Judge Dale S. Fischer last week extended a temporary restraining order and froze most of the assets of Miao, Bachman and their businesses until a scheduled Jan. 6 hearing.
Michael Mallow, chairmain of the consumer protection defense department in the Century City office of Loeb & Loeb, said this is standard practice for the FTC, which wants to prevent Miao and Bachman, who serves as chairman, chief executive and president of Game Plan Holdings Inc., a publicly traded company in Boston, from moving money out of reach while the case in ongoing.
“The reason they request an asset freeze is to try to protect the assets so if there is an award for monetary relief to the consumers, there is some money to give back,” he said.
Miao co-founded Tatto with Bachman and two others in 2005 while they were students at Boston’s Babson College. The company, which conducted mobile and online advertising campaigns, has previously been accused of scamming people.
Tatto, which was previously incorporated in Washington state, was sued by the state attorney general in 2008 for advertising a subscription called MyLuvCrush that promised to reveal the identity of a person’s secret admirer. Instead, people were sent a text with the name of a fake person and then charged a $10 subscription fee for monthly horoscopes. Tatto settled and agreed to stop the campaign, but was sued by the state again in 2009 for continuing to run the ads.
The FTC alleges that following those lawsuits, Miao and Bachman created six businesses to continue to run scams. Those businesses – Shaboom Media, Bune, Mobile Media Products, Chairman Ventures, Galactic Media and Virtus Media – were also named in the FTC’s lawsuit.
In 2011, Tatto said that it was acquired by Hong Kong mobile game publisher Ozura World for $60 million. In the court filing, Miao claims that Tatto is now defunct and it has no ties to Ozura.
The same year Miao sold Tatto, he embarked on a new venture, L.A.-based website Scambook, a complaint resolution site that aims to help consumers in their dealings with vendors that engage in cramming and other similar business practices – like Tatto allegedly did.
When Miao launched Be Great Partners earlier this year, Scambook was listed as the incubator’s first portfolio company. Be Great has reported that it has since invested in 24 startups, service booking app Porter and movie ticket discount service DealFlicks. Porter and DealFlicks declined to comment.