UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

FEDERAL TRADE COMMISSION,
Plaintiff,

v.

PACIFIC RIM POOLS INTERNATIONAL, et al.,
Defendants.

Civil No. C97-1748R

ORDER FOR PERMANENT INJUNCTION AND FINAL JUDGMENT (PROPOSED)

Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), has filed a complaint for a permanent injunction and other relief pursuant to Section 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b, and the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. § 6101 et seq., naming as defendants Pacific Rim Pools International ("Pools"), ENA Enterprises, Inc. ("ENA"), Michael Loukas ("Loukas"), and Patricia Lynn Kucey ("Kucey") and alleging violations of the Telemarketing Sales Rule, 16 C.F.R. Part 310 ("the Rule").

Defendants Pools, ENA, Loukas, and Kucey, and the Commission, by and through their respective counsel, have agreed to entry of this Order by this Court in order to resolve all matters in dispute between them in this action. These defendants have consented to the entry of this Order without trial or adjudication of any issue of law or fact herein, and this Decree shall not constitute an admission of liability by defendants nor constitute evidence of liability against defendants in any matter relating to the facts alleged in the Commission’s Complaint. NOW, THEREFORE, these defendants and the Commission having requested the Court to enter this Order, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED as follows:

FINDINGS

A. This Court has jurisdiction of the subject matter of this action and the parties consenting hereto.

 

B. The complaint states a claim upon which relief may be granted against Pools, ENA, Loukas, and Kucey under Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, The Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. § 6101 et seq,.and the Telemarketing Sales Rule ("the Rule") 16 C.F.R. Part 310.

 

C. Entry of this Order is in the public interest.

 

D. These defendants have waived all rights to seek judicial review or otherwise challenge or contest the validity of this Order.

 

E. This Order does not constitute and shall not be interpreted to constitute either an admission by these defendants or a finding by the Court that Pools, ENA, Loukas, and Kucey have engaged in violations of the FTC Act or the Telemarketing Sales Rule, 16 C.F.R. Part 310.

DEFINITIONS

For the purpose of this Order, the following definitions shall apply:

A. “Person” means a natural person, organization or other legal entity, including a corporation, partnership, proprietorship, association, cooperative, government or governmental subdivision or agency, or any other group or combination acting as an entity;

 

B. “Defendants” means Pools, ENA, Loukas, and Kucey, as well as their successors and assigns, directors, officers, agents, servants, employees, salespersons, independent contractors, corporations, subsidiaries, affiliates and other persons directly or indirectly under their control or in active concert or participation with them who receive actual notice of this Order by personal service, facsimile or otherwise, whether acting directly or through any corporation, subsidiary, division or other device; and

 

C. "Telemarketing" means a plan, program, or campaign that is conducted to induce the purchase of goods or services by use of one or more telephones.

I. CONDUCT PROHIBITIONS

IT IS THEREFORE ORDERED that defendants are hereby permanently restrained and enjoined from:

A. Promoting, offering for sale, selling, or participating, directly or through an agent, in the sale of tickets, chances, interests, or registrations in any lottery to U.S. residents;

 

B. Promoting, offering for sale, selling, or participating, directly or through an agent, in the sale of any product or service to U.S. residents in a manner that violates the Telemarketing Sales Rule, including but not limited to:

1. failing to disclose in a clear and conspicuous manner:

a. the total cost to purchase, receive, or use goods or services that are the subject of the sales offer;

b. all material restrictions, limitations, or conditions to purchase, receive, or use the goods or services that are the subject of the sales offer;

c. if the seller has a policy of not making refunds, cancellations, or exchanges, or repurchases, a statement informing the customer that this is the seller’s policy; or if the seller or telemarketer makes a representation about a refund, cancellation, exchange or repurchase policy, a statement of all material terms and conditions of such policy;

d. in any prize promotion, the odds of being able to receive the prize, and if the odds are not calculable in advance, the factors used in calculating the odds; that no purchase or payment is required to win a prize or to participate in a prize promotion; and the no purchase/no payment method of participating in the prize promotion; and

e. all material costs or conditions to receive or redeem a prize that is the subject of a prize promotion.

2. misrepresenting, directly or by implication any of the following:

a. the total cost to purchase, receive or use, and the quantity of, any goods or services that are the subject of a sales offer;

b. any material restriction, limitation, or condition to purchase, receive, or use goods or services that are the subject of a sales offer;

c. any material aspect of the performance, efficacy, nature, or central characteristics of goods or services that are the subject of a sales offer;

d. any material aspect of the nature or terms of the seller’s refund, cancellation, exchange, or repurchase policies; and

e. any material aspect of a prize promotion including, but not limited to, the odds of being able to win a prize, the nature or value of a prize, or that a purchase or payment is required to win a prize of participate in a prize promotion.

C. Making a false or misleading statement to induce a person to pay for goods or services.

 

D. Processing credit card sales drafts in a manner that violates the Telemarketing Sales Rule, 16 C.F.R. 310.3(c).

II. MONETARY RELIEF

IT IS FURTHER ORDERED that:

A. Within six (6) months of entry of this Order, defendant Loukas shall pay the Commission the proceeds from the sale of the condominium (Legal description: Las Vegas Country Club Garden Home a.k.a. Las Vegas International Country Club Estate, Plat Book 14, page 100, Lot 22) which is located at 2985 Bel Air Drive, Las Vegas, Nevada, and is valued at $185,000. Defendant shall use his best efforts to obtain a commercially reasonable price for said condominium. If after six (6) months defendant has not sold the condominium, the Court shall, upon motion by the plaintiff, appoint a receiver to carry out the sale of the aforementioned property. As security for payment of the proceeds from the sale of the condominium Loukas shall cause to be transferred to the Commission, within seven (7) days of the entry of this Order, a security interest in the property described above. Defendant Loukas shall furnish to counsel for the Commission an executed statement sufficient to perfect the filing and recording of the security interest in the property described above under the appropriate state laws. The FTC will release this security interest upon receipt of the payment required by this Paragraph.

 

B. Within ten (7) days of entry of this Order defendants Pools and Loukas shall also execute a release of all right, title, and interest in the Woofter funds held at Nevada State Bank, Account number 002088078, First Charter Bank, Account Numbers 0055003556 and 0055003548, and First Security Bank, Account number 502009926, to the FTC. Such funds held by the receiver have been calculated to be $216,000 U.S.

 

C. The payment of the proceeds of sale of the condominium and the release of right, title, and interests in the aforementioned funds to the FTC shall fully satisfy all monetary claims asserted by the Commission against defendants in the complaint filed herein and shall be used to provide redress to consumers who purchased lottery tickets from Pools, and pay attendant expenses of administering redress. If the Commission determines, in its sole discretion, that redress is wholly or partially impracticable, any funds not used for redress shall be deposited into the United States Treasury as disgorgement or be used by the Commission to educate consumers affected by the defendants’ practices. No portion of the payments as herein provided shall be deemed a payment of any fine, penalty or punitive assessment. Defendants shall be notified as to how funds are disbursed, but shall have no right to contest the manner of distribution chosen by the Commission.

III. RIGHT TO REOPEN

IT IS FURTHER ORDERED that, by agreeing to this Order, defendants Pools and Loukas reaffirm and attests to the truthfulness, accuracy, and completeness of the financial statements that were prepared by Steve Cook and transmitted to the FTC on September 14 and 24, 1998, (designated the "Financial Statements"). The Commission's agreement to this Order is expressly premised upon the truthfulness, accuracy, and completeness of defendants’ financial condition as represented in the Financial Statements referenced above, which contain material information upon which the Commission relied in negotiating and agreeing to the terms of this Order, including the monetary redress provided for by this Order. If, upon motion by the Commission, this Court finds that defendants Pools or Loukas failed to disclose any material asset, or materially misrepresented the value of any asset, or made any other material misrepresentation in or omission from the Financial Statements, the Court may reopen the judgment for the purpose of requiring additional monetary consumer redress in an amount equivalent to any resulting understatement of assets, overstatement of liabilities or understatement of net worth, provided, however, that in all other respects, this Order shall remain in full force and effect unless otherwise ordered by this Court; and provided further that proceedings instituted under this Paragraph 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.

IV. RECORD KEEPING PROVISIONS

IT IS FURTHER ORDERED that:

A. For a period of three (3) years from the date of entry of this Order, defendants, in connection with any business in which any defendant is the majority owner of the business or directly or indirectly manages or controls the business, and where the business is engaged in telemarketing, are hereby restrained and enjoined from failing to create and retain records sufficient to demonstrate defendants’ compliance with this Order, including but not limited to, records of every consumer complaint and refund request, whether received directly or indirectly through any third party, and copies of all sales scripts, training materials, advertisements, and other marketing materials used.

 

B. For purposes of determining or securing compliance with this Order, defendants shall permit, for a period of three (3) years from the date of entry of this Order, and upon reasonable written notice to defendants, representatives of the Federal Trade Commission to access, inspect and/or copy all such records.

V. COMPLIANCE REPORTING BY DEFENDANTS

IT IS FURTHER ORDERED that for a period of three (3) years from the date of entry of this Order:

A. Each defendant shall notify the Commission in writing of any employment or affiliation with any new business that is related to the telemarketing of any product or service to U.S. residents, including the new business' name and address, a statement of the nature of the business, and a statement of defendant’s duties and responsibilities in connection with the business;

 

B. Defendant Loukas shall notify the Commission in writing of any proposed change in the structure of defendant Pacific Rim Pools International, that may affect compliance obligations arising out of this Order;

 

C. Within one hundred-eighty (180) days after the date of entry of this Order, defendants shall file a report, in writing, setting forth in detail the manner and form in which each of them has complied with this Order; and

 

D. For purposes of this Order all notices and reports required of defendants shall be made to the following address:

Regional Director
Federal Trade Commission
915 Second Avenue, Suite 2896
Seattle, Washington 98174

VI. ACKNOWLEDGMENT OF RECEIPT OF ORDER

IT IS FURTHER ORDERED that, within five (5) business days after receipt by defendants of this Order as entered by the Court, defendants shall each submit to the Commission a truthful sworn statement, in the form shown on Appendix A, that shall acknowledge receipt of this Permanent Injunction and Final Judgment.

VII. COMPLIANCE MONITORING BY FTC

IT IS FURTHER ORDERED that the Commission is authorized to monitor defendants’ compliance with this Order by all lawful means available, including but not limited to the use of compulsory process and the use of investigators posing as consumers or suppliers.

VIII. RETENTION OF JURISDICTION

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for the purpose of enabling either of the parties to this Order 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 for the punishment of violations thereof.

SO ORDERED, this _____ day of , 1998.

______________________________
United States District Judge

The parties hereby consent to the terms and conditions set forth above and consent to entry of this Order without further notice to the parties. Defendants waive any rights that may arise under the Equal Access to Justice Act, 28 U.S.C. § 2412.

FOR THE DEFENDANTS:

MICHAEL LOUKAS
Individually and as Owner and Officer of
Pacific Rim Pools International and
ENA Enterprises

________________________________
PATRICIA LYNN KUCEY

_______________________________
MICHAEL D. MCKAY WSBA # 7040
Attorney for Defendants

FOR THE PLAINTIFF:

_______________________________
ELEANOR DURHAM
Attorney for Plaintiff