| Collot Guerard Elizabeth Grant Federal Trade Commission 600 Pennsylvania Avenue, NW Washington, DC 20580 202-326-3338 UNITED STATES DISTRICT COURT FEDERAL TRADE COMMISSION, Plaintiff, v. ROBERT S. DOLGIN, doing business as Design Travel and Design Travel of Santa Rosa, Defendant. Case No. -CIV-97-0833 (MHP) STIPULATED FINAL JUDGMENT AND ORDER FOR PERMANENT INJUNCTION AND MONETARY RELIEF On March 10, 1997, the Federal Trade Commission ("FTC" or "Commission") filed a complaint for a permanent injunction and other equitable relief, pursuant to Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b) and 57b, against Robert S. Dolgin, d/b/a Design Travel and Design Travel of Santa Rosa (“defendant” or “Dolgin”). The FTC’s complaint charged Dolgin with violations of: 1) Section 5(a) of the FTC Act, 15 U.S.C. § 45(a); 2) the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. § 6101 et seq. and the FTC’s "Telemarketing Sales Rule," 16 C.F.R. §§ 310.3(a)(1)(I) and 310.3(a)(2)(iii); and, 3) the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq, and Section 226.12(e) of Regulation Z, 12 C.F.R. § 226.12(e). On June 2, 1997, this Court entered a Stipulated Preliminary Injunction against Dolgin. Dolgin has agreed to the entry of this Stipulated Final Judgment and Order for Permanent Injunction and Monetary Relief ("Order") by this Court in order to resolve this civil action, settle the Commission’s claims for injunctive and monetary relief, and avoid the costs of additional litigation. The defendant and the Commission having requested the Court to enter this Order, the Court makes the following findings of fact and HEREBY ORDERS, ADJUDGES, AND DECREES as follows: FINDINGS
DEFINITIONS For the purposes of this Order, the following definitions shall apply:
ORDER PROHIBITED BUSINESS ACTIVITIES Permanent Ban Against Telemarketing I. IT IS ORDERED that defendant, whether as an owner, officer, director, employee, consultant, independent contractor, or in any other capacity, is hereby permanently enjoined and restrained from directly or indirectly (1) engaging in the business of telemarketing, or (2) assisting, or working for a person or entity assisting, other persons or entities engaged in the business of telemarketing. Permanent Ban Involving Travel Packages or Services II. IT IS FURTHER ORDERED that defendant, whether as an owner, officer, director, employee, consultant, independent contractor, or in any other capacity, is hereby permanently enjoined and restrained from directly or indirectly promoting, advertising, marketing, offering for sale, selling, or providing, or assisting others in the promotion, advertising, marketing, offering for sale, selling, or providing of, any travel package or service. Prohibition Against Processing Credit and Debit Card Sales III. IT IS FURTHER ORDERED that defendant, whether as an owner, officer, director, employee, consultant, independent contractor, or in any other capacity, is hereby permanently enjoined and restrained from processing directly or indirectly any credit or debit card transactions (1) for any sales made by any other person or entity, and (2) for any sales made by defendant unless the consumer personally signs the credit or debit card slip. Provided, however, that defendant may process deposits for the purchase of goods or services sold by defendant if (1) the defendant or his representative informs the consumer at the time the sale is made that the deposit will be charged to the consumer’s credit card account unless the consumer cancels the purchase of the goods or services within a time period specified by the defendant, and (2) the consumer fails to notify defendant within the specified time period that the consumer does not want to purchase the goods or services, Provided, further, that defendant may arrange for the processing of credits to the accounts of consumers seeking refunds on purchases of any product or service sold by, through, or with the assistance of defendant prior to the date of this Order. Prohibition Against Debiting Consumers’ Checking Accounts IV. IT IS FURTHER ORDERED that defendant, whether as an owner, officer, director, employee, consultant, independent contractor, or in any other capacity, is hereby permanently enjoined and restrained from directly or indirectly (1) creating any check or other financial instrument by which a consumer’s checking account may be debited, or (2) depositing any check or other financial instrument by which a consumer’s checking account may be debited unless the consumer personally signs the check or financial instrument Prohibition Against Violating the Truth in Lending Act V. IT IS FURTHER ORDERED that defendant, whether as an owner, officer, director, employee, consultant, independent contractor, or in any other capacity, with respect to any sales made after the date of this Order, is hereby permanently enjoined and restrained from failing to credit promptly consumers’ credit card accounts within seven (7) business days from accepting the return of property or forgiving a debt for services, in violation of Section 166 of the Truth in Lending Act, 15 U.S.C. § 1666e, and Section 226.12(e) of Regulation Z, 12 C.F.R. § 226.12(e) or otherwise violating Section 166 of the Truth in Lending Act, 15 U.S.C. § 1666e, as amended, and Section 226.12(e) of Regulation Z, 12 C.F.R. § 226.12(e), as amended. Prohibition Against Misrepresentations and Failures to Disclose VI. IT IS FURTHER ORDERED that defendant, whether as an owner, officer, director, employee, consultant, independent contractor, or in any other capacity, in connection with promoting, advertising, marketing, offering for sale, or selling any product or service, is hereby permanently enjoined and restrained from directly or indirectly:
Prohibition Against Distribution of Customer Lists VII. IT IS FURTHER ORDERED that defendant, whether as an owner, officer, director, employee, consultant, independent contractor, or in any other capacity, is permanently enjoined and restrained from directly or indirectly selling, renting, leasing, transferring, or otherwise disclosing the name, address, telephone number, facsimile number, credit or debit card number, bank card number, bank account number, e-mail address, or other identifying information of any person who paid any money to defendant or his affiliates in connection with the purchase of any travel-related product or service. Provided, however, that defendant may disclose such identifying information to a bank, a law enforcement agency, plaintiff’s counsel or its agents, or as required by any law, regulation, or court order. REQUIRED ASSISTANCE TO PAST CONSUMER PURCHASERS VIII. IT IS FURTHER ORDERED that, for twelve (12) months from the date of this Order, defendant is required to forward to defendant’s attorney, or make arrangements with the Postal Service to forward, within forty-eight (48) hours of its receipt, any and all mail or correspondence from consumers addressed to Design Travel or any other business entity through which defendant sold or assisted in the sale of travel packages or services, including any checks, money orders, or other form of payment. Defendant, through his attorney, shall arrange for the prompt return of any such mail or correspondence to the consumer, along with a letter in the form of Attachment B to this Order. Defendant and all persons covered by this Section of the Order, are directed to create and maintain records to document compliance with this Section of the Order. Such records shall be maintained for a minimum of eighteen (18) months from the date of this Order. IX. IT IS FURTHER ORDERED that defendant, for twelve (12) months from the date of this Order, shall provide assistance in obtaining a refund to consumers contacting defendant about any travel packages or service sold by, through, or with the assistance of the defendant. Assistance includes, but is not limited to (1) maintaining a telephone number consumers can call to hear a recording about how they can request a chargeback on their credit card for, or a refund of, money they paid to defendant or his affiliates, and (2) arranging for sending of the letter in the form of Attachment B to this Order and the return of any funds, mail, or correspondence received from consumers, as provided for in Section VIII of this Order. Defendant and all persons covered by this Section of the Order, are directed to create and maintain records to document compliance with this Section of the Order. Such records shall be maintained for a minimum of eighteen (18) months from the date of this Order. X. IT IS FURTHER ORDERED that any expenses reasonably incurred by defendant in providing the assistance required by Paragraphs VIII and IX, not to exceed Ten Thousand Dollars ($10,000), shall be credited against the $125,000 defendant is required by Paragraph XI to pay in consumer redress or disgorgement. CONSUMER REDRESS AND DISGORGEMENT XI. IT IS FURTHER ORDERED that judgment is entered against defendant in favor of the FTC in the amount of Twenty-Five Million Dollars ($25,000,000) for equitable monetary relief, including but not limited to consumer redress. This sum represents the estimated loss to consumers based on the amount of money in credit card sales for the Design Travel vacation packages that defendant processed through his merchant accounts. In lieu of the foregoing monetary judgment, which shall be suspended subject to the conditions set forth in this Section and Sections XIII and XIV of this Order, and based upon the sworn representations in defendant’s financial statements and documentation, as provided for in Sections XIII and XIV of this Order, defendant shall pay the FTC One Hundred Twenty-Five Thousand Dollars ($125,000). Upon signing this Order, defendant shall immediately transmit One Hundred Fifteen Thousand Dollars ($115,000) into the Design Travel Escrow Fund established pursuant to the Escrow Agreement, which is Attachment A to this Order. The Escrow Agent, within two (2) days of the entry of this Order, shall pay the $115,000 in funds held in the Design Travel Escrow Fund, and any interest received thereon, to the Commission or to an agent designated by the Commission. Also, upon or before signing this Order, defendant shall immediately transmit Ten Thousand Dollars ($10,000) into the Trust Fund of his attorney, Michael Piccarreta, for use in paying the expenses associated with providing the assistance to purchasers of the Design Travel vacation packages, as required by Paragraphs VIII and IX of this Order. Twelve (12) months from the date of entry of this Order, any funds remaining of this $10,000 shall be transferred to the Commission or its designated agent. No portion of money paid by defendant pursuant to this Order or to the Escrow Agreement shall be deemed the payment of any fine, penalty, or punitive assessment. IT IS FURTHER ORDERED that one hundred (100) days after the funds in the Design Travel Escrow Account have been paid to the Commission or its agent, the $25,000,000 judgment shall be extinguished, except as provided in Section XIV of this Order. XII. IT IS FURTHER ORDERED that:
FINANCIAL STATEMENTS AND RIGHT TO REOPEN XIII. IT IS FURTHER ORDERED that, within two (2) business days of signing this Order, defendant shall submit to the Commission a truthful sworn statement, in the form that is Attachment C to this Order, that shall reaffirm and attest to the truth, accuracy, and completeness of the financial statements and documentation described in Section XIV, below. IT IS FURTHER ORDERED that the Commission is authorized to verify all information provided on the financial statements and other documentation with all appropriate third parties, including, but not limited to, financial institutions. XIV. IT IS FURTHER ORDERED that the Commission’s agreement to this Order is expressly premised upon the truthfulness, accuracy, and completeness of the financial statements and documentation provided by defendant to the Commission by letters dated September 24, 1997, September 25, 1997, October 2, 1997, October 15, 1997, and October 29, 1997. If, at any time following entry of this Order, the Commission obtains information indicating that any of defendant’s representations concerning his assets, income, liabilities, or net worth were knowingly inaccurate or incomplete, or otherwise materially misleading or fraudulent, the Commission may, upon motion to the Court, request that the Order be reopened for the purposes of requiring payment of additional consumer redress or disgorgement to the United States Treasury in the amount of Ten Million Dollars ($10,000,000), less any amount defendant has paid pursuant to Section XI, and it shall be the burden of the Commission to prove by a preponderance of the evidence that any of defendant’s representations were knowingly inaccurate or incomplete, or otherwise materially misleading or fraudulent; Provided, however, that in all other respects this Order shall remain in full force and effect unless otherwise ordered by the Court; Provided further, that proceedings instituted under this Section are in addition to, and not in lieu of, any other civil or criminal remedies as may be provided by law, including any other proceedings the Commission may initiate to enforce this Order. IT IS FURTHER ORDERED that upon a finding by the Court of any material misrepresentation or material omission to the Commission that was knowingly made or omitted by defendant as to his financial condition, judgment in favor of the FTC and against defendant in the amount of Ten Million Dollars ($10,000,000), less any amount defendant has paid pursuant to Section XI, shall be entered, and this judgment shall be immediately due and payable from defendant to the Commission. The Commission, or any of its designees, may collect this judgment. The Commission may not seek an amount in excess of this Ten Million Dollar ($10,000,000) judgment. IT IS FURTHER ORDERED that solely for purposes of reopening or enforcing this Section of the Order, defendant waives any right he may have to contest any of the allegations in plaintiff’s complaint and he agrees that the facts as alleged in plaintiff’s complaint shall be taken as true in any subsequent litigation to collect the amount due pursuant to this Order, including but not limited to a non-dischargeability complaint in any bankruptcy proceeding. BANKRUPTCY PROVISIONS XV. IT IS FURTHER ORDERED that defendant agrees that, for ninety (90) days following the entry of this Order, he will not file or cause to be filed a petition for protection under the United States Bankruptcy Code, 11 U.S.C. § 101 et seq. Defendant expressly agrees that he will not seek to have the financial liability of $125,000 under this Order discharged by any proceeding under the U.S. Bankruptcy Code, 11 U.S.C. § 101 et. seq., and he further agrees that the liability under this Order is not so dischargeable. This Order is without prejudice to the rights of the Commission to prove non-dischargeability of the liability under this Order in any bankruptcy proceeding filed by or against defendant. XVI. IT IS FURTHER ORDERED that defendant shall notify the Commission contemporaneously with filing a petition for relief under the U.S. Bankruptcy Code, 11 U.S.C. § 101 et seq. In the event that defendant’s creditors file a petition for relief under the U.S. Bankruptcy Code, 11 U.S.C. § 101 et seq., defendant shall notify the Commission within two (2) days of defendant receiving notice of such a petition. RECORD KEEPING PROVISIONS XVII. IT IS FURTHER ORDERED that for a period of five (5) years from the date of entry of this Order, defendant, in connection with any business entity of which he is a majority owner, or which he otherwise manages or controls, shall create and maintain:
EMPLOYMENT AND RESIDENCE NOTIFICATION XVIII. IT IS FURTHER ORDERED that within five (5) days of the entry of this Order, defendant shall provide to the Commission a sworn statement with the following information: 1) the address of his current residence; 2) the name and address of his current employer, together with a brief statement of defendant’s duties and responsibilities or the services he provides to the employer, or if he is self-employed, the address of the location from which he works, together with a brief statement of the products and services he provides, and the amount and nature of the compensation he receives. XIX. IT IS FURTHER ORDERED that for a period of five (5) years from the date of the entry of this Order, defendant shall promptly inform the Commission in writing within five (5) business days of:
For purposes of this Section, "employment" includes the performance of services as an owner, officer, director, employee, consultant, or independent contractor; and "employers" includes any individual or entity for which the defendant performs services as an owner, officer, director, employee, consultant, or independent contractor. ORDER DISTRIBUTION XX. IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, defendant shall:
MONITORING COMPLIANCE WITH THIS ORDER XXI. IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, for purposes of determining or securing compliance with the Order, defendant shall permit representatives of the Commission:
XXII. IT IS FURTHER ORDERED that all notifications required of defendant by this Order, or concerning this Order, shall be sent to the following address:
All notifications required of the Commission by this Order, or concerning this Order, shall be sent to the following address:
If defendant notifies the Commission of a change in address, all future notifications from the Commission to defendant shall be sent to that address. XXIII. IT IS FURTHER ORDERED that each party to this Order shall bear its own costs and attorneys’ fees incurred in connection with this action. XXIV. IT IS FURTHER ORDERED that this Court will retain jurisdiction of this matter for the purpose of enabling either of the parties to apply to the Court at any time for such further orders or directives as may be necessary or appropriate for the interpretation or modification of this Order, for the enforcement of compliance therewith or the punishment of violations thereof. Dated:________________________ ________________________ Dated:________________________ ________________________ Dated:________________________ ________________________ SO ORDERED this _________ day of _______________, 1998. ________________________ The parties agree to the terms and conditions set forth above and hereby consent to entry of this Stipulated Final Judgment and Order for Permanent Injunction at the Court's convenience and without further notice to the parties. This agreement may be executed in counterparts. ________________________ ________________________ ________________________ |