FOR RELEASE: APRIL 22, 1993
TWO DEFENDANTS IN STAMP FRAUD CASE AGREE TO SETTLE CHARGES THEY MISREPRESENTED INVESTMENT POTENTIAL OF STAMPS
Janet Alexander and Christopher de Jesus, two of the defendants in the Federal Trade Commission's first case alleging fraud in the stamps and related collectibles market, have agreed to settle charges that they misrepresented the investment poten- tial of stamps they sold to consumers. Under the individual settlements, both Alexander and de Jesus would be prohibited from making misrepresentations about any future investment offering they make and would be required to pay a total of $44,000 for consumer redress.
Last year, the FTC filed a complaint in federal court detailing charges against World Wide Classics, Inc. of Mission Viejo, California; World Wide Classics of Indiana, Inc.; Ronald T. Schaefer, chairman of the board and past president of the firms; Janet Alexander, president of the firms; and Christopher de Jesus, also known as Chris Davis, who was sales director. In June 1992, the court issued an order against the defendants barring the chal- lenged conduct pending trial.
In August 1992, the Commission named three additional defendants in the case: Schaefer and Associates (S & A); Collectibles Clearinghouse, Inc., also known as American and International Stamp Exchange, Inc. (CCI); and Joyce Eve Schaefer, Ronald Schaefer's wife and an officer of the firms. The court subsequently issued a preliminary order prohibiting Joyce Eve Schaefer from making the alleged misrepresentations and freezing her assets. Litigation is continuing with the non-settling defendants.
According to the FTC complaint, the defendants offered and sold their stamps and stamp-related collectibles to consumers through investment seminars, radio and television infomercials, telephone solicitations, and written promotional material. World
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Wide Classics also published the American Classic Stamps Index which purportedly measured the price performance of "blue chip" stamps in the U.S. investment stamp market, according to the complaint.
The FTC alleged that the defendants represented that their stamps and related collectibles were excellent, low-risk invest- ments. According to the complaint, however, the stamps and col- lectibles were routinely sold at prices 2-to-10 times higher than the prices at which they are generally available to retail pur- chasers. The FTC further alleged that certain stamps and related collectibles sold by World Wide Classics did not regularly trade at the prices stated by them.
The proposed consent judgments settling the charges against Alexander and de Jesus would prohibit them from, among other things, falsely representing that stamps and related philatelic items, collectibles (including animation cells or art), or any other investment offerings sold by them:
-- are excellent, low-risk investments;
-- have regularly traded at certain prices, or have increased in value by certain amounts; or
-- are sold by the defendants at or below prevailing auction or retail prices.
Further, the proposed settlements would prohibit the defen- dants from misrepresenting any fact material to a consumer's decision to purchase stamps and related philatelic items, or any other investment offering.
In addition to imposing extensive recordkeeping requirements, the proposed settlements also would require Alexander and de Jesus to provide funds for consumer redress. Alexander would pay $5,000, and Christopher de Jesus would pay a total of $39,000 into a redress fund.
The FTC filed the proposed settlements in the U.S. District Court for the Central District of California, in Los Angeles, on April 21.
The five-member Commission vote to approve the settlements was 5-0.
NOTE: The final consent judgments and orders for permanent injunction are for settlement purposes only and do not constitute admissions of law violations. The judgments and orders are subject to court approval and have the force of law when signed by the judge.
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Copies of the proposed settlements are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261.
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MEDIA CONTACT: Howard Shapiro, Office of Public Affairs 202-326-2176
STAFF CONTACT: Connie Wagner, Bureau of Consumer Protection 202-326-3309 or Monica E. Tait, Bureau of Consumer Protection 202-326-3505 or Linda M. Stock, Los Angeles Regional Office 11000 Wilshire Boulevard, Suite 13209 Los Angeles, California 90024 310-575-7890
(Civil Action No.: CV 92-3363 TJH(EEx)) (FTC File No. 922 3158) (World Wide-3)