Federal Trade Commission, et al. v. American Tax Service LLC, et al.

• Court: District Court, D. Nevada
• Decided: December 11, 2025
• Docket: 2:25-cv-01894
• Status: Unknown

Opinion

1 UNITED STATES DISTRICT COURT

2 DISTRICT OF NEVADA 3

4 FEDERAL TRADE COMMISSION, et al., Case No.: 2:25-cv-01894-GMN-EJY 5 Plaintiffs, 6 vs. ORDER GRANTING, IN PART, MOTION TO MODIFY PRELIMINARY 7 AMERICAN TAX SERVICE LLC, et al., INJUNCTION

8 Defendants. 9 Pending before the Court is Defendants Tyler Bennett and Terrance Selb’s Motion to 10 Modify Preliminary Injunction Order,1 or Alternatively Motion for Withdrawal of Counsel, 11 (ECF No. 57). Plaintiffs Federal Trade Commission, (“FTC”), and State of Nevada filed a 12 Response, (ECF No. 63), to which Defendants replied, (ECF No. 65). For the reasons 13 discussed below, the Court GRANTS, in part, and DENIES, in part, Defendants’ Motion to 14 Modify Preliminary Injunction. 15 I. BACKGROUND 16 This action arises out of Defendants alleged violations of Section 5(a) of the FTC Act, 17 Section 521 of the Gramm-Leach-Bliley Act, the Trade Regulation rule on Impersonation of 18 Government and Business, and the Telemarketing Sales Rule. (See generally Compl., ECF No. 19 1). The factual background of this case is set forth more fully in the Court’s prior order 20 entering a preliminary injunction, (ECF No. 64). 21 On November 20, 2025, the Court entered a preliminary injunction against Defendants. 22 Among other things, the preliminary injunction contained the following order: 23 24 25 1 When the Motion was filed, Defendants sought to modify the TRO. However, before briefing concluded on this motion, the Court entered a Preliminary Injunction against all Defendants. In their Reply, Defendants clarified that they now move to modify the preliminary injunction. (See Reply at n. 2, ECF No. 65). 1 It is further ordered that Defendants and their officers, agents, employees, and attorneys, and all other persons in active concert or participation with any of them, who receive 2 actual notice of this Order, whether acting directly or indirectly, are hereby preliminarily restrained and enjoined from: 3

4 A. Transferring, liquidating, converting, encumbering, pledging, loaning, selling, concealing, dissipating, disbursing, assigning, relinquishing, spending, 5 withdrawing, granting a lien or security interest or other interest in, or otherwise disposing of any assets that are: (1) owned or controlled, directly or 6 indirectly, by any Defendant; (2) held, in part or in whole, for the benefit of 7 any Defendant; 3) in the actual or constructive possession of any Defendant; or (4) owned or controlled by, in the actual or constructive possession of, or 8 otherwise held for the benefit of, any corporation, partnership, asset protection trust, or other entity that is directly or indirectly owned, managed or controlled 9 by any Defendant. 10 B. Opening or causing to be opened any safe deposit boxes, commercial 11 mailboxes, or storage facilities titled in the name of any Defendant or subject to access by any Defendant, except as necessary to comply with written 12 requests from the Receiver acting pursuant to its authority under this Order.

13 C. Incurring charges or cash advances on any credit, debit, or ATM card issued 14 in the name, individually or jointly, of any Corporate Defendant or any corporation, partnership, or other entity directly or indirectly owned, 15 managed, or controlled by any Defendant or of which any Defendant is an officer, director, member, or manager. This includes any corporate bankcard 16 or corporate credit card account for which any Defendant is, or was on the 17 date that this Order was signed, an authorized signor.

18 D. Cashing any checks or depositing any money orders or cash received from consumers, clients, or customers of any Defendant. 19

20 The assets affected by this Section include: (1) all assets of Defendants; and (2) assets obtained by Defendants after this Order is entered if those assets are derived from any 21 activity that is the subject of the Complaint in this matter or that is prohibited by this Order. This Section does not prohibit any transfers to the Receiver or repatriation of 22 foreign assets specifically required by this order.

23 24 (Prelim. Inj. 6:22–7:24, ECF No. 64).

25 1 Defendants move the Court for an order to modify the preliminary injunction to allow 2 them to access funds for their living expenses and legal fees and costs. Specifically, 3 Defendants request the following amounts: 4 (1) $30,195 in monthly expenditures for Mr. Bennett; 5 (2) $26,680 in monthly expenditures for Mr. Selb; 6 (3) $92,818.01 to Snell & Wilmer for outstanding amounts due; and 7 (4) $45,000 a month to Snell & Wilmer for future/ongoing litigation fees and costs. 8 (Mot. Modify 8:6–9, ECF No. 57). 9 II. LEGAL STANDARD 10 In civil cases where a district court has frozen a party’s assets, the court has discretion to 11 release funds for the purpose of paying attorney fees or living expenses. Commodity Futures 12 Trading Comm’n v. Noble Metals Int’l, Inc., 67 F.3d 766, 775 (9th Cir. 1995). When reviewing 13 district courts’ discretionary decisions to release frozen funds, the Ninth Circuit has 14 “recognized the importance of preserving the integrity of disputed assets to ensure that such 15 assets are not squandered by one party to the potential detriment of another.” FSLIC v. Ferm, 16 909 F.2d 372, 374 (9th Cir. 1990). 17 III. DISCUSSION 18 In cases like this, district courts consider the following factors in determining whether to 19 release frozen funds for legal fees and living expenses: (1) “the likelihood that plaintiff will 20 prevail on the merits”; (2) “whether defense counsel was aware of the possibility that the court 21 might deny or limit attorney fees”; (3) “the availability of assets for consumer redress”; (4) “a 22 defendant’s access to alternative assets”; and (5) “the reasonableness of the funds requested for 23 legal fees and living expenses.” Fed. Trade Comm’n v. Johnson, No. 2:10-CV-02203-RLH- 24 GWF, 2011 WL 13249477, at *2 (D. Nev. June 17, 2011) (citing FTC v. World Wide Factors,

25 Ltd., 882 F.2d 344 (9th Cir. 1989)). Although this list is not exhaustive, it is helpful to guide 1 the Court’s analysis. See Johnson, No. 2:10-CV-02203-RLH-GWF, 2011 WL 13249477, at *2. 2 A. Likelihood of Success on the Merits 3 In exercising its discretion, the Court must take into account Plaintiffs’ probable success 4 on the merits of its claim. World Wide Factors, Ltd., 882 F.2d at 346. The Court previously 5 evaluated the merits of this case in its orders granting Plaintiffs’ Motion for TRO and Motion 6 for Preliminary Injunction. In those Orders, the Court found that Plaintiffs were likely to 7 succeed on the merits of their claims. Accordingly, this factor weighs against modifying the 8 preliminary injunction. 9 B. Defense Counsels’ Awareness of the Asset Freeze 10 “A district court may presume that attorneys who are aware of a defendant’s asset freeze 11 will also know that the court has discretion to approve or deny a release of frozen assets to pay 12 attorney fees.” Johnson, No. 2:10-CV-02203-RLH-GWF, 2011 WL 13249477, at *2 13 (collecting cases). Here, the Court can easily deduce that attorneys Bradly Austin, Benjamin 14 Reeves, and Blakeley Griffith were aware, or should have been aware, of the asset freeze prior 15 to agreeing to represent the Defendants in this case.2 The Court issued the TRO on October 7, 16 2025, and set a preliminary injunction hearing. Three days later, Plaintiffs served the TRO on 17 Defendants’ financial institutions subjecting Defendants to the asset freeze. (Resp. 6:24–25, 18 ECF No. 63). Bradley Austin and Blakeley Griffith then entered their appearances on October 19 17. (Not. Appearance, ECF No. 35). Benjamin Reeves filed a Motion/Verified Petition to 20 Practice Pro Hac Vice on October 23 designating Blakely Griffith as local counsel. Thus, the 21 Court concludes that Defendants’ counsel assumed the risk of not getting paid which weighs 22 against modifying the preliminary injunction. 23 24

25 2 Defendants do not respond to Plaintiffs assertion that defense counsel was aware of the asset freeze. (See generally Reply, ECF No. 65). 1 2 C. Availability of Assets for Consumer Redress 3 When a defendant’s frozen assets are insufficient to cover the potential claims, a district 4 court is within its discretion to deny a fee application. Noble Metals Int’l, Inc., 67 F.3d at 5 775 (affirming the district court’s decision to deny attorney fees because the record 6 demonstrated that “the frozen assets fell far short of the amount needed to compensate” 7 aggrieved parties). “Furthermore, if the receiver’s estate is not large enough to pay all the 8 claims against it, the court must essentially decide whether the alleged victims or defense 9 counsel deserves the money more.” Johnson, No. 2:10-CV-02203-RLH-GWF, 2011 WL 10 13249477, at *2 (citing FTC v. Sharp, 1991 WL 214076, at *1 (D. Nev. Jul. 23, 1991)). 11 Plaintiffs state that records from payment processors and consumer financing companies show 12 that, since February 2022, Defendants have taken in more than $77.7 million of ill-gotten 13 revenue. (Resp. 7:9–11); (see Cordova Decl. ¶ 10, Pls.’ Ex. 434 to TRO, ECF No. 49-3). 14 Additionally, a “Company Plan” prepared in early 2025 and found on Defendant Selb’s desktop 15 computer includes an estimate that Defendants have taken in at least $153,683,015.66 of 16 revenue since 2018, which Plaintiffs argue was ill-gotten. (Resp. 7:15); (see Company Plan at 17 3216, Pls.’ Ex. 610 to Resp., ECF No. 63-1). 18 Under the preliminary injunction, its estimated that the Court has frozen approximately 19 $10.5 million in assets held at financial institutions. (See Tyndall Suppl. Decl. ¶3, Pls.’ Ex. 594 20 ¶ 3, ECF No. 47-3). Although this amount does not take into account Defendants’ unliquidated 21 assets, the amount available to satisfy consumer injuries is not enough to cover the potential 22 liability. Defendants request access to $92,818.01 to pay for outstanding attorneys’ fees and 23 costs, $45,000 a month for future fees and costs, as well as sizable monthly living expenses. 24 (Mot. Modify 8:6–9). Under these circumstances, it would be inappropriate to pay the

25 requested amounts. See Johnson, No. 2:10-CV-02203-RLH-GWF, 2011 WL 13249477, at *3 1 (finding the same under similar circumstances). Doing so right now could leave consumers 2 without sufficient assets for redress—an outcome that runs contrary to the Court’s directive “to 3 preserv[e] the integrity of disputed assets to ensure that such assets are not squandered by one 4 party to the potential detriment of another.” Ferm, 909 F.2d at 374. Accordingly, this factor 5 weighs against modifying the preliminary injunction. 6 D. Defendants’ Access to Alternative Assets 7 “Another important consideration for a district court in determining whether to release 8 frozen assets is the defendant’s availability of alternative assets.” Johnson, No. 2:10-CV- 9 02203-RLH-GWF, 2011 WL 13249477, at *3 (citing FTC v. World Travel Vacation Brokers, 10 Inc., 861 F.2d 1020, 1032 n.10 (7th Cir. 1988)). Plaintiffs argue that Defendants have access to 11 alternative assets. First, Plaintiff contends that Bennett may have access to funds through his 12 girlfriend (with whom he resides), because Bennett transferred $83,333 to her, as “prepayment 13 of child support” on September 30, 2025. (Resp. 8:8–10); (see Tyndall Fourth Decl. ¶ 8(e), Pls.’ 14 Ex. 620 to Resp., ECF No. 63-1). In the past year, Bennett also transferred $32,000 to his 15 girlfriend for “pregnancy support,” “support,” and “gifts.” (Tyndall Fourth Decl. Pls.’ ¶ 8(b)– 16 (c), Ex. 620 to Resp.). And, in April 2025, Bennett gifted her jewelry that he valued at 17 $80,000. (Id. ¶ 8(d)). Plaintiffs speculate why Bennett cannot use the money he gifted to his 18 girlfriend to cover baby supplies, diapers, formula, and other childcare expenses. (Resp. 8:12– 19 16). 20 Additionally, Plaintiffs point out that Defendant Selb receives $2,100 per month in 21 social security payments and has transferred approximately $950,000 to his son, Justin Selb 22 over the past two years. (See Tyndall Fourth Decl. Pls.’ ¶ 10–11, Ex. 620 to Resp.). Plaintiffs 23 appear to question why Selb cannot supplement his social security income with support from 24 his son or another source. (See Resp. 8:18–20). Lastly, Plaintiffs argue that Defendants may

25 obtain lawful employment and their choice not to undercuts their request to unfreeze funds. 1 (Resp. 8:21–25 (citing FTC v. IAB Marketing Associates, LP, 972 F. Supp. 2d 1307, 1314 (S.D. 2 Fla. Sept. 18, 2013) (“Absent persuasive evidence to the contrary, the Court can conclude only 3 that [Defendants] are capable of working to support their basic necessities.”))). 4 In reply, Defendants argue that the prior funds transferred to Bennett’s girlfriend for the 5 child are controlled by her in a separate account, and Bennett is unable to retrieve those funds. 6 (Reply 6:10–12). Moreover, Defendants point out that Selb’s social security payments are 7 deposited into an account that remains frozen under the preliminary injunction. (Id. 5:23–25). 8 Similarly, Justin Selb’s bank account has also been frozen under the preliminary injunction so 9 Selb cannot access the funds Plaintiffs reference. (Id. 5:26–6:3). Defendants further inform the 10 Court that they are currently evaluating lawful employment options but “it is extremely difficult 11 to find suitable employment with the asset freeze, the employment restrictions under the TRO 12 and now preliminary injunction, and the lawsuit pending.” (Id. at n.5). 13 Accordingly, the record reflects that Bennett may not have access to alternative assets 14 except for obtaining employment, and Selb would have access to alternative assets if his social 15 security payment was not in a frozen account, his son’s bank account was unfrozen, and he 16 obtained employment. Because Plaintiffs argued that Selb could supplement his social security 17 payments with support from his son, Justin, the Court finds it appropriate to allow Selb to 18 access his social security payments and unfreeze Justin’s bank account. However, the Court is 19 unpersuaded by their argument that it is difficult to find suitable employment. Thus, the Court 20 concludes that Defendants can work to support their basic necessities, and this factor ultimately 21 weighs against modifying the preliminary injunction beyond the social security payment 22 carveout and unfreezing Justin Selb’s bank account. 23 E. Reasonableness of the Requested Funds 24 For a defendant to receive access to frozen funds, a district court must determine that the

25 funds be used solely for fees which are “reasonable.” Ferm, 909 F.2d at 374; see also World 1 Wide Factors, Ltd., 882 F.2d at 348. The Court separately addresses the reasonableness of the 2 requested attorneys’ fees and living expenses. 3 1. Attorneys’ Fees and Costs 4 Selb and Bennett request $92,818.01 for outstanding amounts due and a monthly 5 recurring payment of $45,000 for possible future expenses. But counsel Austin’s Declaration 6 and Defendants’ Reply do not include any real detail regarding either the outstanding invoices 7 or the anticipated ongoing monthly legal fees and costs. The Court cannot ascertain the 8 reasonableness of Defendants’ attorneys’ fees and costs request without more information such 9 as an itemization of the costs incurred, hours worked, and rates charged. Accordingly, 10 Defendants fail to meet their burden of establishing the reasonableness of the requested 11 attorneys’ fees and costs. 12 2. Living Expenses 13 To determine the reasonableness of requested living expenses, a district court must be 14 comfortable that the requested funds involve necessities and would not support luxuries or a 15 lavish lifestyle. See, e.g., SEC v. Private Equity Mgmt. Group, Inc., No. 09-2901, 2009 WL 16 2058247, *4 (C.D. Cal. July 9, 2009) (finding that a defendant’s requests for living expenses 17 was “facially unreasonable” because he asked for an amount that would fund “a lavish 18 lifestyle” including owning multiple homes and cars); SEC v. Duclaud Gonzalez de Castilla, 19 170 F. Supp. 2d 427, 430 (S.D.N.Y. 2001) (denying defendant’s request for living expenses 20 that included money for a nanny, housekeeper, handyman, and nurse). 21 Defendants argue that their requested living expenses are reasonable because they are 22 largely attributable to fixed monthly costs. (Mot. Modify 7:15–16). But Defendants’ requested 23 living expenses are facially unreasonable because they support a lavish lifestyle rather than 24 necessities. Bennett requests access to $30,195 per month to pay for his monthly expenses and

25 Selb requests $26,680 per month. Their purported budgets appear basic—although high—at 1 first glance, however, a peak into the record suggests the budgets contain luxury spending 2 requests. 3 Beginning with Bennett, according to his financial disclosures, he owns his 2022 4 Mercedes-Benz G class SUV outright, (Tyndall Fourth Decl. Pls.’ ¶ 9, Ex. 620 to Resp.), but 5 his budget request includes $2,000 per month for a “car lease,” (Bennett Budget at 2, Ex. 2 to 6 Mot. Modify, ECF No. 57-2). Plaintiff argues that this suggests that Bennett seeks to maintain 7 a second car, which is not a necessity, and likely contributes to his significant monthly car 8 insurance payment ($1,500) and monthly fuel costs ($450). (Resp. 9:18–20). Defendants reply 9 that the leased vehicle has been returned and they no longer seek that budget item, but they 10 make no mention of a reduction in the car insurance or fuel costs now that Bennett only 11 maintains one car. (See Reply at n.3). As another example, Bennett seeks $2,855 for his 12 monthly water bill. (Bennett Budget at 2, Ex. 2 to Mot. Modify). Plaintiffs posit the source of 13 this high bill is likely his home’s private pool with a waterfall, which they argue is not a 14 necessity. (Resp. 20:22); (see Tyndall Fourth Decl. ¶ 3(a)–(c), Ex. 620 to Resp.). Indeed, a 15 pool is a luxury. The Court further finds Bennett’s requests unreasonable because he asks for 16 funds to support a residence that requires a $14,424 mortgage payment—nearly 50% of his 17 purported living expenses. 18 As for Selb, he seeks $1,233 for a car payment. (Selb Budget at 2, Ex. 3 to Mot. 19 Modify, ECF No. 57-3). Selb’s financial disclosures show that Selb owns three Teslas outright 20 but has a $50,000 loan on his fourth Tesla. (Tyndall Fourth Decl. ¶ 13, Ex. 620 to Resp.). As 21 stated above, a second car is not a necessity, let alone a fourth. See Private Equity Mgmt. 22 Group, Inc., No. 09-2901, 2009 WL 2058247, at *4. Selb’s budget also requests $13,497 23 (nearly 50% of his purported living expenses) to maintain his home in the Hollywood Hills 24 neighborhood, which the Court finds unreasonable. (Selb Budget at 2, Ex. 3 to Mot. Modify).

25 In sum, Defendants’ requested living expenses are facially unreasonable and weigh against 1 || modifying the preliminary injunction. 2 F. Request to Withdraw 3 Lastly, the Court turns to Defendants’ argument to allow defense counsel to withdraw. 4 ||LR IC 2-2 provides that “[f]or each type of relief requested or purpose of the document, a 5 separate document must be filed and a separate event must be selected for that document.” 6 || Here, Defendants request two types of relief in the same motion: (1) to modify the preliminary 7 || injunction, and (2) to allow counsel to withdraw if modification is denied. Accordingly, the 8 request to withdraw as counsel is DENIED without prejudice. 9 CONCLUSION 10 IT IS HEREBY ORDERED that Defendants Tyler Bennett and Terrance Selb’s 11 || Motion to Modify Preliminary Injunction Order, (ECF No. 57), is GRANTED, in part, and 12 || DENIED, in part. It is granted to the extent that Selb shall be given access to his monthly 13 || social security payments and Justin Selb’s joint Wells Fargo account ending in 9793 shall be 14 unfrozen immediately. The Motion is denied as to all other modifications sought and defense 15 || counsels’ request to withdraw. 16 DATED this 11 day of December, 2025. 17 ff 18 ¢ hy. 19 Gloria M. ay arro, District Judge UNITED STATES DISTRICT COURT 20 21 22 23 24 25

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