Bruce E. Reinhart, United State Magistrate Judge issues Order for FINAL JUDGMENT AND PERMANENT INJUNCTION October 20, 2021

A final order in the case has been issued:

Judge Reinhardt writes:

1. Actual damages... in the total amount of $184,225.87; and

2. Exemplary damages... in the total amount of $368,451.74*


*with the footnote: I hereby amend the amount of damages awarded in my Findings of Fact and Conclusions of Law (ECF No. 314/310). I agree with Compulife that the statute provides for compensatory damages and a separate award for exemplary damages where the Court has found willful and malicious misappropriation "in an amount not exceeding twice any award" of actual damages

5. THE COURT ALSO ORDERS THAT inasmuch as the proof at trial demonstrated that the defendants are in possession of the plaintiff's trade secrets, that defendants have repeatedly misappropriated the plaintiff's trade secrets, and that the misappropriation has continued to date, pursuant to 18 U.S.C. § 1836(b)(3)(A)(ii) and Fla. Stat. § 688.003(3), the Court hereby determines that requiring the defendants to take affirmative actions to protect the plaintiff's trade secrets is appropriate, and therefore HEREBY ORDERS THE DEFENDANTS Binyomin Rutstein a/k/a Ben Rutstein, David Rutstein a/k/a David Gordon, Moses Newman, and Aaron Levy to immediately discontinue the provision of life insurance quoting and quotation services and the use of life insurance quoters on the websites at the domain names www.naaip.org and www.beyondquotes.com, and file a certification with the Court confirming that the provision of life insurance quoting and quotation services and the use of life insurance quoters has ceased at the websites at www.naaip.org and www.beyondquotes.com within five (5) business days of the date of this Final Judgment and Permanent Injunction.

Bruce E. Reinhart, United State Magistrate Judge finds for Compulife in July 12, 2021 decision

From his initial decision:

Judge Reinhardt writes:

Based on the foregoing, Compulife is entitled to judgment in its favor on its claims for misappropriation of trade secrets (Counts IV and V in the '08 case and Counts I and V in the '42 case). Defendants shall be jointly and severally liable for damages in the amount of $368,451.71, plus prejudgment interest. Judgment shall be entered in favor of Defendants on the copyright infringement claims (Counts I and II in the '08 case and Counts II and III in the '42 case).

Eleventh Circuit Vacates Insurance Database Hacking Case

There has been a welcome development in this ongoing story, which you can read about here:

Within the first line of the article is a link to the Eleventh Circuit's opinion:

David Rutsein Loses Insurance Licenses

The following numbered paragraphs are taken from this court decision's finding of facts:

67. David was previously licensed by the Florida Department of Financial Services as an insurance agent
68. At one time David had insurance licenses in 40 different states.
69. Beginning in 2010, insurance regulators began to terminate and/or stop renewing David's insurance licenses.
70. On April 19, 2012, in the Matter of David Brian Rutstein, Case No. 115256-11-AG, a Consent Order was entered revoking the license to sell insurance previously issued to David, and David was immediately and permanently removed and permanently barred from any and all direct or indirect participation in and/or affiliation with, any entity which is licensed or regulated under the Florida lnsurance Code, and any individual or entity which is otherwise involved in the business or transaction of insurance.
(Paragraphs 67-70, pages 11-12, FINDINGS OF FACT, March 12, 2018)

Here is the consent order that this is referring to:

In order to avoid prosecution for insurance fraud, David Rutstein signed and admitted in the "Settlement Stipulation For Consent Order" that:

3. On February 14, 2012, the Department issued an Administrative Complaint alleging that Respondent [David Rutstein] aided or represented an unauthorized insurer in transacting business and that he [David Rutstein] misappropriated approximately $200,000 in consumer funds in the form of commissions received for nonexistent insurance products. In order to avoid formal litigation of this matter, Respondent has determined that it is in his best interests to enter into this Settlement Stipulation for Consent Order. [emphasis added]

Once again, the Consent Oder barred David Rutstein from from any participation in the insurance business. Here is that portion of the order:

(c) Respondent [David Rutstein] shall be immediately and permanently removed, pursuant to Section 624.310, Florida Statutes, from all of his positions with, and shall otherwise be immediately and permanently removed and permanently barred from any and all direct or indirect participation in and/or afiliation with, any entity which is licensed or regulated under the Florida Insurance Code, and any individual or entity which is otherwise involved in the business or transaction of insurance. Respondent shall not engage in or attempt or profess to engage in any transaction or business for which a license or appointment is required under this code or directly or indirectly own, control, or be employed in any manner by any insurance agent or agency or adjuster or adjusting firm.

(d) Following the issuance of the Consent Order, Respondent shall not make application to the Department for any license or permit issued under the authority of the Department, and Respondent shall be permanently ineligible to receive from the Department any license or permit issued under the authority of the Department.

(e) If the Department has good cause to believe that the Respondent has violated any condition of this Consent Order, Respondent authorizes the Department to seek the immediate enforcement of this order in the circuit court of the State of Florida. If such an enforcement order is granted in the circuit court, Respondent agrees that he or she shall be liable to the Department for all costs and attorneys fees expended in the enforcement action. Further, if this order is enforced in the circuit court, Respondent shall be subject to contempt sanctions for violating any such enforcement order.

How Did I (Bob Barney) Get Involved In All This?

In May of 2016 my company Compulife commenced a lawsuit against David Rutstein and his partner(s). A second lawsuit was filed later that year. The lawsuits went to trial in October 2017 and Compulife lost. I am still bewildered by this decision:

Despite the disappointing outcome and conclusion, the decision explained much of what happened. Most important, the decision set forth as fact who David Rutstein is, the aliases he uses and that David Rutstein has an ongoing and continuing involvement in the insurance industry. David Rutstein's insurance activity is in direct violation of the Consent Order from Florida.

Here's How I First Became Involved:

From the court decision:

122. On April 8, 2015, Barney was made aware of the www.naaip.org website by one of Compulife's customers.
123. Barney visited the www.naaip.org website and ran a life insurance quote.
124. Barney recognized the company and product names in the quote obtained from www.naaip.org as the ones created for the Compulife Program.
125. Barney viewed the source code of the www.naaip.org agent's website, but was unable to determine what internet engine and server the website was calling.
126. Barney then called the toll free number on the www.naaip.org home page and spoke to David, who identified himself as David Gordon
(Paragraphs 122-126, pages 17-18, FINDINGS OF FACT, March 12, 2018)

After much investigation I learned the following about NAAIP - National Association of Accredited Insurance Professionals:

91. NAAIP is not a real entity, charity, not-for-profit, or trade association, and is not incorporated anywhere.
92. NAAIP does not issue credentials or accreditation.
93. The concept of www.naaip.org is to provide an automated process for giving free websites to insurance agents using a simple website template
94. The key benefit offered by a free www.naaip.org website is access to NAAIP'S "Life Insurance Quote Engine."
(Paragraphs 91-94, page 14, FINDINGS OF FACT, March 12, 2018)

Over time, I also learned the following about David Rutstein (aka David Gordon):

65. David Rutstein ("David") is an individual who currently resides in Jerusalem, Israel, and has resided in lsrael since 2004.
66. David is also known as David Gordon, Bob Gordon, and Nate Golden.
(Paragraphs 65&66, page 11, FINDINGS OF FACT, March 12, 2018)

Why Does David Rutstein Not Use His Real Name?

I believe that David Rutstein does not use his real name, and uses aliases like David Gordon, because his continued involvement in the life insurance industry means that he is in contempt of the Consent Order that was issued by the State of Florida. If Florida were to ever investigate they will find ample evidence that David Rutstein has engaged in insurance related business in violation of that Consent Order.

All the evidence that Florida needs to prove David Rutstein is in contempt of the Consent Order is found in this federal court judgement:

and in the documents accepted as evidence in that court case.

David Rutstein's Ongoing Participation In The Insurance Industry

How concerned is David about being found in contempt of that Consent Order? During his 3 hour deposition for that lawsuit, David Rutstein repeatedly denied any and all involvement in NAAIP or insurance. David Rutsein claimed that he turned everything over to his partner Aaron Levy after Rutstein lost his insurance license.

But the court said:

85. David founded the "National Association of Accredited Insurance Professionals" or NAAIP'' in 2010.
86. David initially claimed that he ceased being involved with NAAIP after April 19 , 2012.
87. Before trial, David stipulated that he was involved with NAAIP after April 19, 2012.
88. During trial, David admitted he was not truthful at his deposition when he said he was not involved with NAAIP after April 19, 2012.
(Paragraphs 65&66, page 11, FINDINGS OF FACT, March 12, 2018)

I believe "was not truthful at his deposition" was an enormous understatement. Of all the things that have shocked and amazed me about this legal process, it was the court's nonchalant and cavalier attitude toward a witness who clearly was not telling the truth. I cannot imagine how a court system can function when people violate their oath to tell the truth and there is no consequence for doing so.

How Does David Rutstein Make Money From His Insurance Related Activities

As we have already seen:

93. The concept of www.naaip.org is to provide an automated process for giving free websites to insurance agents using a simple website template
94. The key benefit offered by a free www .naaip.org website is access to NAAIP'S "Life Insurance Quote Engine.
(Paragraphs 93-94, page 14, FINDINGS OF FACT, March 12, 2018)

It is obvious that David Rutstein cannot make money directly from websites that he gives away for free. To make money David Rutstein recruits agents to sell insurance by offering those free websites as a lure, then has those agents sign up with insurance distributors. Money is generated from the sale of life insurance policies for which commissions, bonuses and overrides are paid. Distributors pay David Rutstein a portion of override or bonus commission from the agents' sale of policies.

But David Rutstein does not have an insurance license, how can he be legally paid insurance commissions?

71. Binyomin Rutstein ("Binyomin") is David Rutstein's son.
76. Binyomin is an insurance agent licensed in 35 different states and appointed as agent by 70 different insurance companies to act as the producer on sales of insurance policies.
77. Binyomin has never sold a life insurance policy.
78. American Web Designers, Ltd. ("AWD") is an Ohio company set up by Binyomin that is licensed as an insurance agency in Florida.
(Paragraphs 71, 76-78, page 12, FINDINGS OF FACT, March 12, 2018)

What is David Rustein's business connection to Binyomin Rutstein and American Web Designers?

The following is a document submitted at trial as evidence, a document that was not referenced in the court's decision:

Here is where the document was introduced at trial, during my testimony:

MR. ROTHMAN: We are going to move into evidence
Plaintiff's Exhibit 106, which is under a notice of filing but
it's a self-authenticating record of the Bank of America, with
an affidavit of the bank custodian on the first page of the
exhibit.
I understand there is no objection. It's Exhibit 106.
THE COURT: Admitted with no objection.
MS. FRIEDMAN: No objection.
(Thereupon, Plaintiff Exhibit 106 received inExhibit 106 received in
evidence.)
BY MR. ROTHMAN:
Q. This is record from Bank of America for what company?
A. This is for American Web Designers.
Q. When was the account opened?
A. The date on the page 4 of 7 is July 8, 2013.
Q. Who is the authorized signer?
A. David Rutstein.
Q. Does David's Rutstein's signature appear in several places
in this document?
A. It does.
Q. Does it match other David Rutstein signatures you have seen?
A. Little confusion there because there seems to be two
different situation for David Rutstein. But this particular
signature matches the one on the Florida consent order.
(Page 341-342 trial transcript, morning of October 5, 2017

IMPORTANT: The signature of David Rutsetin on the bank document matches the signature for Binyom Rutstein on the same document. David Rutsein signed as Binyomin Rutstein.

NOTE: Binyomin Rutstein admitted during this deposition that he permits other people to sign his name to insurance and insurance related documents.

Consider the remaining facts about Binyomin Rutstein:

75. Binyomin is a legal resident of Jerusalem, lsrael, where he has lived for the past seven years
72. Binyomin's resident agent address and place of business is 11618 Briarwood Circle, #1, Boynton Beach, Florida.
73. However, Binyomin in does not live or work at 11618 Briarwood Circle, #1, Boynton Beach, Florida
74. lnstead, 11618 Briarwood Circle, #1, Boynton Beach, Florida, is the address of the home of Binyomin's grandmother Arleen Rutstein
(Paragraphs 71, 76-78, page 12, FINDINGS OF FACT, March 12, 2018)

NOTE: Binyomin Rutsetin was NOT a resident of Florida when Florida issued him a resident insurance license.

SUMMARY: While Binyomin Rutstein and his agency American Web Designers are the licensed entities entitled to receive commissions from the sale of life insurance policies, the person actually receiving the money is David Rutstein. David Rutstein, having signed the American Web Designers bank documents for Binyomin Rutstein, is the sole signing authority for the bank account of American Web Designers. It is into that bank account that insurance commissions flow.

Question: Has the state of Florida investigated any of this? I've sent reports on David Rutseins activity to the State of Florida but there does not appear to be any concern on their part. So far the state of Florida does not seem too interested in following up on reports of David Rutsein's activity. Unfortunately, that seems to be par for the course in the state of Florida where the state ignores warnings until things blow up.

Compulife Sues David Rutsein

Two lawsuits went to trial in October 2017. They represented what Compulife believed to be two different and separate ways that David Rutstein gained unauthorized access to our software.

The first lawsuit:

122. On April 8, 2015, Barney was made aware of the www.naaip.org website by one of Compulife's customers.
123. Barney visited the www.naaip.org website and ran a life insurance quote
124. Barney recognized the company and product names in the quote obtained from www.naaip.org as the ones created for the Compulife Program.
125. Barney viewed the source code of the wwm naaip.org agent's website, but was unable to determ ine what internet engine and server the website was calling.
126. Barney then called the toll free num ber on the w ww.naaip.org hom e page and spoke to David, who identified himself as David Gordon.
127. From April 8, 2015, through at least April 13, 2015, Barney repeatedly contacted David to assert that David was using Compulife's product without permission and demand that David either stop using the product or purchase a license.
(Paragraphs 122-127, pages 17-18, FINDINGS OF FACT, March 12, 2018)

The second lawsuit:

141. Between September 1,2016 and September 6, 2016, a total of 871,055 requests were made to the www.term4sale.com website from IP address 5.29.63.18,which is owned by ISP called Hot-Net lnternet Services, Ltd, that is located in lsrael.
143. The requests from the lsraeli IP address used a "Get Command" also known as a "Get Code" or "Get Request."
147. The Get Commands from the Israeli IP address requested quotes for only two zip codes: 10458 (a New York zip code) and 33433 (a Florida zip code).
148. Newman received a data file in CSV format from woman named Natal who lives in Israel
149. At som e point, Newman observed Natal obtain the information contained in the CSV data files by using a computer to send automated requests.
150. The information from these CSV files was integrated into the database that provides quote information to the www.naaip.org websites.
151. The database for the www.naaip.org websites contains data for only two zip codes: one in Florida and one in New York.
152. Bruner compared the Compulife HTML code to the Get Commands sent from the Israeli IP address and discovered that the parameters in the Get Commands were the same as those in Compulife's HTML code.
(Paragraphs 141, 143, 147-152, pages 20-22, FINDINGS OF FACT, March 12, 2018)

With regard to the first lawsuit, I found it very hard to reconcile these two statements:

lt is undisputed that Defendants' access through MBM 'S VAM DB account was terminated in April of 2015
(second paragraph, page 35, March 12, 2018)

with

153. The Defendants are not and have never been authorized users of the Compulife Software.
154. The Defendants have never had permission or authority to copy, use, display, make available, distribute or make derivative works of the Compulife Software.
155. The Defendants were never authorized by Compulife to use or access the Compulife Internet Engine.
156. Compulife never gave Defendants permission to access Compulife's database of insurance information, or copy, distribute or make derivative works of Compulife's HTML code.
(Paragraphs 153-156, page 22, FINDINGS OF FACT, March 12, 2018)

On the one hand the court confirms that David Rutstein was never authorized to use Compulife, then turns around and acknowledges that he had his unauthorized account terminated.

With respect to the second lawsuit, I am shocked by the court's inability to connect the dots. Each of the 850,000 requests to the term4sale.com website/server, contained 450 plus characters of information, including the key variable names and correct/acceptable values necessary to produce a quote. The variable names were taken from the HTML source code that the court acknowledged to be registered as copyrighted material.

The 850,000 requests were done for 2 different zip codes.

147. The Get Commands from the Israeli IP address requested quotes for only two zip codes: 10458 (a New York zip code) and 33433 (a Florida zip code).
(Paragraph 147, page 21, FINDINGS OF FACT, March 12, 2018)

Those exact same two zip codes ended up in the NAAIP website source code to differentiate between NY and non-NY quotes being produced at NAAIP websites and at beyondquotes.com.

Despite all this, the court said Compulife failed to make its case. I remained bewildered.

If you have any questions or comments you can contact me directly:

Robert Barney (President)
Compulife Software, Inc.
(888-798-3488
email: barneyrl@compulife.com