The FTC has secured a preliminary injunction against Digital Income System, Derek Jones Foley, William J. Foley, Jennifer Hedrick and Kaitlyn Scott.
The injunction follows a similar preliminary injunction granted against DIS promoter Brandon Frye a few weeks ago.
As per the December 21st stipulated preliminary injunction filing, the court found the Digital Income System defendants
- misrepresented achievable income;
- failed to provide prospective purchasers with disclosure documents (earnings claims statement etc.);
- made unverifiable income claims;
- misrepresented actual sales within Digital Income System; and
- misrepresented that DIS would be able to find customers for affiliates.
There is good cause to believe that Defendants Digital Income System, Inc., Derek Jones Foley, William J. Foley, Christopher Brandon Frye, Jennifer Hedrick, and Kaitlyn Scott have engaged and are likely to engage in acts or practices … that violate the FTC Act, and the Business Opportunity Rule.
The court also found that the FTC is ‘likely to prevail on the merits of this action’.
There is good cause to believe that immediate and irreparable harm will result from Defendants’ ongoing violations of the FTC Act and the Business Opportunity Rule unless Defendants are restrained and enjoined by order of this court.
The granted injunction prohibits the DIS defendants from further engaging in violations of the FTC Act and Business Opportunity Rule.
They are also not allowed to benefit in any way from Digital Income Systems’ affiliate database.
Assets have been frozen and I imagine going forward we’ll likely see settlements that clean out the defendants one by one. We’ll get a better idea of how that’s coming along when the court appointed Receiver files his first report.
It’s rare for defendants in MLM related FTC Act violation cases to go to court. And personally I’m not aware of anyone defending an MLM fraud case who’s successfully defended an FTC fraud case.
Looking forward, the case has been referred to mediation as of December 21st.
The court clerk also recorded entries of default against Brandon Frye and Kaitlyn Scott on December 23rd. These entries pave the way for the FTC to file for default judgment at a later date.
Stay tuned for updates as we continue to follow the case.