spending 

“another person’s money” on legal expenses and spending it on living expenses—both 

expenditures are wrong. 

The manner in which courts address requests for living expenses before a defendant’s 

liability is determined helps illustrate this principle. When a defendant’s assets are frozen and 

potentially subject to forfeiture, courts generally balance “[t]he defendant’s interest in having 

access to funds needed to pay ordinary and necessary living expenses . . . against the 

 2 Trudeau’s monthly allowance is likely to increase because $4,676 does not include the 

cost of health insurance. See PXA:1. 

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government’s interest in preventing the depletion of potentially forfeitable assets.” SEC v. 

Dobbins, No. 04-605, 2004 WL 957715, at *3 (N.D. Tex. Apr. 14, 2004) (quoting United States 

v. Thier, 801 F.2d 1463, 1474 (5th Cir.1987)). Even in this context, courts do not always allow 

defendants living expenses. See, e.g., SEC v. Petters, No. 09-1750, 2010 WL 1782235, *2 (D. 

Minn. Apr. 30, 2010) (“The Court reiterates that living expense payments from funds preserved 

for Bell’s victims cannot be justified and will no longer be approved.”). However, after liability 

is determined, there is nothing to “balance” because the defendant no longer has any legitimate 

interest in the frozen assets. Accordingly, unless the receivership estate exceeds the amount 

“necessary to compensate the victims of the fraud for their losses,” Think Achievement, 312 F.3d 

at 262, Trudeau has no right to use estate assets for any expense, whether legal or otherwise. 

As noted above, the FTC does not object to the Receiver allowing Trudeau money for 

“ordinary and necessary” living expenses from salary he earns through future legitimate 

employment (much as a debtor can retain portions of his income in other contexts). Put 

differently, if Trudeau adds to the receivership estate through his employment, he can enjoy the 

portion of that addition necessary to pay his personal expenses. However, if Trudeau chooses 

not to contribute to the estate, then—exactly like people who elect not work in other situations—

he will have to rely on friends and family to support him. But he cannot simply sit idle and 

receive a monthly dole from a fund that isn’t his. 

IV. CONCLUSION 

Under Think Achievement, a contemnor cannot use money needed to compensate victims 

to subsidize his legal expenses. Because Think Achievement’s rationale applies with equal force 

to any expenses, the Court cannot require the Receiver to pay Trudeau’s personal expenses. 

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Dated: August 30, 2013 

David O’Toole (dotoole@ftc.gov) 

Federal Trade Commission 

55 West Monroe Street, Suite 1825 

Chicago, Illinois 60603-5001 

Phone: (312) 960-5601 

Fax: (312) 960-5600 

Respectfully Submitted, 

/s/ Jonathan Cohen 

Michael Mora (mmora@ftc.gov) 

Jonathan Cohen (jcohen2@ftc.gov) 

Amanda B. Kostner (akostner@ftc.gov) 

Federal Trade Commission 

600 Pennsylvania Ave., N.W. M-8102B 

Washington, DC 20580 

Phone: 202-326-3373; -2551; -2880

 

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CERTIFICATE OF SERVICE 

I, Jonathan Cohen, hereby certify that on August 30, 2013, I caused to be 

served true copies of the foregoing by electronic means, by filing such documents through the 

Court’s Electronic Case Filing System, which will send notification of such filing to: 

Kimball Richard Anderson 

kanderson@winston.com

Thomas Lee Kirsch, II 

tkirsch@winston.com 

Katherine E. Rohlf 

kcroswell@winston.com 

Blair R. Zanzig 

bzanzig@hwzlaw.com

/s/ Jonathan Cohen 

Jonathan Cohen (jcohen2@ftc.gov) 

Attorney for Plaintiff 

Federal Trade Commission 

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