Jay Noland, a defendant in multiple Federal Trade Commission fraud cases, has temporarily sidestepped contempt sanctions stemming from a 2000 injunction against his pyramid scheme, NetForce Seminars. The FTC had sought to hold Noland in contempt for allegedly violating this prior injunction through his involvement in a subsequent venture, Success By Health.

The FTC's original lawsuit against Noland and NetForce Seminars in 2000 successfully established the operation as a pyramid scheme. A court order subsequently barred Noland from participating in such schemes. In January 2020, the FTC filed another lawsuit against Noland and Success By Health, alleging it too was a pyramid scheme. This new action triggered a motion within the NetForce Seminars case, seeking contempt sanctions against Noland for violating the earlier injunction. The FTC also named Success By Health co-defendants Scott Harris and Thomas Sacca in the NetForce contempt motion, arguing Noland’s associates were acting in concert with him.

Noland defended himself by claiming he did not violate the NetForce Seminars injunction. He asserted that any alleged violation was in good faith, citing ambiguity in the injunction's language and his reliance on legal counsel's advice. Harris and Sacca contended that the FTC’s motion was procedurally flawed, attempting to introduce new parties into a concluded case. The court rejected this procedural argument.

However, the court did agree with Noland’s position that any contempt proceedings should be deferred. The court ruled that such proceedings should only occur after the trial for the FTC's request for a permanent injunction in the Success By Health case concludes. This means Noland faces potential contempt penalties for the NetForce violation only if the FTC prevails in its Success By Health action. To secure contempt sanctions, the FTC must not only prove its allegations in the Success By Health case but do so with clear and convincing evidence. Noland, Harris, and Sacca maintain their innocence, dispute the FTC’s allegations, and believe the court erred in granting a preliminary injunction. They expect to win at the permanent injunction stage.

The outcome of the Success By Health case now carries increased weight. A loss for Noland in that action would expose him to penalties in that case as well as possible NetForce sanctions. The specific penalties for civil contempt violations under the FTC Act are typically monetary, not criminal. The court’s preliminary injunction order in February indicated the FTC had a strong likelihood of success in the Success By Health case. The FTC has until June 23rd to file its Motion for Entry of Civil Contempt Judgment with Compensatory Civil Contempt Sanctions.