Details of what went down at the Digital Altitude preliminary injunction have been published.
The Civil Minutes for the hearing cover testimony from Michael Force, Mary Dee and Thomas Seaman, the court-appointed Receiver.
The Civil Minutes notes the FTC presented “a significant amount of documentary evidence” in support of a preliminary injunction.
Michael Force and Mary Dee submitted written declarations, which were supported by testimony.
The court found both Force and Dee to be “credible as to many matters” but lacking “some credibility as to others”.
Owing to her “tone, demeanor, evasive and conflicting answers” given, the court designated “less weight” to Dee’s testimony with respect to Digital Altitude’s operations.
In his testimony Force was evasive about prior income.
(In Force’s) answers to questions about his past income … he stated that he was uncertain and would have to review his tax returns.
He was also unable to explain how he covered living expenses in 2013 and 2014, when his prior testimony was that he did not earn income during either of those years.
A search of Force’s name during January, 2013 to December, 2014 ties him to MOBE, a downline builder called My Top Tier Business
In a November, 2013 video titled “MOBE Titanium Mastermind Testimonial”, Force is cited as a “7 Figure Producer”.
Like Digital Altitude, MOBE is a an MLM company that charges thousands of dollars for “education”.
In a YouTube video uploaded to Force’s own YouTube channel in November, 2014, he boasts about being a “multiple seven-figure earner” and pitches a “training course”.
Whether this is income Force declared on his tax returns over 2013 to 2014 is unclear.
One crowning moment was Force revealing in his testimony that
Digital Altitude did not analyze how many customers made over $100,000 in 90 days, nor did it analyze whether certain customers were able to make over $1,000,000 by purchasing the highest level membership.
(Force) testified that he could not recall any customers who started successful businesses outside of the resale of Digital Altitude products or whether any such customers had made over $100,000 in 90 days through the operation of such an independent business.
This is significant because Digital Altitude’s primary marketing pitch touted a six-figure income within 90 days.
And here we have the Founder and CEO of Digital Altitude acknowledging that despite taking in millions of dollars from consumers, nobody achieved that.
In contrast to Force and Dee’s somewhat unreliable testimony, the court found the Digital Altitude Receiver to be “very credible”.
Based on submitted evidence and testimony during the hearing, the court found
the FTC presented substantial evidence to support its claim that Digital Altitude made false representations to customers.
The FTC also introduced evidence about certain marketing materials that represented to customers who purchased the Peak level product would be able to grow a business with revenues of six figures to one with revenues of seven-figures.
Force testified that he was not aware of any data that supported this claim.
Defendants argued that declarations from 24 dissatisfied Digital Altitude customers is a very small sample size given the thousands of customers who purchased services.
They also argued that there are many satisfied customers.
However, very limited evidence was presented by Defendants in support of this claim.
With respect to the value of Digital Altitude’s products, the court found ‘the FTC’s position is more persuasive‘.
That being Digital Altitude’s product value, if any, did not match what consumers were being charged.
Another point of contention was whether anyone who bought Digital Altitude products went on to “develop digital businesses” (external to just promoting Digital Altitude itself).
Despite acknowledging that evidence of their customers going to build significant digital businesses would ‘undermine the claim(s) of the FTC‘,
Defendants did not introduce any evidence of such independent, successful business operations by any customer.
Mary Dee testified that refunds had been issued to two “dissatisfied customers”, however once again no evidence in support of the claim was presented.
One of the myths of the MLM underbelly is that you can disclaimer your way out of anything.
As part of their defense Digital Altitude tried to argue
their representations are not misleading because Digital Altitude
websites contain relevant disclaimers and disclosures and customers sign contracts disclaiming their reliance on any of the challenged representations.
The court found the argument “consumers were provided with disclaimers” was “not persuasive”.
Summing up its findings, the court concluded
the FTC has presented sufficient evidence to support a finding that it is likely to prevail on the merits with respect to whether Responding Defendants made misrepresentations, or ones that were without a reasonable basis to consumers regarding earning potential and business coaching.
Similarly, it has met this burden with respect to whether such misrepresentations were material to the decisions by consumers to purchase Digital Altitude products and services.
Finally, it has met this burden as to whether an ordinary customer behaving reasonably under the circumstances would have been misled.
With respect to personal liability, Michael Force and Mary Dee were both found to have ‘substantial role(s) … in the operations of Digital Altitude‘.
The FTC has presented sufficient evidence to support a finding that it is likely to prevail on the merits with respect to whether Force and Dee are liable for the alleged violations of Digital Altitude.
In the public interest of protecting consumers and ‘maintain(ing) funds that can be used to provide restitution to consumers who have been deceived by Digital Altitude‘, a preliminary injunction was granted.
One caveat Force and Dee were granted was payment of “living and medical expenses”.
Under the terms of the preliminary injunction, Force and Dee can apply to the Receiver to use funds appropriated from consumers via deception, to
meet reasonable and necessary living and medical expenses that cannot be covered by the applicant through his or her other assets, income or resources, those of his or her spouse, or those that may be shown to have been transferred by the applicant to another person to avoid potential recovery as to claims like those brought in this action.
Considering the FTC allege Digital Altitude conned consumers out of ‘as much as $50 million‘ and that seized assets stand at only $2 million, I’m not really sure why carve-outs were granted.
Hopefully the Receiver plays hardball with any requests for expenses received.
With a preliminary injunction granted, looking forward Digital Altitude, Force and Dee now have the option of settling or going to trial.
The tone of the preliminary injunction makes it pretty clear there’s a lack of evidence to support their claims, whereas the FTC has evidence in abundance.
With that in mind I really can’t see this one going to trial. A settlement meanwhile would likely see Force and Dee up for disgorgement and further asset seizure.