UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
In the Matter of
Kalvin P. Schmidt, individually, and doing business as DKS Enterprises,
DS Productions, DES Enterprises, www.mkt-america.com , and www.mkt-usa.com.
FILE NO. 9723308
AGREEMENT CONTAINING CONSENT ORDER
The Federal Trade Commission has conducted an investigation of certain acts and
practices of Kalvin P. Schmidt, individually, and doing business as DKS Enterprises, DS
Productions, DES Enterprises, www.mkt-america.com, and www.mkt-usa.com ("proposed
respondent"). Proposed respondent, having been represented by counsel, is willing to
enter into an agreement containing a consent order resolving the allegations contained in
the attached draft complaint. Therefore,
IT IS HEREBY AGREED by and between Kalvin P. Schmidt, and counsel for the
Federal Trade Commission that:
1. Proposed respondent Kalvin P. Schmidt is a Minnesota resident who does
business as DKS Enterprises, DS Productions, DES Enterprises, www.mkt-america.com, and
www.mkt- usa.com. He conducts his business activities out of his home, 911 3rd Street,
N.W., Waseca, Minnesota 56093.
2. Proposed respondent admits all the jurisdictional facts set forth in
the draft complaint.
3. Proposed respondent waives:
a. Any further procedural steps;
b. The requirement that the Commission's decision contain a statement of findings of
fact and conclusions of law; and
c. All rights to seek judicial review or otherwise to challenge or contest the validity
of the order entered pursuant to this agreement.
4. This agreement shall not become part of the public record of the proceeding unless
and until it is accepted by the Commission. If this agreement is accepted by the
Commission, it, together with the draft complaint, will be placed on the public record for
a period of sixty (60) days and information about it publicly released. The Commission
thereafter may either withdraw its acceptance of this agreement and so notify proposed
respondents, in which event it will take such action as it may consider appropriate, or
issue and serve its complaint (in such form as the circumstances may require) and decision
in disposition of the proceeding.
5. This agreement is for settlement purposes only and does not constitute an admission
by proposed respondent that the law has been violated as alleged in the draft complaint,
or that the facts as alleged in the draft complaint, other than the jurisdictional facts,
6. This agreement contemplates that, if it is accepted by the Commission, and if such
acceptance is not subsequently withdrawn by the Commission pursuant to the provisions of
Section 2.34 of the Commission's Rules, the Commission may, without further notice to
proposed respondent, (1) issue its complaint corresponding in form and substance with the
attached draft complaint and its decision containing the following order in disposition of
the proceeding, and (2) make information about it public. When so entered, the order shall
have the same force and effect and may be altered, modified, or set aside in the same
manner and within the same time provided by statute for other orders. The order shall
become final upon service. Delivery of the complaint and the decision and order to
proposed respondents address as stated in this agreement by any means specified in
Section 4.4(a) of the Commission's Rules shall constitute service. Proposed respondent
waives any right he may have to any other manner of service. The complaint may be used in
construing the terms of the order. No agreement, understanding, representation, or
interpretation not contained in the order or in the agreement may be used to vary or
contradict the terms of the order.
7. Proposed respondent has read the draft complaint and consent order. He understands
that he may be liable for civil penalties in the amount provided by law and other
appropriate relief for each violation of the order after it becomes final.
For purposes of this order, the following definitions shall apply:
1. "Prohibited Marketing Program" means a pyramid sales scheme, ponzi scheme,
chain marketing scheme, or other marketing plan or program in which a person who
participates makes a payment and receives the right, license or opportunity to derive
income as a participant primarily from: (i) the recruitment of additional recruits by the
participant, program promotor or others; (ii) sales made to or by such recruits or their
recruits; or (iii) any other payments made by recruits. A "Prohibited Marketing
Program" does not include a marketing plan or program in which the program promotor
demonstrates that it has instituted and enforced rules that have the actual effect of
insuring that a participant derives income primarily from the sale of goods or services to
persons who do not recruit participants into the program.
For purposes of this Order, the phrase "goods or services" does not include a
membership or opportunity to participate in a sales or marketing program, or access codes
or numbers which allow participation in a sales or marketing program.
2. "Clearly and prominently" shall mean as follows:
A. In an advertisement communicated through an electronic medium (such as television,
video, radio, and interactive media such as the Internet and online services), the
disclosure shall be presented simultaneously in both the audio and video portions of the
advertisement. Provided, however, that in any advertisement presented solely through video
or audio means, the disclosure may be made through the same means in which the ad is
presented. The audio disclosure shall be delivered in a volume and cadence sufficient for
an ordinary consumer to hear and comprehend it. The video disclosure shall be of a size
and shade, and shall appear on the screen for a duration, sufficient for an ordinary
consumer to read and comprehend it. In addition to the foregoing, in interactive media the
disclosure shall also be unavoidable and shall be presented prior to the consumer
incurring any financial obligation.
B. In a print advertisement, promotional material, or instructional manual, the
disclosure shall be in a type size and location sufficiently noticeable for an ordinary
consumer to read and comprehend it, in print that contrasts with the background against
which it appears. In multipage documents, the disclosure shall appear on the cover or
C. On a product label, the disclosure shall be in a type size and location on the
principal display panel sufficiently noticeable for an ordinary consumer to read and
comprehend it, in print that contrasts with the background against which it appears.
The disclosure shall be in understandable language and syntax. Nothing contrary to,
inconsistent with, or in mitigation of the disclosure shall be used in any advertisement
or on any label.
3. Unless otherwise specified, "respondent" shall mean Kalvin P. Schmidt,
individually and doing business as DKS Enterprises, DS Productions, DES Enterprises,
www.mkt- america.com, and www.mkt-usa.com; and, his agents, representatives, and
4. "Commerce" shall mean as defined in Section 4 of the Federal Trade
Commission Act, 15 U.S.C. § 44.
IT IS ORDERED THAT respondent, directly or through any corporation, subsidiary,
division, or other device, shall cease and desist from engaging, participating, or
assisting in any manner or capacity whatsoever in any Prohibited Marketing Program.
IT IS FURTHER ORDERED that respondent, directly or through any corporation, subsidiary,
division, or other device, in connection with any marketing plan or program, or with the
promotion, offering for sale, sale or distribution of any good or service, shall not:
A. Represent, expressly or by implication:
- the income, profits, or sales volume that has been achieved by participants in any
marketing program or purchasers of any good or service;
- the income, profits, or sales volume that may be achieved by participants in any
marketing program or purchasers of any good or service; or
- any other fact material to a consumers decision to participate in such marketing
plan or program or purchase such good or service
unless such representation is true and, at the time it is made, respondent possesses
and relies upon competent and reliable evidence that substantiates the representation.
B. Make any representation in any manner, expressly or by implication, of specific
earnings, profits or sales volume that have been achieved or may be achieved by
participants in any marketing program or purchasers or any good or service without also
clearly and prominently disclosing (1) the number of persons who earned at least the
amount represented, and (2) the percentage of total participants or purchasers who earned
at least the amount represented.
IT IS FURTHER ORDERED that respondent Kalvin P. Schmidt, in connection with any
business owned or controlled, in whole or in part, by him, for five (5) years after the
date of issuance of this order, shall maintain and upon request make available to the
Federal Trade Commission, for inspection and copying, business records demonstrating his
compliance with the terms and provisions of this order, including:
A. All advertisements and promotional materials containing representations concerning
actual or possible earnings by participants in any marketing plan or program or by
purchasers of any good or service;
B. All materials that were relied upon in disseminating representations concerning
actual or possible earnings by participants in any marketing plan or program or by
purchasers of any good or service;
C. The income, disbursements, transactions, and use of money by any such business;
D. The name, address, telephone number, and social security number of each person
employed by any such business in any capacity;
E. The name, address, and telephone number of each person whom respondent has recruited
to participate in any marketing plan or program, or to whom respondent has sold any good
F. All complaints and other communications between respondent and any consumer or any
governmental or consumer protection organization; and
G. All documents relating in any way to any conduct subject to this Final Order
IT IS FURTHER ORDERED that respondent Kalvin P. Schmidt shall deliver a copy of this
order to all current and future employees, agents, and representatives having
responsibilities with respect to the subject matter of this order, and shall secure from
each such person a signed and dated statement acknowledging receipt of the order.
Respondents shall deliver this order to current personnel within thirty (30) days after
the date of service of this order, and to future personnel within thirty (30) days after
the person assumes such position or responsibilities.
IT IS FURTHER ORDERED that respondent Kalvin P. Schmidt, for a period of seven (7)
years after the date of issuance of this order, shall notify the Commission of the
discontinuance of his current business or employment, or of his affiliation with any new
business or employment. The notice shall include respondent's new business address and
telephone number and a description of the nature of the business or employment and his
duties and responsibilities. All notices required by this Part shall be sent by certified
mail to the Associate Director, Division of Enforcement, Bureau of Consumer
Protection, Federal Trade Commission, Washington, D.C. 20580.
IT IS FURTHER ORDERED that Kalvin P. Schmidt shall, within sixty (60) days after the
date of service of this order, and at such other times as the Federal Trade Commission may
require, file with the Commission a report, in writing, setting forth in detail the manner
and form in which he has complied with this order.
This order will terminate twenty (20) years from the date of its issuance, or twenty
(20) years from the most recent date that the United States or the Federal Trade
Commission files a complaint (with or without an accompanying consent decree) in federal
court alleging any violation of the order, whichever comes later; provided, however, that
the filing of such a complaint will not affect the duration of:
A. Any Part in this order that terminates in less than twenty (20) years;
B. This order's application to any respondent that is not named as a defendant in such
C. This order if such complaint is filed after the order has terminated pursuant to
Provided, further, that if such complaint is dismissed or a federal court rules that
the respondent did not violate any provision of the order, and the dismissal or ruling is
either not appealed or upheld on appeal, then the order will terminate according to this
Part as though the complaint had never been filed, except that the order will not
terminate between the date such complaint is filed and the later of the deadline for
appealing such dismissal or ruling and the date such dismissal or ruling is upheld on
Signed this day of , 19
KALVIN P. SCHMIDT
THOMAS K. HAGEN, ESQ.
Patton, Hoversten & Berg, P.A.
Attorney for respondent
TARA M. FLYNN
Counsel for the Federal Trade Commission
Division of Marketing Practices
Bureau of Consumer Protection