Last month, Judge Robert J. Shelby issued a decision, FTC v. Elite IT Partners, Inc., 2:19-cv-125, 2019 U.S. Dist. LEXIS 34561 (D. Utah Feb. 27, 2019), granting the Federal Trade Commission's motion for a temporary restraining order. The Court found that the Defendants falsely represented to individuals that their computers were infected with viruses and tricked them into paying for its antivirus services. The decision is a good example of how a court will act in a federal investigation into computer fraud to facilitate electronic discovery.
The FTC demonstrated that there was good cause to believe that the Defendants violated the FTC Act, the Telemarketing Sales Rule, and the Restore Online Shoppers' Confidence Act, and that immediate and irreparable harm would result from their violations of these laws. There was also good cause to believe that the Court would not be able to grant relief to consumers unless the Defendants were restrained by an order from transferring or destroying its records. The Court ordered the appointment of a temporary receiver with access to the Defendants' premises and allowed it and the FTC to take expedited discovery. The Defendants' assets were also frozen.
The order restricted the Defendants' business and marketing activities, and barred it from releasing consumer information and charging for their technical support services. Each defendant was ordered to make financial disclosures, and the FTC was authorized to obtain credit reports for each of the Defendants.
Section XI of the order addresses the preservation of records. The Defendants are enjoined from "[d]estroying, erasing, falsifying, writing over,mutilating, concealing, altering, transferring, or otherwise disposing of, in any manner, directly or indirectly,", documents relating to their business practices. Id. at *20.
This order gives the receiver wide ranging authority to meet his duties. His powers include some for the preservation and collection of ESI. The receiver was authorized to both "divert mail" and preserve online documentation by updating login information and taking possession of electronic documents with the assistance of the FTC's Digital Forensic Unit. Id. at *23. Pursuant to securing the Defendants' premises the receiver is given the right to disconnect internet connections and other computer network access. Parties with possession, custody, or control of the Defendants' data are required to provide the key codes and passwords necessary to get access to computer systems, cloud accounts, electronic data hosts, mobile devices or "electronic file(s) in any medium". Id. *32.
In order to facilitate the receiver's immediate access to the Defendants' data, "computers or electronic storage devices shall be powered down in the normal course of the operating system used on such devices and shall not be powered up or used until produced for copying and inspection". Id. at *39.
Section XXV of the order concerns expedited discovery. Depositions are to be taken with 48 hours notice, and these depositions do not count to the limit of 10 under the Federal Rules of Civil Procedure. (The expedited depositions can be taken over the phone or through electronic means.) Requests for productions of hard copy documents are to be responded to in five days, and those for electronic documents in three days. Interrogatories and non-party subpoenas are also to be responded to in five days. The order states that a meet and confer is not necessary for the purposes of the expedited discovery, and the parties do not have to make initial disclosures under Fed. R. Civ. P. 26(a).