Court Sends a Strong “Signal”: Defendants Sanctioned Over Their Failure to Preserve Ephemeral Communications and Surreptitious Use of Encrypted Email
“The Individual Defendants’ systematic efforts to conceal and destroy evidence are deeply troubling and have cast a pall over this action.” These are some of the harsh words used by the Honorable Dominic W. Lanza, District Judge for the United States District Court for the District of Arizona, in Federal Trade Commission v. Noland, in lambasting the defendants for their deliberate deletion of cellphone messages sent via the Signal app and their suspension/clearing of email messages sent through ProtonMail (an encrypted email platform). One day after individual defendant James Noland became aware that the FTC was investigating him and his business Success by Health (SBH), he required the other individual defendants – who are all part of SBH’s leadership team – to start using a pair of encryption communications platforms: the Signal app for their cellphones and ProtonMail for email messaging relating to SBH’s business. After doing so, the individual defendants stopped using their previous messaging platforms for work-related communications and turned on Signal’s auto-delete function. After the FTC filed the action, it obtained a restraining order appointing a receiver to assume control over SBH and required the individual defendants to produce their electronic communications and turn over the mobile devices used to operate the business. In his deposition, Noland failed to disclose the Signal...