FTC v. Affordable Media, 179 F.3d 1228 (9th Cir. 1999)

Reviewed by Elizabeth A. Tresp, JD, LL.M., trust & probate litigator · Updated August 2026

How it is commonly cited

“The Ninth Circuit held that impossibility is not a defense when assets are in an offshore trust, so Cook Islands trusts expose you to jail.” Promoters answer with a different overstatement: “the case only failed because the Andersons were running a Ponzi scheme.” Both are wrong.

What the court actually held

The district court made a factual finding that the Andersons “are in control of this trust.” The Ninth Circuit reviewed that finding for clear error and held it was not clearly erroneous. Three facts drove it:

• The Andersons were the protectors of the Cook Islands trust.
• The trust gave the protectors affirmative powers, including the power to appoint new trustees, and made the anti-duress provisions subject to those protector powers.
• On learning the FTC had discovered their protector status, they immediately tried to resign, which the court read as an admission of control.

The court stated the drafting rule directly: a protector “can be compelled to exercise control over a trust to repatriate assets if the protector’s powers are not drafted solely as the negative powers to veto trustee decisions or if the protector’s powers are not subject to the anti-duress provisions.”

The sentence that undoes the common citation

The court did announce a burden gloss that is holding-adjacent and correctly quoted: “In the asset protection trust context, moreover, the burden on the party asserting an impossibility defense will be particularly high because of the likelihood that any attempted compliance with the court’s orders will be merely a charade rather than a good faith effort to comply.”

What actually happened

Contempt was affirmed. The district court had ordered repatriation; the foreign trustee invoked the duress clause, refused, and terminated the Andersons as co-trustees. We do not publish figures for time served or amounts recovered, because those facts are not stated in the opinion and we have not verified them from a primary source.

The planning lesson

This is a retained-control case wearing a Cook Islands costume. The jurisdiction did what it was designed to do, the foreign trustee refused to repatriate. What failed was the drafting: the settlors held affirmative protector powers, and those powers overrode the duress provisions. A protector’s powers should be negative (veto only) and should be subject to, not superior to, the anti-duress clause. Where a client wants meaningful influence, it belongs with an independent protector, not the settlor.

Why this matters for your plan

Reading the cases is not an academic exercise. Every one of these decisions turned on something a planner controls: when the structure was created, how much control the settlor kept, whether the governing-law choice was backed by real contacts, and whether the client told the truth on the record. We build to the way these disputes are actually litigated, because Elizabeth litigates them. To discuss how your situation maps onto this body of law, call (858) 755-6672.