The FTC has been denied a preliminary injunction against Financial Education Services.

The decision puts regulation of the suspected $467 million dollar pyramid scheme in jeopardy.

As reflected on the case docket, the Financial Education Services preliminary injunction hearing was held on June 30th.

Minute Entry for in-person proceedings before District Judge Bernard A. Friedman: Show Cause Hearing held on 6/30/2022 Disposition: Court will issue an order.

That order came through on July 17th, denying the FTC’s motion for a preliminary injunction.

The FTC’s motion for preliminary\injunction is hereby denied for the reasons stated on the record at the June 30, 2022 hearing.

Unfortunately, we still don’t even know what happened at the June 30th hearing.

The case docket quote above is the
only
information about the June 30th hearing the court has made public. This means I can tell you the requested preliminary injunction was denied, but I can’t tell you
why
.

Consumers being in the dark about why an injunction against an almost half billion dollar alleged pyramid scheme wasn’t granted, isn’t a good look.

A transcript of the June 30th hearing is scheduled to be made public on October.

In the meantime,

the previously granted Financial Education Services TRO has been vacated;

the Temporary Receivership has been converted into a Monitor; and

Financial Education Services assets have been unfrozen.

With respect to finances, there are some caveat restrictions in place. The FES Defendants aren’t allowed to

“dispose of any material assets beyond ordinary course sales and related transactions”;

move less than $500,000 worth of assets without informing the Monitor; and

transfer assets overseas without informing the Monitor.

If the Monitor objects to any proposed asset disposition set forth above, the Monitored Entities will not proceed with such disposition until approved by the Court.

As to the difference between a Receivership and a Monitor, it’s pretty much what it sounds like. The FES Monitor will “monitor and review” business activities, including:

marketing (both written and active in-person events);

training materials;

policies and procedures;

document retention and preservation policies (including financial records and transactions); and

conducting interviews with FES staff and related entities

The FES Defendants have been ordered to fully cooperate with the Monitor, and not interfere in court-appointed duties.

One win for consumers is that FES will be funding the Monitorship;

The Corporate Defendants shall maintain a minimum balance of Five Hundred Thousand Dollars ($500,000) in the corporate receivership account established by the previously appointed Receiver under the TRO for the payment of any fees, costs, or other expenses approved by the Court.

As with Receiverships, the Monitor will file a periodic report with the court. This is typically quarterly, unless something urgent comes up.

Seemingly emboldened by their w

🤖 Quick Answer

What was the outcome of the FTC's preliminary injunction motion against Financial Education Services?
The FTC's motion for preliminary injunction was denied by District Judge Bernard A. Friedman on July 17th, 2022, following a hearing held on June 30th. This denial significantly impacts regulatory efforts against the company, which is under investigation for allegedly operating a $467 million pyramid scheme.

Why is the denial of the preliminary injunction considered significant in this case?
The preliminary injunction denial jeopardizes regulatory action against Financial Education Services during the litigation process. Without such an injunction, the company could continue operating while the case proceeds, potentially allowing further alleged fraudulent activities and making it more difficult to protect consumers during the legal proceedings.

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