NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

FEDERAL TRADE COMMISSION,

 Plaintiff,

v.

MILLENNIUM TELECARD, INC., et al.,

 Defendants.

 Civil Action No.: 11-2479 (JLL)

OPINION

LINARES, District Judge.

This matter comes before the Court by way of Plaintiff’s motion for a preliminary injunction

pursuant to Federal Rule of Civil Procedure 65, brought by way of Order to Show Cause. The

Plaintiff in this matter is the Federal Trade Commission (“FTC”). Defendants, Millennium

Telecard, Inc., Millenium Tele Card, LLC, Coleccion Latina, Inc., Telecard Center USA, Inc., and

Fadi Salim (referred to collectively as “Defendants”), are engaged in the business of prepaid calling

cards. The FTC brings this enforcement action under Section 13(b) of the Federal Trade

Commission Act, 15 U.S.C. § 53(b), seeking to obtain, inter alia, temporary, preliminary and

permanent injunctive relief, restitution, the refund of monies paid, disgorgement of ill-gotten monies,

and other equitable relief based on allegations that Defendants have engaged in deceptive marketing

of prepaid calling cards in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). The Court

has considered the submissions made in support of and in opposition to the instant motion. A

hearing in connection with Plaintiff’s motion was held before the undersigned on May 16, 2011. 

Based on the reasons that follow, Plaintiff’s application is granted in part. 

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FACTUAL AND PROCEDURAL BACKGROUND

A. Plaintiff’s Complaint

The FTC, an independent agency of the United States Government created by statute,

initiated this action on May 2, 2011 by filing a Complaint for Permanent Injunction and other

equitable relief and an ex parte motion for a Temporary Restraining Order against the various

Defendants to this matter. Defendants have been engaged in the business of prepaid calling cards

since at least 2002 (Compl., ¶ 20). Defendant Salim is the founder, president and/or CEO of the

various corporate Defendants. 

In short, Plaintiff’s Complaint alleges that Defendants engaged in deceptive marketing of

prepaid calling cards in violation of the Federal Trade Commission Act, 15 U.S.C. § 41, et seq. In

particular, the FTC maintains that Defendants “have deceived and continue to deceive consumers,

many of whom are recent immigrants, by: (1) misrepresenting the number of calling minutes

consumers will obtain using Defendants’ prepaid calling cards; and (2) failing to disclose or disclose

adequatelyfees that have the effect of reducing the number of callingminutes available to consumers

using Defendants’ prepaid calling cards.” (Compl., ¶ 1). The FTC further alleges that “[i]n

numerous instances since at least 2007, the calling minutes actually delivered to consumers by

Defendants’ prepaid calling cards are substantially fewer than what is promised by Defendants in

marketing, advertising and promoting their cards.” (Compl., ¶ 39). In support of this position, the

FTC points to the fruits of its own investigation wherein it determined that “[i]n 141 tests of

Defendants’ cards conducted between August 24, 2010 and March 30, 2011, Defendants’ cards

delivered an average of only 45% of the advertised minutes. Of the 141 tested cards, 139 – more

than 98% – failed to deliver the number of minutes advertised on the point-of-sale posters.” (Compl.,

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¶ 40). 

Count One of Plaintiff’s Complaint alleges deception bywayof misrepresentationsregarding

the number of calling minutes, in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). Count

Two of Plaintiff’s Complaint alleges deception by virtue of failure to disclose fees, also in violation

of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). This Court has jurisdiction over this matter

pursuant to 28 U.S.C. § 1331. 

B. Plaintiff’s Ex Parte Motion for a Temporary Restraining Order

In conjunction with its Complaint, the FTC filed, on May 2, 2011, an ex parte motion for a

temporaryrestraining order pending this Court’s decision on its motion for a preliminaryinjunction. 

Plaintiff’s application for a temporary restraining order was granted on the same day. In its May 2,

2011 Order, this Court found, preliminarily, that “there is good cause to believe that Defendants .

. . have engaged in and are likely to engage in acts and practices that violate Section 5(a) of the FTC

Act, 15 U.S.C. § 45(a), by deceptively marketing prepaid telephone calling cards, and the FTC is

therefore likely to prevail on the merits of this action.” (May 2, 2011 Order, ¶ 2). This Court’s May

2, 2011 Temporary Restraining Order directed, inter alia, certain conduct prohibitions, an asset

freeze, disclosure byDefendants of variousfinancial records and statements, preservation of records, 

prohibition of release of customer information, and the appointment of a temporary Receiver.

(Docket Entry No. 5). 

Such Order was entered on an ex parte basis based upon the sworn certification submitted

by Kathleen Daffan, counsel for the FTC, wherein she represented that there is ample evidence

demonstrating that “it is reasonably likely that Defendants will destroy documents and dissipate or

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hide assets” absent the ex parte relief requested. (Docket Entry No. 3-2). Such evidence also

included a sworn certification by an investigator for Bank of America stating that Mr. Salim bounced

three (3) checks (drawn from his personal E*Trade account and deposited into a Millennium

corporate account) in or around November 2009. See Starr Decl., ¶ 9, Pl. Ex. 154. No bond was

posted by the FTC in accordance with Federal Rule of Civil Procedure 65(c).

LEGAL STANDARD

A preliminary injunction is a “drastic and extraordinary remedy that is not to be routinely

granted.” Intel Corp. v. ULSI Sys. Tech., Inc., 995 F.2d 1566, 1568 (Fed. Cir. 1993). Traditionally,

in orderto obtain preliminaryinjunctive relief, the moving partymust demonstrate: (1) the likelihood

of eventual success on the merits; (2) the existence of immediate irreparable harm if the relief

requested is not granted; (3) that a balance of the hardships weighs in its favor; and (4) that

consideration of the public interest weighs in favor of granting the relief requested. Ortho Pharm.

Corp. v. Amgen, Inc., 882 F.2d 806, 812-13 (3d Cir. 1989). 

However, in the specific context of actions brought by the FTC, several courts of appeals

have held that the FTC need not satisfy the traditional equity standard that courts typically impose

on private litigants to justify imposition of a preliminary injunction, but must instead demonstrate

the following: (1) the likelihood that it will ultimately succeed on the merits, and (2) that a balance

of the equities weighs in favor of granting the relief requested. See F.T.C. v. Univ. Health, Inc., 938

F.2d 1206, 1217-18 (11th Cir. 1991); FTC v. Warner Comm’cs Inc., 742 F.2d 1156, 1160 (9th Cir.

1984); FTC v. Food Town Stores, Inc., 539 F.2d 1339, 1343-44 (4th Cir. 1976); see generally FTC

v. Check Investors, Inc., No. 03-2115, 2003 U.S. Dist. LEXIS 26941, at *13 (D.N.J. July 30, 2003)

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(noting that “the traditional factors are not applicable when, as in this case, a federal agency is

seeking injunctive reliefthat is authorized by statute.”). Section 13(b) of the FTC Act itself provides

that “[u]pon a propershowing that, weighing the equities and considering the [FTC]'s likelihood of

ultimate success, such action would be in the public interest . . . a preliminary injunction may be

granted . . . .” 15 U.S.C. §53(b). In light of the foregoing, and absent a contrary directive from the

Court of Appeals for the Third Circuit, the Court will apply this standard to Plaintiff’s application. 

DISCUSSION

A. Likelihood of Success on the Merits

Plaintiff’s Complaint asserts two claims of deception under Section 5(a) of the FTC Act, 15

U.S.C. § 45(a). Section 5(a)(1) declares unlawful “[u]nfair methods of competition in or affecting

commerce, and unfair or deceptive acts or practices in or affecting commerce.” 15 U.S.C. § 45. “The

primary purpose of § 5 is to lessen the harsh effects of caveat emptor.” FTC v. Freecom Commc’ns,

Inc., 401 F.3d 1192, 1202 (10th Cir. 2005). To establish liability under section 5 of the FTC Act,

the FTC must establish: “(1) there was a representation; (2) the representation was likely to mislead

customers acting reasonably under the circumstances, and (3) the representation was material.” FTC

v. Tashman, 318 F.3d 1273, 1277 (11th Cir. 2003). A material omission can also violate section 5

of the FTC Act. See, e.g., Sterling Drug, Inc. v. FTC, 741 F.2d 1146, 1154 (9th Cir. 1984) (“The

failure to disclose material information may cause an advertisement to be deceptive, even if it does

not state false facts.”). In order to establish liability under Section 5(a), the FTC need not prove that

the misrepresentation or omissions were made with the intent to deceive or in bad faith. See

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Freecom Commc’ns,, 401 F.3d at 1202. Nor does the FTC need to show actual reliance by

consumers. See FTC v. Verity Intern., Ltd., 443 F.3d 48, 63 (2d Cir. 2006) (“[I]t is enough that the

representations or practices were likely to mislead consumers acting reasonably.”). “Instead, the

‘cardinal factor’ in determining whether an act or practice is deceptive under § 5 is the likely effect

the promoter’s handiwork will have on the mind of the ordinary consumer.” Freecom Commc’ns,,

401 F.3d at 1202. 

The FTC claims that Defendants have committed two forms of deception: (1) falsely

representing the number of minutes consumers will receive when using Millennium calling cards,

and (2) failing to disclose (or adequately disclose) the fees associated with Millennium cards. In

addition, the FTC claims that Defendants, together, constitute a “common enterprise” for purposes

of rendering them jointly and severally liable for the foregoing violations of the FTC Act. 

The crux of Defendants’ opposition to the FTC’s application is that the FTC is unlikely to

succeed on the merits because it has failed to establish that the conduct at issue – under both claims

– constitutes “deceptive marketing” within the meaning of the Act. Defendants also offer two more

generalized arguments in opposition to Plaintiff’s motion. For instance, Defendants maintain that

the FTC is unlikely to succeed on the merits because: (1) the Federal Communications Commission

(“FCC”), not the FTC, has exclusive jurisdiction over the issues raised in Plaintiff’s Complaint, and

(2) the voluntary payment doctrine renders the government incapable of demonstrating that

Millennium’s customers were deceived. For purposes of ease and efficiency, the Court will first

address the more global arguments raised by Defendants concerning the FTC’s jurisdiction to bring

this action (or lack thereof) as well as the implications, if any, of the voluntary payment doctrine to

the FTC’s claims.

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1. FTC’s Jurisdiction 

 15 U.S.C. § 45(a)(2) provides that “the Commission is hereby empowered and directed to

prevent persons, partnerships, or corporations, except . . . common carriers subject to the Acts to

regulate commerce . . . from using unfair methods of competition in or affecting commerce and

unfair or deceptive acts or practices in or affecting commerce.” In this regard, Defendants maintain,

generally, that “[a]s distributors of the cards, defendants have absolutely no ability to set the rate

structure or fee structure for the calls, which is within the exclusive province of the service providers

[or common carriers]. Regulation of the service providers, in turn, is within the exclusive

jurisdiction of the Federal Communications Commission (“FCC”). (Def. Br. at 1). See 15 U.S.C.

§ 45(a)(2). It follows – according to the Defendants – that any action as to the amount of the

applicable fees or the rates imposed will necessarilyinvolve the service carriers (or common carriers)

over which the FTC does not have jurisdiction. See id. Thus, the crux of Defendants’ argument

is not that the FTC lacks jurisdiction to bring this action; rather, Defendants argue that the FTC

lacks jurisdiction over a hypothetical action that Defendants believe would more appropriatelyserve

the ultimate goal of protecting consumers from the rate/fee structure at issue in this matter – that is,

an action against the service providers (or common carriers) who actually set the fee/rate structure. 

Although Defendants’ point is well taken, it has no bearing on whether the FTC has jurisdiction to

bring the instant enforcement action against a calling card distributor. Nothing stated or cited to by

Defendants suggests that it does not. Defendants’ argument in this regard is therefore rejected. 1

 To the extent Defendants argue that the Court should construe distributors (or retailers) 1

like Millennium as agents or employees of the common carrier, Defendants cite to no legal

authority in support of this position. Moreover, Defendants admit that they are not carriers

and/or providers. (Salim Cert., ¶¶ 7-9) (“Contrary to the suggestion of the FTC, it is calling card

providers (also referred to as carriers), not distributors of calling cards like MTC, that are in

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2. Voluntary Payment Doctrine 

Defendants maintain that the FTC is unlikely to succeed on the merits of its claims of

deception by virtue of the voluntary payment doctrine. The “voluntary payment doctrine is a

corollary to the mistake of law doctrine and, in its general formulation, holds that a person who

voluntarily pays another with full knowledge of the facts will not be entitled to restitution.”

Randazzo v. Harris Bank Palatine, N.A., 262 F.3d 663, 667 -668 (7th Cir. 2001). 

Defendants argue that the voluntary payment doctrine precludes the FTC’s claims of

deception inasmuch as the consumers at issue in this matter purchased the calling card products after

becoming aware of the alleged misrepresentations and supposed hidden fees. (Def. Br. at 13). 

Defendants cite to no case law applying the voluntary payment doctrine in the context of an

enforcement action brought by the FTC. To the contrary, as previously stated,”[t]he primary

purpose of § 5 [of the FTC Act] is to lessen the harsh effects of caveat emptor.” Freecom

Commc’ns, 401 F.3d at 1202 (“Such rule ‘can no longer be relied upon as a means of rewarding

fraud and deception and has been replaced by a rule which gives to the consumer the right to rely

upon representations of facts as the truth.”). Thus, without more, Defendants have failed to

demonstrate that the voluntary payment doctrine should be applied in the context of an FTC

enforcement action, the primary purpose of which is to protect the consumer public. 

3. The FTC’s Claims of Deception 

Count One ofPlaintiff’s Complaint alleges deception bywayof misrepresentations regarding

the number of calling minutes, in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). In

control of and responsible for [inter alia] . . . imposing fees or costs that reduce calling time”). 

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support of this claim, the FTC relies on the results of an investigation it conducted between August

24, 2010 and March 30, 2011. Dani Stagg, an investigator with the FTC, testified to the following:

Of the 141 cards tested, 139 cards or 98.58% failed to deliver the

number of minutes advertised in the corresponding point of sale

posters. On average, the 141 tested cards delivered only 45.06% of

the minutes advertised on point of sale posters. Thirty of the 141

delivered less than 25% of the advertised minutes. Furthermore, nine

cards delivered less than 10% of the advertised minutes, and the

worst card failed to deliver any minutes.

Stagg Decl., ¶ 32, Pl. Ex. 151. Thus, The FTC maintains that Defendants’ express representations

concerning the number of minutes contained on a calling card have been proven false by virtue of

the FTC’s testing and are likely to mislead reasonable consumers. See generally Am. Home Prods.

Corp. v. FTC, 695 F.2d 681, 687 (3d Cir. 1982) (“[T]he tendency of the advertising to deceive must

be judged by viewing it as a whole, without emphasizing isolated words or phrases apart from their

context”) (quotation omitted). 

Count Two of Plaintiff’s Complaint alleges deception byvirtue of failure to disclose fees that

reduce the value of the cards, also in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). 

In support of this claim, the FTC argues that any disclosures and/or curative language must be

sufficiently prominent and unambiguous such that the overall net-impression of the communication

becomes non-deceptive. See, e.g., Removatron Intern. Corp. v. FTC, 884 F.2d 1489, 1497 (1st Cir.

1989) (“Disclaimers or qualifications in any particular ad are not adequate to avoid liability unless

they are sufficiently prominent and unambiguous to change the apparent meaning of the claims and

to leave an accurate impression. Anything less is only likely to cause confusion by creating

contradictory double meanings.”). The FTC maintains that the disclaimers on Millennium’s cards

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and posters “are so minuscule as to be nearly illegible, and certainly make very little impression

compared with the large, colorful claims about the number of minutes a consumer will receive when

calling particular destinations.” (Pl. Br. at 25-26). Moreover, the FTC claims that even consumers

who see, read and try to understand the disclaimers contained on Millennium’s posters and/or cards

“have no way of knowing which fees apply, when they apply or the amount of the actual fee.” (Pl.

Br. at 26). 

Defendants, on the other hand, argue that the FTC has failed to establish that the conduct at

issue constitutes “deceptive business practices” within the meaning of the FTC Act for two reasons:

(1) as to Count 2 , failure by the FTC to rely on actual consumer experiences in order to support its

conclusion that the fees at issue are deceptive, and (2) as to Count 1, failure by the FTC to take into

account the implication of the fees on the total number of minutes available on the card when

conducting its testing and/or concluding that the cards tested misrepresented the number of minutes

available. See generally Tr. (May 16, 2011) at 33:25-35:8. Stated differently, Defendants maintain

that Plaintiff has failed to demonstrate likelihood of success as to Count 1 because their testing does

not address the relevant issue – that is, whether the cards provide the number of minutes one would

expect after all applicable fees are applied. See id. Because the Court determines, based on the

reasons that follow, that the FTC has demonstrated likelihood of success on the merits as to Count

2 – deception by virtue of failure to adequately disclose fees that reduce the value of the calling cards

– the Court need not determine whether the testing upon which Plaintiff relies in support of Count

1 took into account – in whole or in part – the implication of all applicable fees in reducing the

number of minutes available. 

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a. Count Two – Deception by Virtue of Failure to Adequately Disclose Fees

that Reduce the Value of the Calling Cards 

As previously stated, Count 2 alleges deception by virtue of failure to disclose (or adequately

disclose) fees that reduce the value of the calling cards in violation of Section 5(a) of the FTC Act,

15 U.S.C. § 45(a). Defendants oppose the FTC’s motion as to this claim on the basis that the FTC

failed to rely on actual consumer experiences in order to support its conclusion that the fees at issue

are deceptive. In particular, Defendants argue as follows:

The government cites no legal basis (and . . . cites no actual consumer

experiences) for the assertion that MTC’s cards and the disclosures

contained on those cards are ‘deceptive business practices’ but

instead reaches that conclusion all on its own. Whether a finder of

fact would reach the same conclusion, or whether the finder of fact

would determine that MTC’s disclosures are sufficient is not at all

clear. Such a weak claim should never form the basis for a request

for injunctive relief, particularly where the relief sought is extremely

onerous. 

(Def. Br. at 14). Thus, as a preliminary matter, the Court notes that Defendants do not expressly

dispute that the FTC has otherwise satisfied the elements for establishing liability under Section 5

of the FTC Act as to Count 2 – namely, that “(1) there was a representation; (2) the representation

was likely to mislead customers acting reasonably under the circumstances, and (3) the

representation was material.” FTC v. Tashman, 318 F.3d at 1277. Moreover, the Court agrees, as

a general matter, that any representations byDefendants (on their calling cards or other point-of-sale

materials) concerning the number of calling minutes available or the fees that may be applied so as

to reduce the number of calling minutes would be material under the circumstances. 

Turning back to Defendants’ argument concerning the FTC’s failure to substantiate its

allegations of deception with actual consumer experiences, in response, the FTC maintains that such

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evidence is unnecessary given that the Court, acting as the fact finder, can look at the disclaimers

contained on the calling cards and make a preliminarydetermination about whethersuch disclaimers

are sufficiently prominent and unambiguous to avoid liability under section 5. See Tr. (May 16,

2011) at 20:3-14. The Court agrees with the FTC that when considering its request for a

preliminary injunction, the Court is required to make preliminary findings of fact to determine

whether or not the relevant factors weigh in favor of granting the equitable relief requested. See,

e.g., Imaging Business Machines, LLC. v. BancTec, Inc., 459 F.3d 1186, 1192 (11th Cir. 2006) (“In

considering the motion for preliminary injunction, the district court could assess the likelihood that

Imaging Business Machines’ evidence would be persuasive to a fact-finder in light of BancTec’s

evidence.”); Burlington Northern R. Co. v. Bair, 957 F.2d 599, 605 (8th Cir. 1992) (“The district

court, as fact-finder under the 4-R Act, should consider evidence from both parties before deciding

whether to grant a preliminary injunction.”); East Portland Imaging Center, P.C. v. Providence

Health Sys. – Oregon, No. 05-465, 2006 WL 752590, at *5 (D. Or. March 21, 2006) (recognizing

that, procedurally, the court acts as the fact finder in ruling on a motion for a preliminaryinjunction); 

Cabot Corp. v. King, 790 F. Supp. 153, 156 (N.D. Ohio 1992) (same). Accordingly, the Court finds

Defendants’ argument concerning theFTC’sfailure to substantiate its claim of inadequate disclosure

of fees with consumer experiences to be unpersuasive. 

Thus, the sole issue remaining before the Court is whether the FTC has met its burden of

demonstrating – albeit, preliminarily – that Defendants’ calling cards and/or other point-of-sale

materials are deceptive under Section 5. Because it is undisputed that the fees imposed reduce the

number of minutes actually available (and advertised) on the card, the Court will begin its analysis

with the presumption that Defendants’ representation concerning the number of minutes available

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would likely mislead the ordinary consumer absent an adequate disclaimer explaining exactly how

such fees will be imposed and thus reduce the number of minutes advertised. See, e.g., FTC v.

Tashman, 318 F.3d at 1277. As previously stated, the ‘cardinal factor’ in determining whether an

act or practice is deceptive under § 5 is the likely effect the promoter’s handiwork will have on the

mind of the ordinary consumer.” Freecom Commc’ns,, 401 F.3d at 1202. “Disclaimers or

qualifications in any particular ad are not adequate to avoid liability unless they are sufficiently

prominent and unambiguous to change the apparent meaning of the claims and to leave an accurate

impression. Anything less is only likely to cause confusion by creating contradictory double

meanings.” Removatron Intern. Corp. v. FTC, 884 F.2d 1489, 1497 (1st Cir. 1989). 

The Court has closely reviewed the disclaimer contained on Millennium’s “Pan Caliente”

poster and/or calling card – as a sampling of the fee disclosure used by Defendants on their calling

cards and other point-of-sale materials – which provides:

PROMPTED MINUTES ARE AVAILABLE WHEN USED ON A

SINGLE CALL PLACED ONLY FROM A LOCAL ACCESS

NUMBER. At the end of each connected call, all of the following

fees CAN REDUCE the number of available minutes remaining as

well as the value of the card: (1) a post call duration charge of up to

$0.49; (2) a maximum service fee of $0.05 per minute (in addition to

the base rate per minute). In addition, the following fees will ALSO

REDUCE the number of availableminutes, as well as the value of the

card: (1) a $0.79 fee applied on the first day of use and every 7 days

thereafter; (2) a $0.02 additional fee per minute applied to calls made

via toll free access numbers and/or $0.99 additional fee when using

the toll free access from a payphone. Minutes and/or seconds are

billed in three minute increments. Please call our customer service

number at 1-800-479-9352 for updates on our current rates. Cards

have no cash value and are not returnable or exchangeable. Card

expires three (3) months after first use. The prepaid calling service

provider is SCT and their twenty four (24) hour customer service

number is 1-800-479-9352. NOTE THAT different per minute rates,

charges or fees may apply to calls to and from international telephone

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numbers, international cellular and international wireless telephone

numbers.

Pl. Ex. 62. Based on the following reasons, the Court finds that the FTC has demonstrated

likelihood of success on the merits as to Count 2 – deception by virtue of failure to disclose (or

adequately disclose) fees that reduce the value of the calling cards in violation of Section 5(a) of the

FTC Act, 15 U.S.C. § 45(a). 

First, the disclaimer provides that the number of minutes advertised are available only when

the card is used “on a single call placed only from a local access number” but fails to define or

otherwise provide any guidance as to what is meant by “a local access number.” The disclaimer also

provides that “minutes and/or seconds are billed in three-minute increments.” The Court finds that

this statement is ambiguous and inadequately explained. Finally, the disclaimer provides that

“different per minute rates, charges or fees may apply to calls to and from international telephone

numbers . . . .” Again, the Court finds this statement to be confusing particularly given that: (1)

Defendants’ calling cards are marketed as international calling cards, (2) the sentence does not

2

explain what “different” (and/or additional) fees would or could be applied for international calls or

the circumstances that would trigger such fees, and (3) the sentence is preceded by an extensive list

of circumstances triggering various fees that may – by virtue of this sentence – be inapplicable to

international calls all together. 

In light of the foregoing, the Court finds that the FTC has demonstrated likelihood of success

on the merits as to Count 2. In particular, the Court finds that the statements contained in

Defendants’ disclaimer are not sufficiently unambiguous to leave an accurate impression as to the

 See Pl. Ex. 61. 2

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specific circumstances under which the various fees will be imposed thereby reducing the number

of minutes available. To the contrary, the Court finds that an ordinary consumer, upon reading said

disclaimer in conjunction with the number of minutes otherwise advertised on the card, would be

left with little or no idea as to which fees will apply, the circumstances that would trigger such fees

and therefore the number of minutes that will, in fact, be available for their use. Because the Court

finds that statements contained on Defendants’ calling cards and/or posters are likely to mislead

ordinary consumers, the FTC has satisfied its burden of demonstrating that it will likely succeed on 3

the merits as to Count 2. See, e.g. FTC v. Affordable Media, 179 F.3d at 1233. 

C. Existence of Common Enterprise and Imposition of Individual Liability

Among the various forms of relief sought, the FTC seeks to maintain an asset freeze over

Defendant Salim’s personal E*Trade account. The FTC’s request is based upon two theories: (1)

that Defendants, together, constitute a “common enterprise” for purposes of making them jointly and

severally liable for the violations of the FTC Act, and (2) that Defendant Salim should be held

individually liable for the acts of the corporate defendants. 

“When determining whether a common enterprise exists, courts look to a variety of factors,

including: common control, the sharing of office space and officers, whether business is transacted

through “a maze of interrelated companies,” unified advertising, and evidence which ‘reveals that

no real distinction existed between the Corporate Defendants’ ” FTC v. Wolf, 1996 WL 812940, at

* 7 (S.D. Fla. Jan. 31, 1996) (internal citations omitted). Evidence contained in the record

demonstrates, preliminarily, that the corporate defendants are commonly controlled by Fadi Salim,4

 See, e.g., FTC v. Verity Intern., Ltd., 443 F.3d at 63. 3

 See Stagg Decl., Pl. Ex. 151, ¶¶ 34, 37, Tables 3 and 4. 4

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share overlapping corporate addresses, engage in unified advertising with shared trademarks and 5

brands, and commingle corporate funds. Moreover, the Court notes that Defendants do not 6 7

expressly dispute the existence of a common enterprise. In light of the foregoing, the Court finds

that Plaintiff has met its burden of demonstrating – preliminarily – the likelihood of success on the

merits as to its claim that Defendants, together, comprise a common enterprise such that they may

be held jointly and severally liable for any injury caused by virtue of their violations of the FTC Act. 

As to Salim’s individual liability, “[a]n individual will be liable for corporate violations of

the FTC Act if (1) he participated directly in the deceptive acts or had the authority to control them

and (2) he had knowledge of the misrepresentations, was recklessly indifferent to the truth or falsity

of the misrepresentation, or was aware of a high probability of fraud along with an intentional

avoidance of the truth.” FTC v. Stefanchik, 559 F.3d 924, 931 (9th Cir. 2009). Thus, as a general

matter, an individual may be liable for the acts of a corporation where the individual had “actual

knowledge of material misrepresentations, [was] recklessly indifferent to the truth or falsity of a

misrepresentation, or had an awareness of a high probability of fraud along with an intentional

avoidance of the truth.” FTC v. Publishing Clearing House, Inc., 104 F.3d 1168, 1171 (9th Cir.

1997). However, “the FTC is not required to show that a defendant intended to defraud consumers

in order to hold that individual personally liable.” Id.

Defendants do not dispute that, as founder and sole principal of each of the corporate

defendants, Defendant Salim directlyparticipated in all central aspects of Millennium’s business and

 Id. 5

 Id. 6

 See, e.g., Stagg Decl., ¶ 54, Table 7; Stagg Decl., ¶ 56, Table 8. 7

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had the ability to control Millennium. Morever, Salim specificallyadmits that Millennium’s service

providers control its rates/fees, that TCN is one of Millennium’s main service providers, and that 8

he was responsible for operating TCN’s day-to-day business. In light of the foregoing, and given 9

that Defendant Salim does not expressly dispute – at this juncture – that he can be held personally

liable for the acts of the corporate defendants, the Court finds, preliminarily, that Defendant Salim

was at least recklessly indifferent with regard to the deceptive nature of Millennium’s phone cards

or posters and can thus be held individually liable for any injunctive and/or monetary liability

imposed on the Millennium Defendants. 

2. Balance of the Equities

The Court must now determine whether the FTC has met its burden of demonstrating that

a balance of the equities in this matter weighs in favor of granting the injunctive relief sought. In

this regard, the FTC argues that the balance of equities mandates entry of a preliminary injunction

because “the public interest in preventing consumers from falling victim to defendants’ deceptive

marketing far outweighs any possible interest defendants may have in continuing to operate their

business deceptively.” (Pl. Br. at 27). 

Defendants, on the other hand, maintain that the balance of equities weighs in favor of the

removal or amendment of the restraints currently in place because it is so broadly worded and all-

 See Salim Cert., ¶ 9 (“The information as to the number of minutes of initial calling 8

time . . . is not determined by MTC but is provided to MTC by the prepaid calling service

providers.”).

 See Salim Cert., ¶ 11 (TCN then took over SUNCOAST’s accounts and became the 9

service provider on [Millennium’s] calling cards. TCN is owned by a former MTC employee. I

am responsible for operating TCN’s day-to-day business.”). 

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encompassing that it will: (1) damage the very customers the FTC purports to protect, (2) damage

the wholesalers from whom Millennium purchases its products, and (3) prevent Defendants from

properly defending themselves in this action. Moreover, Defendants maintain that the continued

appointment of a Receiver will irreparably damage, if not completely destroy Millennium. Finally,

Defendants urge the Court to amend the injunction currently in place so as to allow Mr. Salim to

have access to his personal assets; according to the Defendants, the Government’s concerns can be

addressed through a much narrower injunction that allows for the monitoring of Mr. Salim’s assets

and an injunction against the expatriation of assets. 

The Court agrees that, as a general matter, public equities receive greater weight than private

equities. See, e.g., FTC v. World Travel Vacation Brokers, Inc., 861 F.2d 1020, 1030 (7th Cir.

1988) (“Although private equities may be considered, public equities receive far greater weight.”)

(quoting FTC v. Warner Commc’ns Inc., 742 F.2d 1156, 1165 (9th Cir.1984)). That being said, the

Court agrees with Defendants that the consideration of private equities – particularly in the context

of this case, its procedural history, and the specific proofs shown by the FTC herein – should be

carefully weighed by this Court in determining whether the restraints currently in place should be

continued or modified in whole or in part. See, e.g., FTC v. Nat’l Tea Co., 603 F.2d 694, 697 n. 4

(8th Cir. 1979) (“In light of the statute’s purpose to protect the public-at-large, rather than individual

private competitors, courts must properly emphasize the public equities. However, we do not think

that it was the intention of the statute’s drafters to totally shield from judicial view the private

equities which may merit inclusion in the courts’ equitable overview.”). 

The Court’s May 2, 2011 TRO directed, inter alia, certain conduct prohibitions, an asset

freeze, disclosure byDefendants of various financial records and statements, preservation ofrecords, 

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prohibition of release of customer information, and the appointment of a temporary Receiver.

(Docket Entry No. 5). The real dispute lies with three aspects of the temporary restraints currently

in place: (1) the curative language to be used on Millennium’s calling cards and/or posters going

forward, (2) the asset freeze, and (3) the appointment of a Receiver. The Court will now consider

whether the continuation of such temporary measures is warranted.

A. Language Used on Calling Cards

Having found Defendants’ calling cards and/or other point-of-sale materials deceptive by

virtue of failure to adequately disclose the fees that reduce the value of the cards, the Court finds that

a balance of the equities certainlyweighs in favor of continuing the “Conduct Prohibitions” imposed

by way of this Court’s May 2, 2011 TRO, in its entirety. Such “Conduct Prohibitions” are hereby

incorporated by reference. See May 2, 2011 Order at 9-11 (“Conduct Prohibitions”). In short,

Defendants are preliminarily enjoined from making or assisting others in making any material

misrepresentation, either expressly or by implication, including but not limited to, a

misrepresentation concerning the Talk Minutes and/or applicable per minute rates. See id. In

addition, Defendants are preliminarily enjoined from failing to make clear and prominent disclosure

of all material limitations on the specific value of their calling cards, including but not limited to,

the existence and amount of all fees or charges of any type that may be imposed. See id. Defendants

do not, as a general matter, expressly oppose the continuation of such prohibitions. 

In fact, it is the Court’s understanding that, in an effort to continue its business operations

in a manner that complies with this Court’s May 2, 2011 TRO, Defendants have ceased using the

disclosure at issue in this motion and, with the assistance of the Receiver, are utilizing a new

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disclosure which they maintain is compliant with the dictates of this Court’s May 2, 2011 TRO. To

date, no specific language has been provided for the Court’s consideration and/or approval. 

Accordingly, in the interest of fairness, the Court will allow both parties to submit proposed

language for the Court’s consideration on or before July 25, 2011. The Court requests that the

Receiver file a recommendation concerning the parties’ proposals on or before July 28, 2011. To

be clear, the Court’s potential approval of any language to be used by the Millennium Defendants

at this time is preliminary in nature and is subject to modification in whole or in part once the record

in this matter has been fully developed.

B. Asset Freeze and Appointment of Receiver

According to the FTC, “where, as here,” defendants have defrauded members of the public

and are likely to dissipate assets, an asset freeze and appointment of a temporary receiver are

appropriate.” (Pl. Br. at 34). Because the FTC relies on largely the same proofs for both of the

remedies sought, the Court will consider both requests in conjunction with one another. 

This Court’s May2, 2011 TRO temporarilyfroze all of Millennium’s corporate assets as well

as Defendant Salim’s personal assets. See May 2, 2011 Order at 11-13. The Court’s May 2, 2011

TRO also appointed Nicholas R. Amato as temporary receiver for the Defendants. In his capacity

as Receiver, Mr. Amato was directed to, among other things: (1) assume full control of Millennium,

(2) take exclusive custody and possession of all assets and/or documents under Defendants’ control,

(3) take all steps necessary to secure and take exclusive custody of each location from which

Millennium operates, (4) conserve, hold and manage all of Defendants’ assets and perform all acts

necessary to preserve the value of those assets in order to prevent any irreparable loss or damage

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thereto, (5) manage and administer Defendants’ business, (6) take all steps necessary to ensure that

any of Defendants’ marketing materials are modified so as to be in compliance with the Federal

Trade Commission Act, and (7) suspend Millennium’s business operations if in his judgment such

operations could not be continued legally and profitably. See May 2, 2011 Order at 20-25. 

“A party seeking an asset freeze must show a likelihood of dissipation of the claimed assets,

or other inability to recover monetary damages, if relief is not granted.” Johnson v. Couturier, 572

F.3d 1067, 1085 (9th Cir. 2009). By way of example, some courts have found it appropriate to

impose an asset freeze in the following types of situations: (1) where defendant had convinced his

fellow directors and trustees to consent to diverting nearly $35 million from the company’s account

into his personal bank account, and (2) where defendant had a history of making intra-family 10

transfers and had refused to disclose asset information in defiance of court order.

11

The appointment of a Receiver is a well-established equitable remedy available in instances

in which the corporate defendant, through its management, has defrauded members of the public. 

See, e.g., SEC v. First Financial Group of Texas, 645 F.2d 429, 438 (5th Cir. 1981) (“It is hardly

conceivable that the trial court should have permitted those who were enjoined from fraudulent

misconduct to continue in control of (the corporate defendant's) affairs for the benefit of those shown

to have been defrauded. In such cases the appointment of a trustee-receiver becomes a necessary

implementation of injunctive relief.”) (quotation omitted). In determining whether a Courtappointed Receiver is necessary, the “prima facie showing of fraud and mismanagement is enough

 See Johnson v. Couturier, 572 F.3d 1067, 1085 (9th Cir. 2009). 10

 See Connecticut General Life Ins. Co. v. New Images of Beverly Hills, 321 F.3d 878, 11

881 (9th Cir. 2003). 

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to call into play the equitable powers of the court.” Id. (quoting SEC v. Keller Corp., 323 F.2d 397,

403 (7th Cir. 1963)). 

In support of its request for an asset freeze and/or appointment of a temporary Receiver, the

FTC points to the following acts of financial impropriety by Millennium and/or Salim:

1. The underlying deceptive conduct. 

2. Three checks (totaling $390,000.00) written in 2009 by Salim from his

personal E*Trade account and deposited into a Millennium corporate account

were returned due to insufficient funds. Security Investigator from Bank of

America, N.A. characterized such activity to be of a “check kiting nature

because the uncollected balance was used to support the payment of various

check expenses for Millenium.” (Staar Decl., Pl. Ex. 154).

3. Salim’s history of commingling corporate and personal funds. For instance,

the FTC points out that, since 2001, Millennium and Salim purchased and

became co-owners of six cars, Salim has used Millennium’s corporate bank

accounts to make payments and repairs on his luxury vehicles and from

January 2010 through February 2011, Salim received $2.24 million in wire

transfers and wrote himself over $2.5 million in checks from Millennium’s

Bank of America accounts. (Pl. Exs. 141, 142, 150, 151). 

4. Salim received almost $5 million in "unsystematic infusions" of Millennium

funds between January 2010 and February 2011. (Pl. Exs. 141, 151 (Table

8)). 

5. Salim’s history of writing large checks to “cash” from Millennium accounts.

(Pl. Exs. 143, 144) (containing copies of two (2) checks written to “cash”

totaling approximately $430,000.00). 

6. Salim wired approximately $40,000 from his United States account to an

HSBC account located in Syria. (Pl. Exs. 157-158, 163). Salim was

admittedly in Syria at the time of this transfer. (Pl. Ex. 159). 

7. Kathleen Daffan, counsel for the FTC, submitted a declaration stating that:

(a) there is ample evidence (as listed above) demonstrating that “it is

reasonably likely that Defendants will destroy documents and dissipate or

hide assets” absent the asset freeze requested, and (b) “it has been the

Commission’s experience,” in the context of similar enforcement actions, that 

defendants like Salim “often attempt to undermine the FTC’s efforts to

preserve the status quo by immediately dissipating or concealing assets”. 

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(Docket Entry No. 3-2). 

In light of the totality of circumstances, as set forth above, the FTC urges the Court to continue the

asset freeze and appointment of a temporary Receiver without which “there is no check on Mr.

Salim’s ability to completely drain Millennium and any personal funds that would otherwise be

available for consumer redress.” (Pl. Reply at 13). 

Defendants, on the other hand, maintain that no assets should be frozen, and certainly none

of Mr. Salim’s personal assets should be frozen (including but not limited to his personal E*Trade

account and his real estate properties). In support of this position, Defendants point out that despite

their one year long investigation, the Government has only been able to provide the Court with a

single incident of “financial impropriety” – that is, the three bounced checks from 2009. Defendants

maintain that none of the other pieces of evidence introduced by the FTC are illegal or even improper

and thus have no bearing on whether Salim is likely to dissipate assets. In short, defense counsel

explains: Salim “has had a successful business. There are times when, as in the E*Trade accounts,

he put money into the company, and there are times when he has taken money out of the company,

but there is nothing wrong with that. There’s nothing wrong with writing checks to cash. There’s

nothing wrong with paying yourself. He has done that. There is nothing wrong with that

whatsoever.” (Tr. (May 16, 2011) at 60:18-24). 

Having carefully considered the public and private interests implicated, the Court finds that

the aspect of its May 2, 2011 TRO directing an asset freeze and the appointment of a temporary

Receiver should be modified for several reasons. First, the Court finds that Plaintiff’s proofs of

Defendants’ financial impropriety do not, as a general mater, rise to the level of those instances

where courts have found a likelihood of dissipation of assets. See, e.g., Johnson v. Couturier, 572

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F.3d 1067, 1085 (9th Cir. 2009) (finding likelihood of dissipation of assets where defendant had

convinced his fellow directors and trustees to consent to diverting nearly $35 million from the

company’s account into his personal bank account). Secondly, the FTC does not dispute that, in

isolation, many of the factors set forth above are neither improper nor illegal. Nevertheless, the FTC

urges the Court to consider the combination of all factors “beginning with the deceptive conduct in

the first instance.” (Tr. (May 16, 2011) at 45:8-9). Although the Court agrees that consideration of

the totality of the circumstances is generally relevant in this context, the Court disagrees that any of

the specific acts of impropriety raised by the FTC – either singly or in combination – demonstrate

a likelihood that Defendants will dissipate any assets. 

For instance, although the FTC has presented some evidence suggesting that Defendants, at

times, may have disregarded the corporate form, the acts of alleged impropriety here appear to be

isolated in nature and, without more, do not demonstrate a history or pattern of deceptive or

fraudulent conduct by Defendant Salim. See, e.g., First Financial Group of Texas, 645 F.2d at 438. 

Moreover, there has been no showing at this juncture that either Defendants’ disregard for the

corporate form or the underlying deceptive conduct at issue in this case – deception by virtue of

failure to adequately disclose fees that reduce the value of the calling cards – was intentional. See

Freecom Commc’ns,, 401 F.3d at 1202 (noting that in order to establish liability under Section 5(a),

the FTC need not prove that the misrepresentation or omissions were made with the intent to deceive

or in bad faith); see generally FTC v. Verity Intern., Ltd., 443 F.3d 48, 63 (2d Cir. 2006) (“[I]t is

enough that the representations or practices were likely to mislead consumers acting reasonably.”). 

Finally, the Court finds that many of the concerns raised by the FTC, while valid, can be properly

addressed by imposing less drastic measures. Such measures could still result in the proper

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safeguarding of all available assets for any future consumer redress, the continued verification that

Defendants’ marketing materials are modified so as to be in compliance with the Federal Trade

Commission Act, while at the same time allowing Defendant Salim’s reintegration into the day-today operations of the Millennium companies, as well as some access to his personal assets. 

In light of the foregoing, the Court finds that a balance of the equities weighs in favor of

modifying the asset freeze and appointment of temporary Receiver currently in place. Based upon

this finding, the Court hereby directs the Receiver to submit a proposal to the Court for a plan of

transition by which his role can be converted into the role of a monitor and by which the Court’s

goals – of (1) preserving all available assets, (2) ensuring the continued operation of the Millennium

companies in a manner that is profitable and compliant with the law, (3) reintegrating Defendant

Salim into the day-to-day operation and management of the Millennium companies, and (4)

providing Defendant Salim with some access to his personal assets – can be achieved and

maintained, with all necessary safeguards in place, during the pendency of this litigation. The

Receiver shall submit such proposal for the Court’s consideration on or before July 28, 2011. 

CONCLUSION

Based on the reasons set forth above, the FTC’s motion for a preliminary injunction is

granted in part. In particular, the Court finds that the FTC has demonstrated a likelihood of success

on the merits as to Count Two of its Complaint – deception by virtue of failure to adequately disclose

fees that reduce the value of Millennium’s calling cards, in violation of Section 5(a) of the FTC Act,

15 U.S.C. § 45(a). The Court also finds, however, that a balance of the equities weighs in favor of

modifying the specific relief sought by the FTC. Accordingly, the parties are directed to submit

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proposed curative language for use on Millennium’s calling cards and other point-of-sale materials

on or before July 25, 2011. The Court requests that the Receiver file a recommendation concerning

the parties’ proposals on or before July 28, 2011. In addition, the Receiver is directed to submit, for

the Court’s consideration, a proposed plan of transition by which his role can be converted into the

role of a monitor and by which the Court’s goals, as set forth above, can be achieved, in a prudent

and orderly fashion, during the pendency of this litigation. Such proposal shall also be submitted

to the Court on or before July 28, 2011.

An appropriate Order accompanies this Opinion. 

/s/ Jose L. Linares 

Dated: July 11, 2011 Jose L. Linares

United States District Judge

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