Friday, 16 October 2020

Motion For Entry of Default Judgement Against Charles Scoville and Traffic Monsoon



                                         CENTRAL DIVISION

        Case No.: 2:16-cv-00832-JNP

 a Utah Limited Liability Company and CHARLES D. SCOVILLE, an individual, DEFENDANTS.


The Court having reviewed the Securities and Exchange Commission’s (the “Commission”) Motion for Default Judgment against Defendant Charles Scoville, and good cause appearing makes the following findings of fact:


1. The Commission filed a Complaint against Defendant on July 26, 2016. 

2. On August 22, 2016, Defendant Scoville’s then counsel waived service of the Complaint.

3. Defendant’s answer or other responsive pleading was due on October 21, 2016. 

4. Defendant Scoville requested, and the Commission agree to, an extension of time to answer until after the conclusion of the Preliminary Injunction proceedings.

5. On March 28, 2017, the Court granted the Commission’s Motion and entered the Preliminary Injunction.

6. Defendant Scoville subsequently appealed the decision to the U.S. Court of Appeals for the Tenth Circuit.

7. On January 24, 2019, the Tenth Circuit affirmed this Court’s Order. 
SEC v. Scoville, 913 F.3d 1204 (10th Cir. 2019). 

8. Defendant Scoville subsequently filed a petition for writ of certiorari with the U.S. Supreme Court, which was denied on November 4, 2019. 

9. On December 9, 2019, the Tenth Circuit issued its mandate, affirming the decision of this Court. 

10. On December 17, 2019, counsel for Defendant Scoville filed a motion to withdraw as counsel.

11. On December 23, 2019, the Court granted the motion to withdraw.

12. The Court ordered that Defendant Scoville had until February 3, 2020 to answer the Complaint and that “[i]f Mr. Scoville neglects to answer or request an extension by February 3, 2020 he may be subject to a default judgment pursuant to Rule 55 of the Federal Rules of Civil Procedure.”

13. On April 21, 2020, the Clerk of the Court entered a Default Certificate against Defendant Scoville after he failed to answer the Complaint. 

14. No stipulation for an extension of time was entered into between the Commission and Defendant Scoville allowing further time in which to respond to the Complaint. 

15. Scoville is not an infant or incompetent person, nor is he in the military service of the United States. It appearing that the Court has personal jurisdiction over Defendant Scoville, subject matter jurisdiction over the Commission’s claims, and there being no just reason for delay:

I. IT IS ORDERED, ADJUDGED, AND DECREED that Defendant is hereby prohibited from soliciting, accepting, or depositing any monies obtained from actual or prospective investors, individuals, customers, companies, and/or entities, through the Internet or other electronic means for Traffic Monsoon or a business model substantially similar to Traffic Monsoon’s sale of AdPacks. 

II. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this Judgment by personal service or otherwise: (a) Defendant’s officers, agents, servants, employees, and attorneys, when acting in such capacities on behalf of Defendant; and (b) other persons who are in active concert or participation with Defendant or with anyone described in (a). 

III. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is liable for disgorgement of $2,426,749, representing profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in the amount of $110,893.93, for a total of $2,537,642.93. Defendant shall satisfy his obligation by paying the total of $2,537,642.93 to the Securities and Exchange Commission within 14 days after entry of this Judgment.
Defendant may transmit payment electronically to the Commission, which will provide detailed ACH transfer/Fedwire instructions upon request. 

Payment may also be made directly from a bank account via through the SEC website at Defendant may also pay by certified check, bank cashier’s check, or United States postal money order payable to the Securities and Exchange Commission, which shall be delivered or mailed to Enterprise Services Center Accounts Receivable Branch 6500 South MacArthur Boulevard Oklahoma City, OK 73169 and shall be accompanied by a letter identifying the case title, civil action number, and name of this Court; [Defendant’s name] as a defendant in this action; and specifying that payment is made pursuant to this Final Judgment.

Defendant shall simultaneously transmit photocopies of evidence of payment and case identifying information to the Commission’s counsel in this action. By making this payment, Defendant relinquishes all legal and equitable right, title, and interest in such funds and no part of the funds shall be returned to Defendant. 

The Commission shall hold the funds (collectively, the “Fund”) and may propose a plan to distribute the Fund subject to the Court’s approval. The Court shall retain jurisdiction over the administration of any distribution of the Fund. 

If the Commission staff determines that the Fund will not be distributed, the Commission shall send the funds paid pursuant to this Final Judgment to the United States Treasury.

The Commission may enforce the Court’s judgment for disgorgement and prejudgment interest by moving for civil contempt (and/or through other collection procedures authorized by law) at any time after 30 days following entry of this Final Judgment. 

Defendant shall pay post judgment interest on any delinquent amounts pursuant to 28 U.S.C. § 1961. 

civil penalty in the amount of $_____________ pursuant to Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act. Defendant shall make this payment within 14 days after entry of this Default Judgment by certified check, bank cashier's check, or United States postal money order payable to the Securities and Exchange Commission. The payment shall be delivered or mailed to the Office of Financial Management, Securities and Exchange Commission, 100 F Street, NE, Stop 6042, Washington DC 20549, and shall be accompanied by a letter identifying Charles D. Scoville as a defendant in this action; setting forth the title and civil action number of this action and the name of this Court; and specifying that payment is made pursuant to this Default Judgment. Defendant shall pay post-judgment interest on any delinquent amounts pursuant to 28 USC § 1961. The Commission shall remit the funds paid pursuant to this paragraph to the United States Treasury. V. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, for purposes of exceptions to discharge set forth in Section 523 of the Bankruptcy Code, 11 U.S.C. §523, the allegations in the complaint are true and admitted by Defendant, and further, any debt for disgorgement, prejudgment interest, civil penalty or other amounts due by Defendant under this Judgment or any other judgment, order, consent order, decree or settlement agreement entered in connection with this proceeding, is a debt for the violation by Defendant of the federal securities laws or any regulation or order issued under such laws, as set forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. §523(a)(19). 

VI. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Judgment. 

VII. There being no just reason for delay, pursuant to Rule 54(b) of the Federal Rules of Civil 
Procedure, the Clerk is ordered to enter this Final Judgment forthwith and without further notice. 

We are still awaiting the Courts entry of this this space!

'Swiss Food' - Are They Using Job Interviews to Recruit for Cashback World? (Lyconet / Lyoness / MyWorld)


In the summer of 2020, a lady applied for a vacancy placed on the Indeed Recruitment website from a company called 'Swiss Food Quality Business AG'. 

The job had been advertised for 30+ days and was for a 'Co-Worker in the field of declarations checks and food law' . The job was based at Swiss Food's Branch Office in Eschbach, Germany.

Just 24 hours after applying for this job, she received an email, not from the HR department, but from the actual CEO of Swiss Foods. He invited her for an interview at the Eschbach branch but unfortunately, on the date suggested, she was on vacation, so instead, an interview was arranged on the 19th August 2020 in Pratteln, Switzerland.

The CEO met her outside the office building at 'Hohenrainstrasse 24' and then took her inside to the 'Black Card Members Club', shown below:

Initially the interview went very well, with all the usual interview questions being asked and duly answered. But after a while, the CEO told her some alarming news.

He told her that he had actually sold the company and didn't know what would happen to the  jobs, but that he had another idea about a job that she might be interested in and asked her to stay for a little while longer for a presentation.

She asked him what the presentation was about but he wouldn't answer directly, simply telling her that he had worked for 'MyWorld' for many years and that the job was 'super easy', that they were 'a family', 'super International', and 'don't sell a product', so it was a perfect way to earn money. 

After a little while, a few other people joined them for the presentation and then another gentleman started telling them all about 'Cashback World' and how it works.

He also told them all about a building in Hanover where they could invest.

After the presentation, the CEO of Swiss Food then asked the lady personally if she could imagine working for the system and that he would send her links to the Cashback World registration. He then handed her a Cashback World Card with the Swiss Food logo on:

She told him she would think about it and the meeting ended.

When she got home however, she googled 'Cashback World' and read all the posts on the internet saying that 'Cashback World' was part of Lyoness/Lyconet and was in fact banned in numerous countries for operating a pyramid scheme. Not wishing to join such a scheme, she contacted the CEO again saying that she had found alternative employment and would no longer be interested in the job.

But disappointment at attending an interview that wouldn't lead to a job, then turned to anger at the feeling that she was simply being used. So she left a review on the Swiss Foods Facebook page, and the CEO responded:

The Review:
'As an employer underground handling applicants.
Jobs that do not exist are advertised. You are invited under the pretext of an interview to learn that the position is not filled at all.
Instead, you will find yourself in an introduction round for the company myworld / Cashbackworld / Lyoness / Lyconet (preferably just Google) and should invest a lot of money to be ′′ part ′′ of the team.
So whether you want to cooperate with Swiss Food Quality Business AG with regard to such practices, you should think twice or better.'

The CEO Responses:

Schon spannend was fachlich unqualifizierte Bewerber so alles tun um sich gut zu f├╝hlen.

(It's exciting to see what unqualified applicants do to feel good.)

Wir sind froh diese Dame nicht eingestellt zu haben. Und was Swiss Food mit Lyconet bzw. Lyoness zu tun haben soll, bleibt uns unerschlossen.

(We are glad we didn't hire this lady. And what Swiss Food should have to do with Lyconet and Lyoness remains to be seen).

The Reviewer Response:

Komisch, dass dann Kundenkarten mit dem Namen von Swiss Food Quality Business AG und Cashback World existieren und verteilt werden...googelt man Cashback World findet man den Zusammenhang mit Lyconet/Lyoness mit nur einem Klick.

(Funny that customer cards with the names of Swiss Food Quality Business AG and Cashback World exist and are distributed ... if you google Cashback World you can find the connection with Lyconet / Lyoness with just one click).

Additional Information:

Swiss Food Quality Business Ltd (Company number 06621129) was incorporated on 16th June 2008 and dissolved on the 4th April 2017.

Swiss Food Quality Business AG was founded on 26th August 2008 and is still active and registered in Zurrich:

The Hanover building that was mentioned as an 'investment' is written about here:

The 'Black Card Members Club' is a private members club that has the facilities to rent out rooms for 'business meetings'. 

Switzerland Information:

Switzerland have banned Lyoness from operating in their country.

If this job interview for Swiss Foods was just a 'one off' and the CEO was just being thoughtful in offering this lady alternative employment as she wasn't suitable for the post advertised, then so be it. He was only guilty of terrible bad manners.

But if anybody reading this has also been to an interview with Swiss Foods and been offered an 'opportunity' with Cashback World instead, then please let us know about it, we'd love to hear from you!