In a lawsuit filed last month, the FTC accused Apply Knowledge and the other defendants of running a common enterprise in which consumers were fraudulently promised high earnings and then also sold pricey services in follow-up phone calls by telemarketers.
"It might be fraud. It might not be," said Benson, who added the issues "can be sorted out at trial" and indicated he didn't accept the FTC argument the businesses operated as single enterprise in which all operations involved fraud.
Attorney Jonathan Hafen, who represented Apply Knowledge and its owners, Ken and Babata Sonnenberg, said his clients made no claims about how much a customer could earn with an online business and that appointing a receiver would strip them of the assets need to live on and defend themselves.
"If there's no access to capital, then for all intents and purposes, this case is over," he said.
Attorney Brett Tolman, representing Phillip Edward Gannuscia and companies associated with him, said the FTC had identified only 107 out of 511,000 customers who had complained about the products and services they received or just .02 percent.
His clients should be able to use funds for reasonable personal and business expenses, including attorneys fees, said Tolman, who said the receivership system is "fraught with conflicts of interest."
"They have come with a shoot-first [attitude] and then worry about aiming and whether they have the right target," he said.
One of defendants, Gregory David Bevan, had agreed to a preliminary injunction and an asset freeze, though the status of that was uncertain with Benson's dissolution of the receivership.
An FTC attorney, Svetlana Gans, had told Benson all the companies had operated as a common enterprise that used deceptive claims to lure tens of thousands of consumers to try the coaching services and then used telemarketers to sell them even more questionable services, while few of them actually prospered.
The case likely will now proceed toward a trial unless the parties reach a settlement.
Defendants in Apply Knowledge case
Names of defendants and companies represented:
Apply Knowledge, Babata Sonnenberg, Ken Sonnenberg, Supplier Source and eVertex Solutions; Phillip Edward Gannuscia, 365DailyFit; Jessica Bjarnson, Dahm International, Dominion of Virgo Investments, EVI LLC and Essent Media; Chad Huntsman, Richard Nemrow, Nemrow Consulting; Jeffrey Nicol, Novus North amd Purple Buffalo; Thomas J. Riskas III, VI Education, Vensure International and eCommerce Support; David Gregory Bevan (no company listed).