Fla. Judge OKs FTC To Unfreeze Assets In ECommerce Suit
By David Minsky
Law360, Fort Lauderdale, Fla. (March 27, 2025, 8:51 PM EDT) -- A Florida federal judge authorized the Federal Trade Commission to unfreeze bank accounts controlled by an Ohio man accused of defrauding e-commerce platform users out of $14 million provided he gives certain financial disclosures, but kept a temporary restraining order precluding business operations in place for now.
U.S. District Judge David S. Leibowitz on Wednesday denied a motion to dissolve a temporary restraining order against William Holton during a hearing in the Southern District of Florida and instead treated it as a "motion to modify" the TRO, which was conditionally approved as long as he gives sworn financial disclosures to the FTC in order to unfreeze four bank accounts containing at least $140,000. Holton says he needs the accounts unfrozen to pay for living expenses and to pay for his attorneys defending him in the case.
Holton, who is named as a defendant in a March 3 FTC lawsuit accusing him of duping users of ecommerce platform Click Profit with an AI-powered system, argues in a motion to dissolve the TRO that the government's complaint "barely mention him" and falsely alleges that he is an owner, director or member of the company.
"As long as the condition is satisfied by Mr. Holton, this is a motion to modify in my discretion," Judge Leibowitz said, adding that the purpose of the TRO is to maintain the "status quo" in the case until the preliminary injunction hearing tentatively scheduled in two weeks. "All bets are off and it's a new day for everybody at the preliminary injunction hearing."
According to the FTC's complaint, Click Profit also operates under the names FBALaunch, Automation Industries and PortfolioLaunch, and told consumers they could make "passive income" using a proprietary system powered by artificial intelligence that would allow them to sell products through online platforms like Amazon, Walmart and TikTok.
The company also falsely told consumers it was affiliated with major companies like Nike Inc. and Walt Disney Co. to lure consumers, according to the FTC complaint. The regulator's lawsuit lists several other defendants, including individuals Patrick McGeoghean and Jason Masri, and several affiliated entities.
The ex parte TRO filed by the FTC on March 5 froze the assets of the defendants and appointed a temporary receiver.
Eric S. Rosen of Dynamis LLP, who represents Holton, told Judge Leibowitz that Holton sold his one-third interest in Click Profit to Masri and McGeoghean in October 2023, and that the circumstances presented in the TRO are not accurate.
In addition, Rosen argued that being a corporate officer of Click Profit isn't enough to show liability and that Holton would have had to directly participate in the alleged fraud. Rosen added that the FTC's ex parte order isn't justified, calling the allegations "beyond bare-boned."
Two of the bank accounts allegedly controlled by Holton include one for a dog grooming business, one for a friend's deck-building company and a personal account. Rosen said he requested to have $25,000 released for attorneys fees, but the FTC hasn't budged.
"Simply owning a company isn't sufficient," Rosen said. "You have to have knowledge [of the fraud]."
FTC in-house attorney Lisa W. Bohl argued that knowledge could be "reckless indifference," adding "even if direct participation was required, the FTC has showed that." Bohl added that Holton might still have control of Click Profit even though he sold his interest.
"It's likely he still may have it today, given that two months ago, he was deleting messages and actively concealing the scheme," Bohl said. "Mr. Holton takes too much of a formalistic view of his involvement."
Judge Leibowitz ultimately allowed Holton to unfreeze his accounts, citing similar agreements the defendants made with the government and given the representations made by Rosen, who needs to be able to defend his client for the upcoming preliminary injunction hearing. He ordered Rosen to submit a representation in the next 48 hours that his client had met the financial disclosure conditions and will allow the FTC to review the filing, and expects an order modifying the TRO shortly after that.
"I find that the asset free and [receivership] as applied to Mr. Holton is necessary to protect consumers and the status quo," Judge Leibowitz said. "The FTC will have a chance to show me that if Rosen didn't do what I told him to do, but if he does, those four accounts should be unfrozen."
The FTC is represented in-house by Lisa W. Bohl and James Davis.
Holton is represented by Eric S. Rosen and Constantine P. Economides of Dynamis LLP.
Masri is represented by Joan M. Silverstein, Barbara R. Llanes and Shane A. Grannum of Gelber Schachter Greenberg PA.
McGeoghean is represented by Jacqueline M. Arango, Jennifer C. Glasser and Ayman F. Rizkalla of Akerman LLP
The case is Federal Trade Commission v. Click Profit LLC et al., case number 1:25-cv-20973, in the U.S. District Court for the Southern District of Florida.
--Additional reporting by Carolina Bolado. Editing by Kristen Becker.
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