William E. Bailey, one of the defendants in a Federal Trade Commission lawsuit brought in 1991 to halt the allegedly decep- tive promotion of fire-safety products and door-to-door sales jobs would be barred from having any involvement in the marketing of any earning opportunity in the future, under an agreement he has signed to settle the FTC charges against him. Bailey, co- founder and chairman of Safety Plus, Inc., also would be prohi- bited from falsely representing any material aspect of any good or service he markets in the future, under the settlement.
The settlement stems from FTC charges filed against Lexington, Kentucky-based Safety Plus, Bailey and two other individuals. Safety Plus distributed its products through a network of door-to-door salespersons, paid on commission, who solicited consumers in about 27 states. The FTC alleged in the complaint it filed in federal district court that the defendants falsely claimed that their halon gas fire extinguishers and other safety products were recommended by the National Fire Protection Association and that the products had been approved by the Ohio State Fire Marshal. The FTC also charged the defendants with falsely representing that the job opportunities they offered were "manager trainee" positions offering high hourly wages and paid training. The defendants also misrepresented the purpose or existence of fees and deposits that employees had to pay, and the level of earnings they could expect, the FTC alleged.
Upon the filing of the FTC complaint, the court issued a temporary restraining order halting the allegedly deceptive claims. Safety Plus filed for bankruptcy and ceased operations
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in April 1992, and the FTC has been unable to collect on the $2.5 million in redress included in a December 1992 judgment it obtained against the company. One of the other individual defendants died in 1992, and the final defendant paid $20,000 in redress under a March 1994 court order resulting from the FTC charges.
The consent judgment to settle the charges against Bailey requires the court's approval to become binding. If approved, the settlement would prohibit Bailey from in any way partici- pating in, or receiving benefits from, an "earning opportunity" -- that is, a business that gets revenues from the recruitment of salesman who must pay some sort of consideration to the business to work. In addition, Bailey would be prohibited from making any false or misleading representation about a material fact regarding any good or service he markets in the future. Based on financial statements Bailey submitted, the consent judgment does not call for consumer redress.
The Commission vote to file the proposed consent judgment was 5-0. It was filed April 27 in U.S. District Court for the Eastern District of Kentucky, Lexington Division.
NOTE: This consent judgment is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.
Copies of consent judgment and other documents associated with this case are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.
(FTC File No. X910081)
(Civil Action No. 91-352)