Source: https://www.ftc.gov/sites/default/files/documents/cases/2001/06/ltmistip.htm
Timestamp: 2018-01-21 03:04:33
Document Index: 661747827

Matched Legal Cases: ['§ 53', '§ 6103', '§ 45', '§ 6103', '§ 44', '§ 2412', 'art 310', '§ 310', '§ 310', '§ 310', '§ 310', '§ 310', '§ 7701', '§ 45', 'art 310', '§ 49', '§ 45']

FTC v. Leisure Time Marketing, Inc., et al. - Stipulated Final Order
STIPULATED FINAL ORDER OF PERMANENT INJUNCTION AGAINST LEISURE TIME MARKETING, INC., DISCOVERY RENTAL, INC., MARLIN SWANSON, BRITT SHENKMAN AND EDWARD M. SEBASTIAN
Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), having filed its Complaint for a permanent injunction and other relief in this matter, pursuant to Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57, and Section 4(a) of the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. § 6103(a), moved for an ex parte temporary restraining order pursuant to Rule 65 of the Federal Rules of Civil Procedure (Fed. R. Civ. P. 65), and for other equitable relief, including appointment of a temporary receiver, an asset freeze and an order to show cause why a preliminary injunction should not issue. The Court granted the Commission's motion except as to the appointment of a receiver on August 14, 2000. Defendants Leisure Time Marketing, Inc., Discovery Rental, Inc., Marlin Swanson, Britt Shenkman and Edward M. Sebastian and Plaintiff Federal Trade Commission, through their counsel, then stipulated and consented to the terms, conditions, and findings of a stipulated preliminary injunction order without the need of a hearing.
Defendants Leisure Time Marketing, Inc., Discovery Rental, Inc., Marlin Swanson, Britt Shenkman and Edward M. Sebastian, together with Plaintiff Federal Trade Commission, through their counsel, have now agreed to the entry of this Stipulated Final Order of Permanent Injunction ("Final Order") by this Court in order to resolve all matters in dispute against them in this action.
Being fully advised in the premises and acting upon the joint motion of the parties, the Commission, Leisure Time Marketing, Inc., Discovery Rental, Inc., Marlin Swanson, Britt Shenkman and Edward M. Sebastian, to enter into this Final Order,
2. The Complaint states a claim upon which relief may be granted against the Defendants under Section 5, 13(b), and 19 of the FTC Act, 15 U.S.C. §§ 45, 53(b), and 57(b); and the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. § 6103(a);
4. The acts and practices of the Defendants are and were in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44;
6. Defendants have waived all claims under the Equal Access to Justice Act, 28 U.S.C. § 2412, and all rights to seek judicial review or otherwise challenge or contest the validity of this Final Order, and further waive and release the Commission, its employees, agents and representatives, from any claims arising from this action; and
7. Except as provided in Section IV(G) of this Final Order, this Final order does not constitute evidence of or an admission by Defendants of any liability or wrongful conduct, including that they have engaged in violation of the FTC Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act, or the Telemarketing Sales Rule or of any wrongful conduct alleged in the Complaint.
2. "Defendants" means Defendants Leisure Time Marketing, Inc., Discovery Rental, Inc., Marlin Swanson, Britt Shenkman and Edward M. Sebastian.
3. "Assets" means all real and personal property of any Defendant, or held for the benefit of any Defendant, including but not limited to, "goods," "instruments," "equipment," "fixtures," "general intangibles," "inventory," "checks," or "notes," (as these terms are defined in the Uniform Commercial Code), lines of credit and all cash, wherever located.
5. "Vacation travel package" means any product or service that purports to provide transportation, accommodations, or amenities usable during travel. This definition specifically includes, but is not limited to: travel planning services; booking and reservation services; and certificates, vouchers, coupons, reservation forms or other documents that purport to be full or partial payment, or redeemable, for transportation or accommodations, car rental, tours, sports or other activities, meals, drinks, or entrance to special events or locations.
INJUNCTIVE PROVISIONS
IT IS THEREFORE ORDERED that Defendants, Leisure Time Marketing, Inc., Discovery Rental, Inc., Marlin Swanson, Britt Shenkman and Edward M. Sebastian, and each of them, and their officers, agents, directors, employees, salespersons, independent contractors, attorneys, corporations, subsidiaries, affiliates, successors, assigns, and all other persons in active concert or participation with them who receive actual notice of this Final Order by personal service or otherwise, whether acting directly or through any trust, corporation, subsidiary, division or other device, in connection with the advertising, marketing, offering for sale or sale of any vacation travel package, are hereby permanently restrained and enjoined from:
A. Making expressly or by implication, any false or misleading representation or omission of any material fact, including, but not limited to:
making any misrepresentation that consumers will receive free round trip airline tickets;
making any misrepresentation that the price quoted to a consumer in the sales solicitation is the total cost to purchase, receive or use the vacation travel package; and
failing to disclose in a clear and conspicuous manner the conditions and restrictions to purchase, receive or use the vacation travel package, including, if applicable:
that consumers are expected or required to attend timeshare sales presentations; and
that in order to receive the airline tickets consumers must stay at certain hotels for a specified price and length of time; and
For consumers who have purchased vacation travel packages prior to the date of this Final Order, before inviting and/or requiring consumers to attend sales presentations for timeshare properties, failing to:
Give to consumers all travel vouchers for hotels, cruises or attractions included in the vacation travel package; and
Disclose both orally and in writing that the consumers' attendance at any sales presentation for timeshare properties is voluntary and will in no way affect the consumers' rights to, or the quality of, the vacation travel packages previously purchased.
IT IS FURTHER ORDERED that, Defendants, Leisure Time Marketing, Inc., Discovery Rental, Inc., Marlin Swanson, Britt Shenkman and Edward M. Sebastian, and each of them, and their officers, agents, directors, employees, salespersons, independent contractors, attorneys, corporations, subsidiaries, affiliates, successors, assigns, and all other persons in active concert or participation with them who receive actual notice of this Final Order by personal service or otherwise, whether acting directly or through any trust, corporation, subsidiary, division or other device, in connection with the advertising, marketing, offering for sale or sale of any vacation travel package, are hereby permanently restrained and enjoined from violating any provision of the Telemarketing Sales Rule, 16 C.F.R. Part 310, including, but not limited to:
A. Misrepresenting, directly or by implication, any material restrictions, limitations, or conditions to purchase, receive, or use the vacation travel package including but not limited to that there are no restrictions, limitations or conditions to purchase or use free round trip airline tickets in violation of Section 310.3(a)(2)(ii) of the Telemarketing Sales Rule, 16 C.F.R. § 310.3(a)(2)(ii);
B. Failing to disclose, in a clear and conspicuous manner before consumers pay for a vacation travel package, the total costs to purchase, receive, or use the vacation travel package, in violation of Section 310.3(a)(1)(i) of the Telemarketing Sales Rule, 16 C.F.R. § 310.3(a)(1)(i) including, but not limited to, failing to disclose booking or processing fees, cruise disembarkation fees and costs associated with complimentary rental cars;
C. Failing to disclose, in a clear and conspicuous manner before consumers pay for a vacation travel package, all material restrictions, limitations or conditions to purchase, receive, or use the vacation travel package, in violation of Section 310.3(a)(1)(ii) of the Telemarketing Sales Rule, 16 C.F.R. § 310.3(a)(1)(ii) including, but not limited to, that consumers are expected or required to attend sales presentations for timeshare vacation properties and the approximate length of such presentations; and
D. ailing to disclose, in a clear and conspicuous manner before consumers pay for a vacation travel package, that Defendants have a policy of not making refunds, cancellations, exchanges, or repurchases in violation of Section 310.3(a)(1)(iii) of the Telemarketing Sales Rule, 16 C.F.R. § 310.3(a)(1)(iii).
IT IS FURTHER ORDERED that, Defendants, Leisure Time Marketing, Inc., Discovery Rental, Inc., Marlin Swanson, Britt Shenkman and Edward M. Sebastian, and each of them, and their officers, agents, directors, employees, salespersons, independent contractors, attorneys, corporations, subsidiaries, affiliates, successors, assigns, and all other persons in active concert or participation with them who receive actual notice of this Final Order by personal service or otherwise, whether acting directly or through any trust, corporation, subsidiary, division or other device, in connection with the advertising, marketing, offering for sale or sale of any vacation travel package, are hereby permanently restrained and enjoined from providing substantial assistance or support to any seller or telemarketer, as those terms are defined at 16 C.F.R. § 310.2 (r) and (t) of the Telemarketing Sales Rule, when Defendants know or consciously avoid knowing that the seller or telemarketer is engaged in any act or practice in violation of the FTC Act or the Telemarketing Sales Rule.
IT IS FURTHER ORDERED that Defendants shall make restitution as follows:
A. Within three (3) days of entry of this Final Order, Defendants shall pay to the Commission the sum of One Hundred and Twenty-Five Thousand Dollars ($125,000.00) (the "Redress Payment") for equitable monetary relief, including but not limited to, consumer redress.
B. The Redress Payment shall be made by wire transfer to the account of the Federal Trade Commission.
C. The Redress Payment shall be deposited into a redress fund, administered by the Commission, to be used for equitable relief, including but not limited to consumer redress and any attendant expenses for the administration of any redress fund. The Commission, in its sole discretion, may use a designated agent to administer the redress fund and may cause redress to be administered through a mailing of checks and notices to persons who may be eligible for redress.
D. Within twenty (20) business days of entry of this Final Order, Defendants shall provide to the Commission or its designated agent, in Microsoft Excel or MS Access computer format, the names, last known mailing addresses and telephone numbers of persons who may be eligible for redress, further identified by category as follows:
1. consumers who made payment for or received a vacation travel package from Discovery Rental, Inc., who traveled on the vacation travel package purchased, and who did not purchase a timeshare interest; and
2. consumers who made payment for or received a vacation travel package from Discovery Rental, Inc., who have not used the vacation travel package and who have not received a full refund for the vacation travel package purchased.
E. If the Commission determines, in its sole discretion, that redress to purchasers is wholly or partially impracticable, any funds not so used shall be deposited into the United States Treasury and treated as disgorgement. Defendants shall have no right to contest any decision or action of the FTC or its agent concerning the disbursement or disposition of any funds paid pursuant to this Final Order.
F. The Redress Payment is intended to be compensatory in nature and no portion thereof shall be deemed a payment of any fine, penalty, forfeiture or punitive assessment.
G. Defendants agree that the facts as alleged in the Complaint filed in this matter shall be taken as true in any subsequent litigation filed by the Commission to enforce its rights pursuant to this Final Order, including but not limited to a nondischargeability complaint in any subsequent bankruptcy proceeding. Each Defendant is hereby required, in accordance with 31 U.S.C. § 7701, to furnish to the Commission Defendants' taxpayer identification numbers (social security number or employer identification number), which shall be used for purposes of collecting and reporting on any delinquent amount arising out of the Defendants' relationship with the government.
IT IS FURTHER ORDERED that the Defendants shall obtain a performance bond in the principal sum of Fifty Thousand Dollars ($50,000.00) within ninety days of the date of the entry of this Order by the Court, which amount shall increase to One Hundred Thousand Dollars within one hundred and eighty days of the entry of this Order by the Court ($100,000.00). The performance bond shall remain in full force and effect so long as the Defendants are engaging in the telemarketing of vacation travel packages whether directly, indirectly or in concert with others, or through intermediaries, business entities or other devices. The terms and conditions of the bond requirement are as follows:
A. The performance bond shall be an insurance agreement pledging surety for financial loss issued by a surety company that is admitted to do business in each State in which any bonded Defendant does business and that holds a Federal Certificate of Authority As Acceptable Surety on a Federal Bond and Reinsuring.
B. The performance bond shall cite this Final Order as the subject matter of the bond and shall provide surety thereunder against financial loss resulting from whole or partial failure of performance due, in whole or in part, to any violation of Section 5 of the FTC Act, 15 U.S.C. § 45, the Telemarketing Sales Rule, 16 C.F.R. Part 310, or the provisions of this Final Order. Such performance bond shall be executed in favor of both (1) the Federal Trade Commission for the benefit of any person injured as a result of any false or misleading representation of material fact made by any of the bonded Defendants while engaged in the advertising, marketing, promotion, offering for sale, or sale of vacation travel packages, and (2) any consumer so injured;
C. The bond shall be deemed continuous and remain in full force and effect as long as any of the bonded Defendants continues to engage or participate in the advertising, marketing, promotion, offering for sale, or sale of vacation travel packages and for at least three (3) years after such Defendant has ceased to engage or participate in the advertising, marketing, promotion, offering for sale, or sale of vacation travel packages;
D. The bond required by this Section is in addition to, and not in lieu of, any other bond required by Federal, State, or local law;
E. Each bonded Defendant shall provide a copy of the bond required by this Section to the Regional Director of the Commission's Southeast Region at the address specified in Section XI no later than five (5) days after the date that the required bond is due;
F. The Commission may execute against the performance bond to the extent provided in Section V(B) above, if it demonstrates to this Court, by a preponderance of the evidence, that after the effective date of this Final Order, such bonded Defendant, while engaging or participating in the advertising, marketing, promotion, offering for sale or sale of vacation travel packages, or while providing substantial assistance or support to others engaged in such activities, made any false or misleading representation of material fact, expressly or by implication, prohibited by Section 5 of the FTC Act, the Telemarketing Sales Rule, or the provisions of this Final Order; and
G. No Defendant shall disclose the existence of any performance bond required by this Section to any consumer, or other purchaser or prospective purchaser of any vacation travel package without also disclosing clearly and prominently, at the same time, "AS REQUIRED BY ORDER OF THE U.S. DISTRICT COURT IN SETTLEMENT OF CHARGES OF FALSE AND MISLEADING REPRESENTATIONS IN THE PROMOTION AND SALE OF VACATION TRAVEL PACKAGES."
IT IS FURTHER ORDERED that each Defendant shall, within three (3) business days after the date of entry of this Final Order, submit to the Commission a truthful sworn statement in the form shown in Attachment A to this Final Order, that shall reaffirm and attest to the truthfulness, accuracy, and completeness of the financial statements that each Defendant provided to the Commission in or about August, 2000. The Commission's agreement to, and the Court's approval of, this Final Order are expressly premised upon the truthfulness, accuracy, and completeness of these financial statements. If the Court finds that any Defendant failed to disclose any material asset, materially misrepresented the value of any asset, or made any other material misrepresentation or omission in the above-referenced financial statements, the Court shall enter a judgment against such Defendant(s), in favor of the Commission, in the amount of eleven million, six hundred thousand dollars ($11,600,000.00), and the entire amount of the judgment shall become immediately due and payable.
IT IS FURTHER ORDERED that in connection with any business operated by Defendants, or where Defendant Marlin Swanson, Britt Shenkman or Edward M. Sebastian is the majority owner of the business or directly or indirectly manages or controls the business, and where the business is engaged in advertising, marketing, promoting, offering for sale or sale of vacation travel packages or provides substantial assistance or support to others engaged in these activities, Defendants, or each of them, are hereby permanently restrained and enjoined from:
A. Failing to take reasonable steps to monitor and ensure that all employees and independent contractors engaged in sales or other customer service functions comply with this Final Order. Such steps shall include adequate monitoring of sales presentations or other communications with consumers, and also shall include, at a minimum, the following: (1) listening to the oral representations made by persons engaged in sales or other consumer service functions; (2) establishing a procedure for receiving and responding to consumer complaints; and (3) ascertaining the number and nature of consumer complaints regarding transactions in which each employee or independent contractor is involved; provided that this Section does not authorize or require Defendants to take any steps that violate any federal, state, or local laws;
C. Failing to take adequate corrective action with respect to any employee or independent contractor who, as determined by any Defendant, is not complying with this Final Order. Corrective action may include training, disciplining, and/or terminating such employee or independent contractor.
IT IS FURTHER ORDERED that within five (5) business days after receipt by each Defendant of this Final Order as entered by the Court, each Defendant shall submit to the Commission a truthful sworn statement, in the form shown on Appendix "B" that shall acknowledge receipt of this Final Order.
IT IS FURTHER ORDERED that for a period of three (3) years from the date of entry of this Final Order, each Defendant shall:
A. Provide a copy of this Final Order to, and obtain a signed and dated acknowledgment of receipt of same from, each officer, director, each individual serving in a management capacity, all personnel involved in responding to complaints or inquiries, and all sales personnel, whether designated as employees, consultants, independent contractors or otherwise, immediately upon employing or retaining any such persons, for any business where Defendant engages in, or is the majority owner of the business or directly or indirectly manages or controls the business, and where the business is engaged in the advertising, marketing, promotion, offering for sale or sale of vacation travel packages or provides substantial assistance or support to others engaged in these activities; and
IT IS FURTHER ORDERED that, for a period of three (3) years from the date of entry of this Final Order, Defendants, in connection with any business operated by Defendants, or where Defendant Marlin Swanson, Britt Shenkman or Edward M. Sebastian owns or is the majority owner of the business or directly or indirectly manages or controls the business, and where the business engages in the advertising, marketing, promoting, offering for sale or sale of vacation travel packages or provides substantial assistance or support to others who are engaged in these activities, are hereby restrained and enjoined from failing to create, and from failing to retain for a period of three (3) years following the date of such creation, unless otherwise specified:
COMPLIANCE REPORTING BY DEFENDANTS
A. For a period of three (3) years from the date of entry of this Final Order, each Defendant, to the extent applicable, shall notify the Commission of the following:
2. Any changes in Defendant's employment status (including self-employment) within ten (10) days of such change. Such notice shall include the name and address of each business that such Defendant is affiliated with or employed by, a statement of the nature of the business, and a statement of said Defendant's duties and responsibilities in connection with the business or employment; and
3. Any proposed change in the structure of any Defendant or any proposed change in the structure of any business entity owned or controlled by any Defendant, such as creation, incorporation, dissolution, assignment, sale, merger, creation or dissolution of subsidiaries, proposed filing of a bankruptcy petition, change in the corporate name or address, or any other change that may affect compliance obligations arising our of this Final Order, thirty (30) days prior to the effective date of any proposed change provided, however, that, with respect to any proposed change in the corporation about which Defendant learns less than thirty (30) days prior to the date such action is to take place, said Defendant shall notify the Commission as soon as is practicable after learning of such proposed change;
B. One hundred eighty (180) days after the date of entry of this Final Order, each Defendant shall provide a written report to the Commission, sworn to under penalty of perjury, setting forth in detail the manner and form in which each Defendant has complied and is complying with this Final Order. This report shall include, but not be limited to, the following:
3. A copy of each acknowledgment of receipt of this Final Order obtained by the Defendant pursuant to Section VIII;
4. A statement describing the manner in which the Defendant has complied and is complying with this Final Order; and
5. A statement indicating whether any performance bond has been obtained by the Defendant pursuant to Section V, and attaching a copy of such bond so obtained;
C. Upon written request by a representative of the Commission, Defendants shall submit additional written reports (under oath, if requested) and produce documents on fifteen (15) days notice with respect to any conduct subject to this Final Order;
D. For the purposes of this Final Order, Defendants shall, unless otherwise directed by the Commission's authorized representatives, mail all written notifications to the Commission to:
E. For the purposes of this Section, "employment" includes the performance of services as an employee, consultant, or independent contractor; and "employers" include any individual or entity for whom a Defendant performs services as an employee, consultant, or independent contractor; and
F. For purposes of the compliance reporting required by this Section, the Commission is authorized to communicate directly with any Defendant.
IT IS FURTHER ORDERED that the Commission is authorized to monitor Defendants' compliance with this Final Order by all lawful means, including, but not limited to, the following:
A. To obtain discovery, without further leave of court, from any person in the manner provided by Chapter V of the Federal Rules of Civil Procedure, Fed. R. Civ. P. 26-37, including the use of compulsory process pursuant to Rule 45, Fed. R. Civ. P. 45, for the purpose of monitoring and investigating Defendants' compliance with any provision of this Final Order;
B. To use representatives posing as consumers and suppliers to Defendants, Defendants' employees, or any other entity managed or controlled in whole or in part by any Defendants, without the necessity of identification or prior notice; and
C. Nothing in this Final Order shall limit the Commission's lawful use of compulsory process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49 and 57b-1, to investigate whether any Defendant has violated any provision of this Final Order or Section 5 of the FTC Act, 15 U.S.C.§ 45.
IT IS FURTHER ORDERED that, for a period of three (3) years from the date of entry of this Final Order, for the purposes of further determining compliance with this Final Order, Defendants shall permit representatives of the Commission:
A. To access, during business hours, any office or facility storing documents of any business operated by defendants, or where Defendants Marlin Swanson, Britt Shenkman or Edward M. Sebastian is the majority owner of the business or directly or indirectly manages or controls any part of the business, and the business is engaged in advertising, marketing, promotion, offering for sale, or sale of vacation travel packages, or provides substantial assistance or support to others engaged in these activities. In providing such access, Defendants shall permit representatives of the Commission to inspect and copy all documents relevant to any matter contained in this Final Order; and shall permit Commission representatives to remove documents relevant to any matter contained in this Final Order for a period not to exceed five (5) business days so that the documents may be inspected, inventoried, and copied; and
B. To interview officers, directors, and employees, including all personnel involved in responding to consumer complaints or inquiries, and all sales personnel, whether designated as employees, consultants, agents, independent contractors or otherwise, of any business to which Subsection A of this Section applies, concerning matters relating to compliance with the terms of this Final Order. The person interviewed may have counsel present. Provided that, upon application of the Commission and for good cause shown, the Court may enter an ex parte order granting immediate access to Defendants' business premises for the purposes of inspecting and copying all documents relevant to any matter contained in this Final Order.
IT IS FURTHER ORDERED that Defendants agree to cooperate fully, truthfully, and completely with the Federal Trade Commission. This cooperation includes, but is not limited to, meeting with Commission personnel whenever and wherever requested and testifying truthfully and completely, if called upon to do so, in the Commission's enforcement action against the remaining defendant, Fereidoun "Fred" Khalilian, in this matter.
IT IS FURTHER ORDERED that Defendants Leisure Time Marketing, Inc., Discovery Rental, Inc., Marlin Swanson, Britt Shenkman and Edward M. Sebastian, and each of them, and their officers, agents, directors, employees, salespersons, independent contractors, attorneys, corporations, subsidiaries, affiliates, successors, assigns, and all other persons in active concert or participation with them who receive actual notice of this Final Order by personal service or otherwise, whether acting directly or through any trust, corporation, subsidiary, division or other device, in connection with the advertising, marketing, offering for sale or sale of any vacation travel package, or while providing substantial assistance or support to others engaged in these activities, are permanently restrained and enjoined from selling, renting, leasing, transferring, or otherwise disclosing the name, address, telephone number, credit card number, bank account number, e-mail address, or other identifying information of any person who paid any money to any Defendant in connection with the advertising, marketing, offering for sale or sale of any vacation travel package at any time prior to entry of this Final Order. Provided however, that Defendants may disclose the names, addresses, telephone numbers, reservation numbers, and itineraries assigned to the consumers by Defendants, as is necessary to fulfill vacation travel packages. Provided further, that Defendants may disclose such identifying information to a law enforcement agency or as required by law, regulation, or court order.
FOR DEFENDANTS LEISURE TIME MARKETING, INC., DISCOVERY RENTAL, INC., MARLIN SWANSON, BRITT SHENKMAN AND EDWARD M. SEBASTIAN
Discovery Rental, Inc.
Marlin Swanson Defendant
Britt Shenkman
Edward M. Sebastian
FL Bar 982776
Trial Attorney for Defendants
Leisure Time Marketing, Inc.,
Discovery Rental, Inc.,
Marlin Swanson, Britt Shenkman
and Edward M. Sebastian