NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS DEC 27 2022 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
CONSUMER FINANCIAL PROTECTION No. 21-56052 BUREAU, D.C. No. Plaintiff-Appellee, 8:20-cv-00043-SB-ADS
v. MEMORANDUM* JAWAD NESHEIWAT,
Defendant-Appellant,
and
CHOU TEAM REALTY, LLC, FKA Chou Team Realty, Inc., DBA Monster Loans, DBA MonsterLoans; et al.,
Defendants.
Appeal from the United States District Court for the Central District of California Stanley Blumenfeld, Jr., District Judge, Presiding
Submitted November 17, 2022** Pasadena, California
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). Before: WARDLAW and W. FLETCHER, Circuit Judges, and KENNELLY,*** District Judge.
Jawad Nesheiwat (Nesheiwat) appeals the district court’s grant of summary
judgment and its award of restitution, civil penalties, and injunctive relief to the
Consumer Protection Financial Bureau (CFPB). As the parties are familiar with
the facts, we do not restate them here. We have jurisdiction under 28 U.S.C. §
1291, and we affirm. There are no genuine disputes of material facts regarding
Nesheiwat’s liability under provisions of the Financial Credit Reporting Act
(FCRA), 12 U.S.C. § 1681b(f)(1), the Telemarketing Sales Rule (TSR), 16 C.F.R.
§§ 310.3(a)(2)(x), (a)(5), and the Consumer Financial Protection Act (CFPA), 12
U.S.C. §§ 5536(a)(1)(B), (a)(3). Nesheiwat’s baseless evidentiary objections, bald
assertions that a jury could find other individuals ultimately (or similarly)
responsible, and various procedural challenges are unavailing.
1. Undisputed record evidence shows that Nesheiwat recklessly violated
the FCRA by using and obtaining consumer reports for unauthorized purposes. 12
U.S.C. § 1681b(f)(1). Nesheiwat played a central role in a scheme to obtain
prescreened lists of student loan borrowers under false pretenses, purporting to
extend a “firm offer of credit or insurance,” id. § 1681b(c)(1)(B)(i), but in fact
*** The Honorable Matthew F. Kennelly, United States District Judge for the Northern District of Illinois, sitting by designation.
2 marketing false debt relief services offered through student loan debt relief (SLDR)
companies. Nesheiwat knew these lists were used for an unauthorized purpose and
instructed employees to prepare fraudulent “compliant mailers” to avoid detection
by regulators.
2. Undisputed record evidence shows that Nesheiwat recklessly violated
the TSR by charging advance fees to individuals for debt relief services, 16 C.F.R.
§ 310.4(a)(5), and misrepresenting material aspects of such services, id. §
310.3(a)(2)(x). Nesheiwat is individually liable for corporate violations of the TSR
because “(1) he participated directly in the [unlawful] acts or had the authority to
control them and (2) he had knowledge of [such conduct] . . . or was aware of a
high probability of” such conduct and “intentional[ly] avoid[ed] . . . the truth.”
FTC v. Stefanchik, 559 F.3d 924, 931 (9th Cir. 2009).
Nesheiwat edited and approved telemarketing scripts for the SLDR
companies. He directed managers at such companies to use these scripts, which
instructed sales associates to collect advance fees, and materially misrepresented
the SLDR companies’ services—promising false benefits such as lower interest
rates and improved credit scores.
Nesheiwat provided “substantial assistance” to the SLDR companies in
violating both provisions of the TSR. 16 C.F.R. § 310.3(b). First, neither party
disputes that the SLDR companies violated the TSR. Second, Nesheiwat provided
3 more than mere “casual or incidental” assistance to the companies by approving
and editing telemarketing scripts. FTC v. Chapman, 714 F.3d 1211, 1216–17 (10th
Cir. 2013). Third, undisputed evidence shows that Nesheiwat knew, or
consciously avoided knowing, that the companies were violating the TSR.
3. Undisputed record evidence shows that Nesheiwat violated the CFPA.
Evidence of Nesheiwat’s role in the SLDR companies’ telemarketing program
makes out a basis for liability under both the deceptive acts provision of the TSR,
16 C.F.R. § 310.3(a)(2)(x), and a related provision of the CFPA, 12 U.S.C. §
5536(a)(1)(B). Additionally, Nesheiwat played a central role in the companies’
direct mail marketing, using contact information obtained in violation of the FCRA
to encourage consumers to call in. These mailers misrepresented material aspects
of the SDLR companies’ debt relief services in a manner “likely to mislead
consumers acting reasonably under the circumstances,” CFPB v. Gordon, 819 F.3d
1179, 1192–93 (9th Cir. 2016) (citing FTC v. Pantron I Corp., 33 F.3d 1088, 1095
(9th Cir. 1994)), by touting lower interest rates, improved credit scores, and false
claims that the Department of Education would become consumers’ new loan
servicer.
Nesheiwat is individually liable for corporate violations of the CFPA.
Gordon, 819 F.3d at 1193. He “participated directly” in these deceptive practices
and “had the authority to control them.” Id. (quoting Stefanchik, 559 F.3d at 931).
4 Nesheiwat was also “recklessly indifferent to the truth or falsity of the
misrepresentations,” id., and did not attempt to verify the truthfulness of statements
in SLDR companies’ telemarketing and direct mail materials.
Nesheiwat provided substantial assistance to the SLDR companies in
violating the CFPA. Our analysis regarding Nesheiwat’s liability for substantial
assistance under the TSR largely tracks our analysis under the CFPA. First, neither
party disputes that the SLDR companies violated the CFPA by making false
promises to consumers via direct mail and sales calls. Second, Nesheiwat provided
substantially more than “mere casual or incidental” assistance to the companies in
their marketing program. Chapman, 714 F.3d at 1216–17. Third, undisputed
evidence shows that Nesheiwat acted recklessly by failing to verify the truthfulness
of the SLDR companies’ marketing materials.
4. Nesheiwat asserts that CFPB filed this action outside the CFPA’s
three-year statute of limitations. 12 U.S.C. §§ 5564(b), (g)(1). He “bears the
burden of proving that the plaintiff filed beyond the limitations period.” Payan v.
Aramark Mgmt. Servs. Ltd. P’ship, 495 F.3d 1119, 1122 (9th Cir. 2007) (citations
omitted).
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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS DEC 27 2022 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
CONSUMER FINANCIAL PROTECTION No. 21-56052 BUREAU, D.C. No. Plaintiff-Appellee, 8:20-cv-00043-SB-ADS
v. MEMORANDUM* JAWAD NESHEIWAT,
Defendant-Appellant,
and
CHOU TEAM REALTY, LLC, FKA Chou Team Realty, Inc., DBA Monster Loans, DBA MonsterLoans; et al.,
Defendants.
Appeal from the United States District Court for the Central District of California Stanley Blumenfeld, Jr., District Judge, Presiding
Submitted November 17, 2022** Pasadena, California
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). Before: WARDLAW and W. FLETCHER, Circuit Judges, and KENNELLY,*** District Judge.
Jawad Nesheiwat (Nesheiwat) appeals the district court’s grant of summary
judgment and its award of restitution, civil penalties, and injunctive relief to the
Consumer Protection Financial Bureau (CFPB). As the parties are familiar with
the facts, we do not restate them here. We have jurisdiction under 28 U.S.C. §
1291, and we affirm. There are no genuine disputes of material facts regarding
Nesheiwat’s liability under provisions of the Financial Credit Reporting Act
(FCRA), 12 U.S.C. § 1681b(f)(1), the Telemarketing Sales Rule (TSR), 16 C.F.R.
§§ 310.3(a)(2)(x), (a)(5), and the Consumer Financial Protection Act (CFPA), 12
U.S.C. §§ 5536(a)(1)(B), (a)(3). Nesheiwat’s baseless evidentiary objections, bald
assertions that a jury could find other individuals ultimately (or similarly)
responsible, and various procedural challenges are unavailing.
1. Undisputed record evidence shows that Nesheiwat recklessly violated
the FCRA by using and obtaining consumer reports for unauthorized purposes. 12
U.S.C. § 1681b(f)(1). Nesheiwat played a central role in a scheme to obtain
prescreened lists of student loan borrowers under false pretenses, purporting to
extend a “firm offer of credit or insurance,” id. § 1681b(c)(1)(B)(i), but in fact
*** The Honorable Matthew F. Kennelly, United States District Judge for the Northern District of Illinois, sitting by designation.
2 marketing false debt relief services offered through student loan debt relief (SLDR)
companies. Nesheiwat knew these lists were used for an unauthorized purpose and
instructed employees to prepare fraudulent “compliant mailers” to avoid detection
by regulators.
2. Undisputed record evidence shows that Nesheiwat recklessly violated
the TSR by charging advance fees to individuals for debt relief services, 16 C.F.R.
§ 310.4(a)(5), and misrepresenting material aspects of such services, id. §
310.3(a)(2)(x). Nesheiwat is individually liable for corporate violations of the TSR
because “(1) he participated directly in the [unlawful] acts or had the authority to
control them and (2) he had knowledge of [such conduct] . . . or was aware of a
high probability of” such conduct and “intentional[ly] avoid[ed] . . . the truth.”
FTC v. Stefanchik, 559 F.3d 924, 931 (9th Cir. 2009).
Nesheiwat edited and approved telemarketing scripts for the SLDR
companies. He directed managers at such companies to use these scripts, which
instructed sales associates to collect advance fees, and materially misrepresented
the SLDR companies’ services—promising false benefits such as lower interest
rates and improved credit scores.
Nesheiwat provided “substantial assistance” to the SLDR companies in
violating both provisions of the TSR. 16 C.F.R. § 310.3(b). First, neither party
disputes that the SLDR companies violated the TSR. Second, Nesheiwat provided
3 more than mere “casual or incidental” assistance to the companies by approving
and editing telemarketing scripts. FTC v. Chapman, 714 F.3d 1211, 1216–17 (10th
Cir. 2013). Third, undisputed evidence shows that Nesheiwat knew, or
consciously avoided knowing, that the companies were violating the TSR.
3. Undisputed record evidence shows that Nesheiwat violated the CFPA.
Evidence of Nesheiwat’s role in the SLDR companies’ telemarketing program
makes out a basis for liability under both the deceptive acts provision of the TSR,
16 C.F.R. § 310.3(a)(2)(x), and a related provision of the CFPA, 12 U.S.C. §
5536(a)(1)(B). Additionally, Nesheiwat played a central role in the companies’
direct mail marketing, using contact information obtained in violation of the FCRA
to encourage consumers to call in. These mailers misrepresented material aspects
of the SDLR companies’ debt relief services in a manner “likely to mislead
consumers acting reasonably under the circumstances,” CFPB v. Gordon, 819 F.3d
1179, 1192–93 (9th Cir. 2016) (citing FTC v. Pantron I Corp., 33 F.3d 1088, 1095
(9th Cir. 1994)), by touting lower interest rates, improved credit scores, and false
claims that the Department of Education would become consumers’ new loan
servicer.
Nesheiwat is individually liable for corporate violations of the CFPA.
Gordon, 819 F.3d at 1193. He “participated directly” in these deceptive practices
and “had the authority to control them.” Id. (quoting Stefanchik, 559 F.3d at 931).
4 Nesheiwat was also “recklessly indifferent to the truth or falsity of the
misrepresentations,” id., and did not attempt to verify the truthfulness of statements
in SLDR companies’ telemarketing and direct mail materials.
Nesheiwat provided substantial assistance to the SLDR companies in
violating the CFPA. Our analysis regarding Nesheiwat’s liability for substantial
assistance under the TSR largely tracks our analysis under the CFPA. First, neither
party disputes that the SLDR companies violated the CFPA by making false
promises to consumers via direct mail and sales calls. Second, Nesheiwat provided
substantially more than “mere casual or incidental” assistance to the companies in
their marketing program. Chapman, 714 F.3d at 1216–17. Third, undisputed
evidence shows that Nesheiwat acted recklessly by failing to verify the truthfulness
of the SLDR companies’ marketing materials.
4. Nesheiwat asserts that CFPB filed this action outside the CFPA’s
three-year statute of limitations. 12 U.S.C. §§ 5564(b), (g)(1). He “bears the
burden of proving that the plaintiff filed beyond the limitations period.” Payan v.
Aramark Mgmt. Servs. Ltd. P’ship, 495 F.3d 1119, 1122 (9th Cir. 2007) (citations
omitted). By merely gesturing at a handful of consumer complaints submitted to
CFPB, he fails to carry his burden . At most, the 24 consumer complaints he
identifies disclose some elements of the SLDR companies’ violations of the
FCRA, TSR, and CFPA. None identifies Nesheiwat by name. Nesheiwat provides
5 no evidence that CFPB was aware of these complaints. Standing alone, they offer
no insight into CFPB’s “date of discovery.” 12 U.S.C. § 5564(g)(1).
5. The district court did not abuse its discretion in ordering restitution,
civil penalties, and injunctive relief. To calculate restitution, the district court
faithfully applied our circuit’s “two-step burden-shifting framework.” Gordon,
819 F.3d at 1195. At step one, CFPB bore its “burden of proving that the amount
it seeks in restitution reasonably approximates the defendant’s unjust gains,”
measured as net revenue. Id. (citation omitted). CFPB relied on undisputed
evidence to calculate net revenue: the amount of fees charged to consumers minus
refunds—$19,699,870. At step two, Nesheiwat failed to “demonstrate that the net
revenues figure overstates the defendant’s unjust gains.” Id. The district court
awarded “legal restitution” to CFPB. Accordingly, we need not decide what
impact, if any, the Supreme Court’s holding in Liu v. SEC, 140 S. Ct. 1936 (2020),
has on this appeal.
6. The district court did not abuse its discretion in imposing second-tier
civil penalties for Nesheiwat’s reckless violations of Federal consumer financial
law. 12 U.S.C. § 5565(c)(2)(B); 12 C.F.R. § 1083.1(a). Nesheiwat offers no legal
argument to contest the district court’s award, instead asserting that such penalties
are “seriously and unjustifiably disproportionate to the penalties imposed against”
other defendants. He has waived his challenge. United States v. Cazares, 788 F.3d
6 956, 983 (9th Cir. 2015) (“The failure to cite to valid legal authority waives a claim
for appellate review.”); Fed. R. App. P. 28(a)(8)(A).
7. The district court did not abuse its discretion in granting a permanent
injunction “broad[] enough to prevent [the defendant] from engaging in similarly
illegal practices in [the] future.” Litton Indus., Inc. v. FTC, 676 F.2d 364, 370 (9th
Cir. 1982) (quoting FTC v. Colgate-Palmolive Co., 380 U.S. 374, 395 (1965)).
Fencing-in provisions, such as restrictions on an individual’s ability to work in a
specific industry, “will be upheld so long as [they] bear[] a ‘reasonable relation to
the unlawful practices found to exist.’” FTC v. Grant Connect, LLC., 763 F.3d
1094, 1105 (9th Cir. 2014) (quoting Colgate-Palmolive, 380 U.S. at 394–95).
Nesheiwat “acted in blatant and utter disregard of the law.” Litton Indus., 676 F.2d
at 371. Nesheiwat’s “elaborate and wide-ranging” unlawful conduct spanned
multiple industries. Accordingly, the district court did not abuse its discretion in
barring Nesheiwat from engaging in debt relief, mortgage loans, and telemarketing
services, and obtaining consumer data.
8. We deem Nesheiwat’s other challenges to the district court’s holding
waived. Nesheiwat waived his challenges to the court’s Local Rules and standing
order on summary judgment. See Crime Just. & Am., Inc. v. Honea, 876 F.3d 966,
978 (9th Cir. 2017) (issues raised in captions in brief which are not supported by
argument are waived). He also waived challenges to the district court’s denial of
7 his evidentiary objections. See Palmer v. IRS, 116 F.3d 1309, 1312–13 (9th Cir.
1997) (issue raised in motion that district court refused to consider “because it was
untimely and in contravention of local rules” which a party does not appeal is
waived).
AFFIRMED.