A federal appeals court has refused to let an alleged Van Nuys-based get-rich-quick scam artist skate on paying back $450 million to his victims, saying a recent U.S. Supreme Court ruling that affects such Federal Trade Commission cases does not affect the Van Nuys man.
The May 11 decision was penned by Judge Diarmuid O'Scannlain, with agreement from Judges Bridget Bade and Andrew Hurwitz, of the U.S. Ninth Circuit Court of Appeals. The decision favored the Federal Trade Commission (FTC) in an action brought by Gary Hewitt in U.S. District Court for the Central District of California.
Hewitt led an operation in Van Nuys for several years, beginning in 2004, which took money from people in exchange for telling them how to buy houses, supposedly for pennies on the dollar, in tax sales, according to court papers. After an FTC investigation, Judge Jacqueline Nguyen determined this operation, which used infomercials, was a scam, court documents said. In 2012, Nguyen ordered Hewitt and his co-defendants to pay $450 million restitution to the victims.
Hewitt was ordered to pay under the Federal Trade Commission Act. However, the U.S. Supreme Court ruled in 2021, in a separate matter, that the Act does not allow restitution. Hewitt, who had paid little of the money, then returned to district court to have the 2012 order vacated, even though he had never appealed the order. District Judge Michael Fitzgerald refused, prompting Hewitt to appeal.
Judge O'Scannlain found that none of the elements that applied in the high court's ruling, were present in Hewitt's case.
O'Scannlain noted the 2012 judgment was "correct under" and "consistent with then-prevailing precedent" and Hewitt hurt his cause by not challenging it at the time.
Further, Hewitt failed to show he was ordered to pay the money as a means of "compelling [him] to perform or restraining him [from] performing a future act," as needed for his case to conform with the Supreme Court ruling, O'Scannlain said. Instead, the judgment was a "'present remedy for a past wrong,'" according to O'Sannlain, who quoted District Judge Fitzgerald's words in turning down Hewitt.
In addition, O'Scannlain pointed out that per the Supreme Court ruling, "extraordinary circumstances" have to be in place for the ruling to upset existing judgments. Neither the district judge nor the appeals judges found any such circumstances, O'Scannlain noted.
Also arguing against reconsideration of the 2012 judgment, was the "severity and culpability of Hewitt's unlawful conduct" and the "nature and magnitude of the injury that Hewitt caused to consumers (who remain largely uncompensated)," according to O'Scannlain.
Hewitt has been represented by Kevin Leichter and Andrew Hewitt, of The Leichter Firm, of Los Angeles.
The Federal Trade Commission has been represented by in-house lawyers Matthew Hoffman, Theodore "Jack" Metzler, Joel Marcus, Anisha Dasgupta, John Jacobs and Evan Rose.