Opinion ID: 2724252
Heading Depth: 5
Heading Rank: 1

Heading: Individual Liability of Michaels and Benhaim

Text: “To obtain injunctive relief against an individual for a business entity’s acts or practices, the FTC must prove the entity violated § 5. The FTC must further show the individual participated directly in the business entity’s deceptive acts or practices, or had the authority to control them.” Freecom Commc’ns, 401 F.3d at 1203 (internal citation omitted). Additionally, the FTC must put forth evidence to show that the individual defendant “knew or should have known of the alleged deceptive misrepresentation.” Wash. Data Res., 856 F. Supp. 2d at 1276. Finally, in order to obtain monetary redress from any defendant, “the FTC must proffer evidence tending to show consumers actually relied on the entity’s deceptive acts or practices to their detriment.” Freecom Commc’ns, 401 F.3d at 1203. In the instant case, there is no genuine dispute of fact regarding whether Michaels and Benhaim, who repeatedly identified themselves as president and vice president of each of the corporate entities and who controlled the bank accounts for the Canadian corporations, participated in the corporations’ deceptive acts. If status as a controlling shareholder of a closely-held corporation creates an inference that an individual had authority to control corporate acts, see id. at 1205, then the president and vice president of these corporate defendants certainly had such authority. Additionally, it is clear that Benhaim and Michaels knew or should have known of the corporate defendants’ misrepresentations. The record demonstrates that third party payment processors forwarded consumer and state attorneys general complaints to Benhaim at james@newlifeconsultants.net and jb@emaonline.net. Benhaim replied to a number of these emails, demonstrating his knowledge of consumers’ frustrations with his companies. Additional No. 13-4169 Fed. Trade Comm’n v. E.M.A. Nationwide, Inc., et al. Page 29 evidence in the record, including the individual defendants’ involvement in the leadership of these entities, establishes that Benhaim and Michaels had or should have had knowledge regarding the defendant corporations’ activities and had the authority to control their deceptive acts. Finally, as explained above, consumers clearly relied on Defendants’ deceptive acts and communications—numerous consumers, who now face bad credit and/or foreclosure due to their interactions with Defendants, paid thousands of dollars in reliance on Defendants’ misrepresentations. Therefore, the district court did not err in holding Benhaim and Michaels liable for the acts of the corporate defendants.