Federal Trade Commission v. H. N. Singer, Inc., and Michael Quinlan and James Earl Weihoff

Defendants appeal from a preliminary injunction and from an order modifying it. We affirm.

I. The Nature of the Case.

In its complaint, filed in the district court, the Federal Trade Commission alleged violations of its trade regulation rule “Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures,” 16 C.F.R. Part 436 (The Franchise Rule), and sought redress for third parties under Section 19 of the Federal Trade Commission Act, 15 U.S.C. § 57b(a)(l) and (b). It also alleged false promises and false and misleading representations contrary to Section 5(a) of the Act, 15 U.S.C. § 45 (a), and sought a permanent injunction under Section 13(b) of the Act, 15 U.S.C. § 53 (b) and refunds for third parties as a form of relief ancillary to that equitable relief.

The Commission asked for a preliminary injunction against further violations of the Franchise Rule, freezing the defendants’ assets (except for “ordinary business and living expenses”) pending a trial on the merits, and requiring an accounting of assets acquired by the defendants as a result of the defendants’ activities. The preliminary injunction was sought in accordance with the…