Source: https://www.ftc.gov/sites/default/files/documents/cases/1998/10/perm-ord.14.htm
Timestamp: 2018-01-17 01:26:46
Document Index: 386440299

Matched Legal Cases: ['§ 45', '§ 45', '§ 44', '§ 2412', 'art 310', '§ 310', '§ 310', '§ 310', '§ 310', '§ 310', '§ 1679', '§ 1679', '§ 1679', '§ 45', 'art 310']

National Scholarship Foundation, Inc. - Stipfinal
FOUNDATION, INC.; et al.,
Defendants. Case No. 97-8836-CIV-FERGUSON
STIPULATED FINAL ORDER FOR PERMANENT INJUNCTION AND SETTLEMENT OF CLAIMS FOR MONETARY RELIEF
Plaintiff, the Federal Trade Commission ("Commission"), commenced this action by filing its complaint against defendants National Scholarship Foundation, Inc. ("NSF"), D.B.F. National Business Reporting Bureau, Inc. ("NBRB"), Eleanor Morse, Calvin Morse, Dorothy Beam, Sandra K. Brown, James P. McKenna, and Timothy Quinn (collectively, the "Defendants"). The complaint alleges that Defendants engaged in unfair or deceptive acts or practices in violation of Section 5 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 45, and seeks a permanent injunction and monetary relief pursuant to Section 13(b) of the FTC Act. The Commission and Defendants hereby stipulate to the entry of this Final Order for Permanent Injunction and Settlement of Claims for Monetary Relief ("Order"). Defendants stipulation is for settlement purposes only and does not constitute an admission of facts, other than jurisdictional facts, or of violations of law as alleged in the Complaint. Being advised of the premises, the Court finds:
This is an action by the Commission instituted under Sections 5 and 13(b) of the Federal Trade Commission Act, 15 U.S.C. §§ 45 and 53(b). The complaint seeks both permanent injunctive relief and consumer redress for alleged unfair or deceptive acts or practices by Defendants in connection with the operation of a scholarship service and a business information reporting service.
The Commission has the authority under Section 13(b) of the FTC Act to seek the relief it has requested.
This Court has jurisdiction over the subject matter of this case and has jurisdiction over Defendants. Venue in the Southern District of Florida is proper, and the complaint states a claim upon which relief may be granted against the defendants under Sections 5 and 13(b) of the FTC Act.
The activities of Defendants are in or affecting commerce, as defined in 15 U.S.C. § 44.
Defendants waive all rights to seek judicial review or otherwise challenge or contest the validity of this Order. Defendants also waive any claim that they may have held under the Equal Access to Justice Act, 28 U.S.C. § 2412, as amended by Pub. L. 104-121, 110 Stat. 847, 863-64 (1996), concerning the prosecution of this action to the date of this Order. Each party shall bear its own costs and attorneys fees.
This action and the relief awarded herein are in addition to, and not in lieu of, other remedies as may be provided by law, including both civil and criminal remedies, except that this Order resolves all matters of dispute between the Commission and Defendants arising from (1) the Complaint in this action and (2) all telemarketed credit services activities of Credit Management Services Group, Inc. (a.k.a. Kimberly Credit Alliance, Inc. and Kimberly Credit Counseling, Inc.) and C&S Credit Services, Inc., up to the date this Order is entered.
A. "Scholarship service" shall mean any business activity that purports to assist consumers with obtaining scholarships, grants, or any other financial assistance for an educational purpose.
B. "Business information reporting service" shall mean any business activity that purports to provide consumers with objective, reliable, and/or independent information about any business.
C. "Telemarketed credit service" shall mean any business activity that involves telemarketing and purports to (1) provide consumers, arrange for consumers to receive, or assist consumers in receiving, credit or debit cards; (2) improve, or arrange to improve, any consumer's credit record, credit history, or credit rating; (3) provide advice or assistance to any consumer with regard to any activity or service the purpose of which is to improve a consumer's credit record, credit history, or credit rating; (4) provide consumers, arrange for consumers to receive, or assist consumers in receiving, a loan or other extension of credit; (5) provide consumers, arrange for consumers to receive, or assist consumers in receiving, debt consolidation or other credit counseling; (6) provide consumers, arrange for consumers to receive, or assist consumers in receiving, credit monitoring.
D. "Telemarketing" shall mean a plan, program, or campaign which is conducted to induce the purchase of goods or services by use of one or more telephones and which involves more than one interstate telephone call.
E. "Assisting others" shall mean knowingly providing any of the following goods or services to any person or entity: (1) performing customer service functions for an entity engaged in telemarketing, including, but not limited to, receiving or responding to consumer complaints; (2) formulating or providing, or arranging for the formulation or provision of, any telephone sales script or any other marketing material for an entity engaged in telemarketing; (3) providing names of, or assisting in the generation of, potential customers for an entity engaged in telemarketing; or (4) performing marketing services of any kind for an entity engaged in telemarketing.
PERMANENT BAN AGAINST BUSINESS INFORMATION
I. THEREFORE, IT IS HEREBY ORDERED that Defendants, individually and collectively, are hereby permanently restrained and enjoined from the promotion, advertising, marketing, sale, or offering of business information reporting services. Defendants, individually and collectively, are hereby permanently restrained and enjoined from assisting others engaged in the promotion, advertising, marketing, sale, or offering of business information reporting services.
PERMANENT BAN AGAINST SCHOLARSHIP SERVICES
II. IT IS FURTHER ORDERED that Defendants are hereby permanently restrained and enjoined, whether directly or indirectly, in concert with others, or through any entity, from the promotion, advertising, marketing, sale, or offering for sale of scholarship services. Defendants are hereby permanently restrained and enjoined from assisting others engaged in the promotion, advertising, marketing, sale, or offering for sale of scholarship services.
III. IT IS FURTHER ORDERED that Defendants and their agents, employees, officers, servants, and successors, and all other persons or entities in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, in connection with the advertising, promotion, offer for sale, or sale of any item, product, good, or service, are hereby restrained and enjoined from:
A. Misrepresenting, expressly or by implication, that any entity will provide consumers with names of sources from which consumers are likely to obtain at least a specified amount of money in grants or scholarships;
B. Misrepresenting, expressly or by implication, that any entity will provide consumers who purchase its services with personal portfolios of scholarships and grant sources that are specifically tailored to the consumers qualifications;
C. Misrepresenting, expressly or by implication, that students are pre-selected by any entity to receive scholarships and grants;
D. Misrepresenting, expressly or by implication, that any entity obtains grants or scholarships on behalf of consumers who purchase services from that entity;
E. Misrepresenting, expressly or by implication, the business relationship of any entity with any corporation or other entity that awards or may award scholarships or grants;
F. Misrepresenting, expressly or by implication, that any entity will refund its processing fee to any consumer who purchases that entitys services and does not obtain at least a specified amount of money in grants or scholarships through that entitys services;
G. Misrepresenting, expressly or by implication, any other material aspect or conditions of any entitys refund policy, including, but not limited to, failing to disclose any condition, qualification or requirement for obtaining a refund;
H. Misrepresenting, expressly or by implication, any fact material to a consumers decision to purchase any scholarship service or telemarketed credit service, or to purchase any good or service based on information provided by a business information reporting service;
I. Misrepresenting, expressly or by implication, that any entity is non-profit, charitable, or otherwise not in business to generate profits for its employees, independent contractors, managers, directors, officers, or owners;
J. Misrepresenting, expressly or by implication, that any entity is in any way affiliated with the Council of Better Business Bureaus or any Better Business Bureau;
K. Misrepresenting, expressly or by implication, the number of complaints and/or requests for refunds that any entity has received about any company;
L. Misrepresenting, expressly or by implication, that consumers will receive a loan or any extension of credit, including but not limited to a loan to consolidate consumers debts, in return for the payment of a fee;
M. Misrepresenting, expressly or by implication, the total cost to purchase, receive or use any goods or services advertised, promoted, offered for sale or sold by any entity;
N. Misrepresenting, expressly or by implication, any material restriction, limitation or condition to receive a loan or extension of credit or use any goods or services advertised, promoted, offered for sale or sold by any entity;
O. Conducting or participating in any telemarketing solicitation without compliance with all applicable federal and state registration and bond requirements;
P. Violating, or assisting others in violating, any provision of the Telemarketing Sales Rule, 16 C.F.R. Part 310, as amended from time to time ("Telemarketing Sales Rule"), including but not limited to:
Requesting or receiving payment of any fee or consideration from any person in advance of that person obtaining a loan or other extension of credit, while guaranteeing or representing a high likelihood of success in obtaining or arranging a loan or other extension of credit for a person, as prohibited by the Telemarketing Sales Rule, 16 C.F.R. § 310.4(a)(4);
Misrepresenting the total costs to purchase, receive, or use any goods or services that are the subject of a sales offer, as prohibited by the Telemarketing Sales Rule, 16 C.F.R. § 310.3(a)(2)(i);
Failing to disclose in a clear and conspicuous manner, the total costs and all material restrictions, limitations, or conditions to purchase, receive, or use any goods or services that are the subject of a sales offer before the customer pays for the goods or services offered, as prohibited by the Telemarketing Sales Rule, 16 C.F.R. § 310.3(a)(1)(i) and (ii);
Making a false or misleading statement to induce any person to pay for goods or services, as prohibited by the Telemarketing Sales Rule, 16 C.F.R. § 310.3(a)(4); and
Providing substantial assistance or support to any seller or telemarketer while knowing or consciously avoiding knowing that the seller or telemarketer is engaged in any act or practice that violates Sections 310.3(a) or (c), or 310.4 of the Telemarketing Sales Rule, 16 C.F.R. §§ 310.3(a) and (c), and 310.4;
Q. Violating, or assisting others in violating, any provision of the Credit Repair Organizations Act, 15 U.S.C. § 1679 et seq., as amended from time to time, including but not limited to:
Making or using any untrue or misleading representation of the services of a credit repair organization, as prohibited by Section 404(a)(3) of the Credit Repair Organizations Act, 15 U.S.C. § 1679b(a)(3); and
Charging or receiving any money or other valuable consideration for the performance of any credit repair service before such service is fully performed, as prohibited by Section 404(b) of the Credit Repair Organizations Act, 15 U.S.C. § 1679b(b); and
R. Assisting others in making, expressly or by implication, any false or misleading oral or written statement or representation enumerated in Subparagraphs A-Q of this Paragraph.
A. Defendants Eleanor Morse, Calvin Morse, Dorothy Beam, Sandra Brown, James McKenna, and Timothy Quinn, inclusively or in any combination thereof, are permanently restrained and enjoined from engaging in, or assisting others engaged in, the promotion, advertising, marketing, sale, or offering of, telemarketed credit services, whether directly or indirectly, in concert with others, or through any entity, unless they first obtain a performance bond in the principal amount of not less than ONE HUNDRED THOUSAND DOLLARS ($100,000).
B. The bonds referred to in this Paragraph shall be conditioned upon compliance with Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, the Telemarketing Sales Rule, 16 C.F.R. Part 310, and with the provisions of this Order with respect to telemarketed credit services. The bonds shall be deemed continuous and remain in full force and effect as long as each Defendant continues to engage in, or to assist others engaged in, the promotion, advertising, marketing, sale, or offering of, telemarketed credit services, and for at least three years after such Defendant has ceased to engage in such activity. The bonds shall cite this 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 Federal Trade Commission Act, the Telemarketing Sales Rule, or the provisions of this Order with respect to telemarketed credit services.
C. The performance bonds required pursuant to this Paragraph shall be an insurance agreement providing surety for financial loss issued by a surety company that is admitted to do business in each of the states in which such Defendant does business and that holds a Federal Certificate of Authority As Acceptable Surety On Federal Bond and Reinsuring. Such performance bond shall be in favor of both: (1) the Federal Trade Commission for the benefit of any consumer injured as a result of any false or misleading representation made by such Defendant, his agents or any other persons acting in concert with him or under his authority, supervision or control, while engaged, or assisting others engaged in, the promotion, marketing, advertising, sale, or offering of, telemarketed credit services; and (2) any consumer so injured.
D. The bonds required pursuant to this Paragraph are in addition to, and not in lieu of, any other bond required by any other federal, state, or local law, or by any other court order not entered in this action.
E. At least ten days before the commencement of any activity for which a bond is required by this Paragraph, such Defendant shall provide a copy of such bond to the Associate Director for Service Industry Practices at the address specified in Paragraph VI of this Order.
F. Each such Defendant and his agents, employees, officers, and servants, and all other persons or entities in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, shall not disclose or make reference to the existence of the bonds required by this Paragraph to any consumer, or other purchaser or prospective purchaser of any telemarketed credit service, without also disclosing clearly and prominently, at the same time, "THIS BOND IS REQUIRED BY ORDER OF THE UNITED STATES DISTRICT COURT IN SETTLEMENT OF CHARGES OF FALSE AND MISLEADING REPRESENTATIONS IN THE PROMOTION AND SALE OF TELEMARKETED CREDIT SERVICES." The disclosure shall be set forth in a clear and conspicuous manner, separated from all other text, in 100% black ink against a light background, in print at least as large as the main text of the sales material or document, and enclosed in a box containing only the required disclosure.
V. IT IS FURTHER ORDERED that, for a period of five years from the date of entry of this Order, each Defendant, in connection with any business where any Defendant is the majority owner of the business or otherwise directly or indirectly manages or controls the business and where the business engages in, or assists others engaged in, telemarketing, are hereby restrained and enjoined from failing to create, and from failing to retain for a period of three years following the date of such creation, unless otherwise specified:
B. Records accurately reflecting: the name, address and telephone number of each person that any of the above-referenced businesses employs in any capacity, including as an independent contractor; that persons job title or position; the date upon which the person commenced work; and the date and reason for the persons termination, if applicable. The businesses subject to this Paragraph shall retain such records for any terminated employee for a period of two years following the date of termination;
C. Records containing the names, addresses, phone numbers, dollar amounts paid, quantity of items purchased, and description of items purchased, for all consumers to whom any of the above-referenced businesses has sold, invoiced or shipped any goods or services, or from whom any of the above-referenced businesses accepted money or other items of value;
the consumers name, address, telephone number, if available, and the dollar amount paid by the consumer
the written complaint, if any, and the date of the complaint or refund request;
the basis of the complaint, including the name of any salesperson complained against, and the nature and result of any investigation conducted concerning the validity of any complaint;
each response and the date of the response;
in the event of a denial of a refund request, the reason for such denial, or if the complaint was cured, the basis for determining that the complaint was cured; and
E. Copies of all sales scripts, training packets, advertisements, or other marketing materials utilized.
VI. IT IS FURTHER ORDERED that, in order that compliance with the provisions of this Order may be monitored:
A. Each Defendant shall notify the Commission in writing, within ten days of the date of entry of this Order, of his or her current residential address, mailing address, business and home telephone numbers, and employment status, including the names, telephone numbers, and business addresses of any current employers;
B. For a period of five years from the date of entry of this Order, each Defendant shall notify the Commission in writing within 30 days of any changes in his or her residential or mailing addresses, telephone numbers, or employment status;
Re: FTC v. National Scholarship Foundation
D. For the purposes of this Paragraph, "employment" includes the performance of services as an employee, consultant, or independent contractor; and "employers" include any entity or individual for whom any defendant performs services as an employee, consultant, or independent contractor.
E. For a period of five years from the date of entry of this Order, for the purpose of further determining compliance with this Order, Defendants shall, within seven business days of receipt of written notice from the Commission to Defendants with a copy to their counsel of record, permit representatives of the Commission:
Access during normal business hours to any office, or facility storing documents, of any business where any defendant is the majority owner of the business or otherwise directly or indirectly manages or controls the business. In providing such access, Defendants shall permit representatives of the Commission to inspect and copy all documents relevant to any matter contained in this Order; and
To interview or depose the officers, directors, and employees of any business to which Subparagraph A of this Paragraph applies, concerning matters relating to compliance with the terms of this Order. The person interviewed or deposed may have counsel present. Provided that the Commission may otherwise monitor Defendants compliance with this Order by all lawful means available, including the use of compulsory process seeking production of documents and the use of investigators posing as consumers or suppliers.
For purposes of this Paragraph, written notice to Defendants shall be deemed sufficient if mailed to the most recent residential address each has provided to the Commission.
A. Judgment is hereby entered against the Defendants, jointly and severally, in the amount of $50,000 for equitable monetary relief, including but not limited to consumer redress, and for paying any attendant expenses of administering any redress fund. All amounts that the Commission collects towards this sum shall be paid over to the United States Treasury as an equitable disgorgement remedy. If the Commission, in its sole discretion, determines that consumer redress is wholly or partially practicable, then such amounts shall be distributed to consumers who purchased scholarship services from the Defendants, as redress in lieu of disgorgement.
B. If the Commission, in its sole discretion, determines that consumer redress is wholly or partially practicable, the Commission shall submit a plan for the disbursement of funds to the Court for review and approval. In establishing this plan, the Commission shall have full and sole discretion to determine the criteria and parameters for participation by injured consumers in a redress program, and may delegate any and all tasks connected with such redress program to any individuals, partnerships, or corporations, and pay the fees, salaries, and expenses incurred thereby in carrying out such tasks from the funds received pursuant to this Paragraph.
C. The Defendants acknowledge and agree that this judgment for equitable monetary relief, as with all other relief provided in this Order, is solely remedial in nature and is not a fine, penalty, punitive assessment, or forfeiture. The Defendants shall have no right to contest the manner of distribution chosen by the Commission or its designated agent.
D. In order to satisfy this monetary judgment, within 10 days after service of this order, Defendants shall cause the transfer of certain assets to the Commission, as follows:
1. Barnett Bank shall transfer the following cash in the form of a certified cashiers check to the Commission, or its designated agent:
a. all cash currently being held in account number 6593274229, in the name of Sandra Brown (approximately $7,400);
b. all cash currently being held in account number 6593183868, in the name of Dorothy Beam (approximately $90);
c. all cash currently being held in account number 6593413205, in the name of Calvin Morse (approximately $500);
d. all cash currently being held in account number 1611800223, in the name of NBRB (approximately $110);
2. NationsBank N.A. shall transfer the following cash in the form of a certified cashiers check to the Commission, or its designated agent:
a. all cash currently being held in NationsBank account number 2225513297, in the name of James McKenna (approximately $10,900);
b. all cash currently being held in NationsBank account number 3732408197, in the name of James McKenna (approximately $13,700);
3. First Union National Bank N.A. shall transfer the following cash in the form of a certified cashiers check to the Commission, or its designated agent:
a. all cash currently being held in account number 2090000789850, in the name of C&M Marketing (approximately $80);
b. all cash currently being held in account number 1090009864515, in the name of Calvin Morse (approximately $370);
c. all cash currently being held in account number 2090000789876, in the name of NSF (approximately $350);
4. Washington Mutual Bank F.A. shall transfer the following cash in the form of a certified cashiers check to the Commission, or its designated agent:
a. all cash currently being held in account number 6225867909, in the name of Eleanor Morse (approximately $6,900);
b. all cash currently being held in account number 6225869418, in the name of Eleanor Morse (approximately $4,800);
5. Charles Schwab & Co. shall sell all shares associated with account number 64787393, in the name of Eleanor Morse (current holdings include approximately 750 shares of Sunrise Technologies International), and transfer the proceeds of such sale in the form of a certified cashiers check to the Commission, or its designated agent.
Provided that, in the event the value of the foregoing transfers exceeds $50,000, the Commission shall remit any such excess to the Defendants. Provided further that, in the event the value of the foregoing transfers is less than $50,000, the Defendants shall be immediately liable for any such shortfall.
E. The Lustigman Firm P.A. is directed to apply the $35,000 currently being held in its client trust fund account on behalf of Defendants towards the payment of its legal services and the legal services of Zuckerman, Spaeder, Taylor & Evans, LLP rendered to Defendants (approximately $28,000 and $2,800, respectively), with any remainder being remitted to Defendants;
F. Within five (5) business days after receiving notice of the entry of this Order, the receiver shall turn over to the Commission all liquid monetary assets of the receivership estate remaining after the receiver has been paid in full.
VIII.IT IS FURTHER ORDERED that notwithstanding any other provision of this Order, Defendants agree that the facts as alleged in the complaint shall be taken as true in any subsequent bankruptcy matter to which any of the defendants is a party.
IX. IT IS FURTHER ORDERED that the Commission's agreement to this Order is expressly premised upon the truthfulness, accuracy, and completeness of defendants financial condition as represented in each of the defendants financial statements previously submitted to the Commission, which contain material information relied upon by the Commission in negotiating and agreeing to the terms of this Order. If the Commission has reason to believe that any of the above-referenced financial statements failed to disclose any material asset, materially misrepresented the value of any asset, or made any other material misrepresentation or omission, the Commission may request that this Order be reopened for the sole purpose of allowing the Commission to modify the monetary liability of the defendant who submitted the financial statement. If the Court finds that such 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 statement, the Court shall enter judgment against that defendant, in favor of the Commission, in the amount of one million dollars ($1,000,000), less the amount the defendants have already paid to the Commission under Paragraph VII of this Order; provided, however, that in all other respects this Order shall remain in full force and effect unless otherwise ordered by the Court and that such defendant has no right to contest any of the allegations in the Commission's complaint in this matter in any proceedings brought pursuant to this Paragraph.
X. IT IS FURTHER ORDERED that, within five business days from the date of entry of this Order, each Defendant shall submit to the Commission a truthful sworn statement that shall acknowledge receipt of this Order and reaffirm and attest to the truth, accuracy and completeness of such Defendants financial statement referred to in Paragraph IX, above, and previously executed and submitted to the Commission.
XI. IT IS FURTHER ORDERED that Defendants and their officers, agents, servants, and employees, and all other persons or entities in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, 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, at any time prior to entry of this Order, in connection with services relating to college tuition funding or providing information about businesses. Provided that Defendants may disclose such identifying information to a law enforcement agency or as required by any law, regulation, or court order.
XII. IT IS FURTHER ORDERED that, for a period of five years from the date of entry of this Order, each of the individual Defendants shall:
(1) any individual Defendant is the majority owner of the business or otherwise directly or indirectly manages or controls the business, and where
B. Provide a copy of each such signed and dated acknowledgment of receipt to the Associate Director for Service Industry Practices at the address specified in Paragraph VI of this Order.
DISSOLUTION OF RECEIVERSHIP
XIII.IT IS FURTHER ORDERED that:
A. Payment shall be made to the receiver for services rendered in connection with this action solely from the assets of the receivership estate. If the assets of the receivership estate are insufficient to pay the receivers fees or expenses, the remainder of the receivers fee shall be paid by Defendants, which payments shall be in addition to any other payments made by Defendants pursuant to this Order. In no event shall the Commission be responsible for the payment of any portion of the receivers fees or expenses.
B. Upon payment to the receiver of her final bill for services rendered in connection with this action, the receivership of defendants NSF and NBRB shall be dissolved.
XIV. IT IS FURTHER ORDERED that, upon entry of this Order, the freeze of Defendants assets shall be dissolved.
XVI. IT IS FURTHER ORDERED that there is no just reason for delay of entry of this judgment, and, pursuant to Fed. R. Civ. P. 54(b), the Clerk shall enter this Order immediately.
STIPULATED TO:
as a Defendant and as president of Defendant National Scholarship Foundation, Inc.
CALVIN MORSE,
DOROTHY BEAM,
as a Defendant and as president of Defendant D.B.F. National Business Reporting Bureau, Inc.
as receiver for National Scholarship Foundation, Inc. and D.B.F. National Business Reporting Bureau, Inc.