In a recent op-ed published in the Los Angeles Daily Journal, entitled, “It’s About Time to Give FTC Defendants a Fairer Shot,” FTCAdLaw’s William Rothbard sharply criticized the current “assembly line” of asset freezes in deceptive business practice cases brought by the Federal Trade Commission and other law enforcement agencies, without basic due process protections such as prior notice and hearing. He called on Congress to stiffen the presently lenient standards by which the FTC can get an asset freeze and thereby deny businesses the financial ability to defend themselves. “Without the ability to defend themselves, Rothbard writes, “[defendants’] have no choice but to surrender and allow the government to take everything….Often with families, they are left penniless and forced to start over, a daunting task. Suicides happen. And all without a fair opportunity for a trial to determine their culpability.”
While acknowledging the legal rationale for asset freezes – preservation of assets for restitution to remedy consumer harm caused by deceptive business activity – Rothbard finds fault in the current system in which it is all too easy for the FTC to obtain an asset freeze and a receiver from a federal judge, which in almost all cases is a death knell for the affected business and its owners. To “level the playing field for FTC defendants,” Rothbard writes, “Congress must step in and amend the FTC’s statute, making explicit its right to seek monetary relief in federal court and under what terms.” Specifically, he wants Congress to:
- Require the FTC, as a condition of getting an asset freeze, to prove, through “actual evidence rather than unsupported assertion, a substantial probability that without one, assets will be secreted or dissipated;”
- Require courts to release frozen funds for living and legal expenses “in proportion to the total amount available, unless the defendant has independent means of support;”
- Prohibit receivers from liquidating a defendant’s assets “until there has been a final adjudication of liability or a settlement.”
These reforms, in Rothbard’s view, will help right a system that for too long has been “rigged against FTC defendants in asset freeze cases. It is time their rights and property are protected, too, and that they be given a fair shot to defend themselves in court.”