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  • Writer's pictureA. Christine Davis, CPA/CFF, CVA, CGMA

Client Victorious in the U.S. District Court for the District of Maryland (FTC v.

Updated: Sep 24, 2022

In the case captioned Federal Trade Commission v. et al., A. Christine (Chris) Davis was retained as the accounting expert for the Defendants.


On December 7, 2020, the FTC filed its Complaint for Permanent Injunction and Other Equitable Relief and moved for a temporary restraining order (TRO) and asset freeze. On December 8, 2020, the Court granted the FTC’s motion ex parte and entered the TRO with an asset freeze and appointment of a Temporary Receiver.

On February 3, 2021 after a briefing on the Motion to Show cause was completed and the Temporary Receiver had filed his Initial Status Report, the Court directed the Defendants to submit a Business Plan outlining how the Company would operate lawfully and profitably on an interim basis until a trial on the merits or the case is otherwise resolved. The Defendants submitted the Business Plan on February 29, 2021. (Chris Davis's assignment, in part, was to review the reasonableness of the Business Plan.)

During today’s ruling (March 26, 2021), the Court issued its Findings that, among other things: (1) the Defendants' Business Plan submitted to the Court on February 19, 2021 provides sufficient detail and assurances that will operate lawfully on a preliminary basis pending resolution of this matter, and that such operation is reasonably likely to decrease the liabilities and increase the assets of the Defendants, and (2) the FTC has not satisfied its burden of demonstrating that the equities weigh in favor of its requested preliminary injunctive relief. Accordingly, the FTC’s request for a preliminary injunction is denied, and the TRO and asset freeze have expired as of today and are no longer in effect.

How Chris's work contributed to a positive outcome for the client:

As the Defendants' accounting expert, Chris submitted two affirmative expert reports offering her expert opinions pertaining to’s: (1) historical revenues and cash distributions, (2) equity balances and the fact that they were historically positive since inception, and (3) method of accounting for its operations, which was Cash basis for many years until Accrual basis was required by the IRS due to a revenue milestone being reached. Equally important was Chris's opinion that the Defendants’ forecast financial statements as reflected in the Business Plan submitted to the Court were a reliable depiction of the Company's near-term plans should the Court permit the Company to restart its business. She also addressed the reasonableness of the assumptions underlying the Company's forecast profitability and cash flow.

Finally, Chris submitted a rebuttal expert report. She opined that the Temporary Receiver’s accounting expert's opinion about the Company’s historical accounting was erroneous and his opinions about the Company’s future profitability and cash flow were flawed.


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