| DEBRA A. VALENTINE General Counsel MICHELLE KILLMER, CSBA #27359 Local Counsel: SUZANNE CHYNOWETH, ASBA #6835 Attorneys for Plaintiff UNITED STATES DISTRICT COURT FEDERAL TRADE COMMISSION, Plaintiff, v. EDWARD E. EPSTEIN, individually and as an officer or director of Electronic Filing Academy, Inc. and Electronic Filing Associates, Ltd., ELECTRONIC FILING ACADEMY, INC., an Arizona corporation, ELECTRONIC FILING ASSOCIATES , LTD., ) a Nevada corporation, d/b/a EFA, Ltd. of Nevada, Defendants. CV- COMPLAINT FOR INJUNCTIVE AND
JURISDICTION AND VENUE 1. The FTC brings this action under Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b), to secure a permanent injunction, preliminary injunctive relief, rescission of contracts, restitution, disgorgement, and other equitable relief for defendants' unfair or deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). 2. This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331, 1337(a) and 1345, and 15 U.S.C. § 53(b). 3. Venue in the United States District Court for the District of Arizona is proper under 28 U.S.C. §§ 1391(b) and (c), and 15 U.S.C. § 53(b). THE PARTIES 4. Plaintiff, the Federal Trade Commission, is an independent agency of the United States Government created by statute. 15 U.S.C. §§ 41 et seq. The Commission is charged, inter alia, with enforcement of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The Commission is authorized to initiate federal district court proceedings to enjoin violations of the FTC Act in order to secure such equitable relief as may be appropriate in each case. 15 U.S.C. § 53(b). 5. Defendant Edward E. Epstein is an officer or director of Electronic Filing Academy, Inc. and Electronic Filing Associates, Ltd. At all times material to this complaint, acting alone or in concert with others, he has formulated, directed, controlled or participated in the acts and practices of the corporate defendants, including the acts and practices set forth in this complaint. He transacts business in the District of Arizona. 6. Defendant Electronic Filing Academy, Inc. ("EFA, Inc."), an Arizona corporation with its principal place of business at 1940 E. Thunderbird Rd., Phoenix, Arizona 85022, promotes and sells medical billing business ventures. EFA, Inc. transacts business in the District of Arizona. 7. Defendant Electronic Filing Associates, Ltd. ("EFA, Ltd."), a Nevada corporation with its principal place of business at 6900 E. Camelback Rd., Scottsdale, Arizona 85251, promotes and sells medical billing business ventures. In the course of transacting business, EFA, Ltd. has also operated under the fictitious name EFA, Ltd. of Nevada. EFA, Ltd. has transacted business in the District of Arizona. COMMERCE 8. At all times relevant to this complaint, the defendants have maintained a substantial course of trade in the offering for sale and sale of medical billing business ventures, in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44. DEFENDANTS' BUSINESS ACTIVITIES 9. Since at least January 1996 and continuing thereafter, the defendants have promoted, offered to sell, and sold pre-packaged businesses, often called "billing centers," to consumers located nationwide. Consumers who purchase a billing center package, consisting of defendants' software, training, and other assistance, are supposed to earn income by providing various billing, accounts receivable, and practice management services to doctors and dentists. The defendants especially emphasize the ability of their billing centers to electronically process medical and dental insurance claims and thereby allow the consumer to enter the growing and "wide open" market of electronic claims processing. Defendants typically charge consumers between $2,495 and $5,995 for a billing center and induce consumers to purchase by making certain claims relating to the earnings potential of the billing centers. In addition, as part of their marketing practices, the defendants encourage consumers to call and speak with individuals whose names appear on defendants' reference list as current successful billing center owners. VIOLATIONS OF SECTION 5 OF THE FTC ACT 10. In the course of offering for sale and selling billing center packages, defendants have represented, expressly or by implication, that consumers who purchase a billing center package from defendants can reasonably expect to earn substantial income. 11. In truth and in fact, few if any consumers who purchase a billing center package from defendants can reasonably expect to earn substantial income. 12. Therefore, defendants' representations as set forth in Paragraph 10 are false and misleading and constitute deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). CONSUMER INJURY 13. Consumers located throughout the United States have suffered substantial monetary loss as a result of defendants' unlawful acts or practices. Absent injunctive relief by this Court, defendants are likely to continue to injure consumers and harm the public interest. THIS COURT'S POWER TO GRANT RELIEF 14. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to grant injunctive and other ancillary relief, including consumer redress, disgorgement and restitution, to prevent and remedy any violations of any provision of law enforced by the Federal Trade Commission. 15. This Court, in the exercise of its equitable jurisdiction, may award other ancillary relief to remedy injury caused by the defendants' law violations. PRAYER FOR RELIEF WHEREFORE, the Commission respectfully requests that this Court, as authorized by Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), and pursuant to its own equitable powers: 1. Award plaintiff such preliminary injunctive and ancillary relief as may be necessary to avert the likelihood of consumer injury during the pendency of this action and to preserve the possibility of effective final relief; 2. Permanently enjoin the defendants from violating the FTC Act, as alleged herein, in connection with the offering and promotion of business ventures, distributorships, business opportunities and franchises; 3. Award such relief as the Court finds necessary to redress injury to consumers resulting from the defendants' violations of the FTC Act, including but not limited to, rescission of contracts, the refund of monies paid, and the disgorgement of ill-gotten monies; and 4. Award plaintiff the costs of bringing this action, as well as such other and additional equitable relief as the Court may determine to be just and proper. Dated: January 12, 1998. Respectfully submitted, DEBRA A. VALENTINE _______________________________ |