UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

FEDERAL TRADE COMMISSION, Plaintiff,

v.

SUMMIT PHOTOGRAPHIX, INC., a Texas corporation;

DANIEL P. KONDOS, individually and as an owner of the corporate defendant Summit Photographix, Inc.;

JOHN LOVELACE, individually and as an owner of the corporate defendant Summit Photographix, Inc.;

BRADLEY DOUGLAS HIGHUM, individually and as an officer of the corporate defendant Summit Photographix, Inc.; and

BRUCE E. CAMPBELL, individually and as an officer of the corporate defendant Summit Photographix, Inc., Defendants.

CIVIL ACTION No.

COMPLAINT FOR INJUNCTION AND OTHER EQUITABLE RELIEF

Plaintiff, the Federal Trade Commission ("Commission"), for its complaint alleges:

  1. The Commission 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, and other equitable relief, including rescission of contracts, restitution, and disgorgement, for defendants' unfair or deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C.  45(a).

JURISDICTION AND VENUE

  1. This Court has jurisdiction over this matter pursuant to 28 U.S.C.  1331, 1337(a) and 1345, and 15 U.S.C.  45(a) and 53(b).
  1. Venue in the Northern District of Texas is proper under 28 U.S.C.  1391(b) and (c), and 15 U.S.C.  53(b).

PLAINTIFF

  1. The 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).

DEFENDANTS

  1. Defendant SUMMIT PHOTOGRAPHIX, INC. ("Summit"), a Texas corporation which had its principal place of business at 14681 Midway Road, Dallas, Texas 75244, offers and sells business ventures for the sale of prepaid trading cards and post cards to the public. Summit has transacted business in the Northern District of Texas.
  1. Defendant DANIEL P. KONDOS is an owner of Summit. 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. In connection with the matters alleged herein, he has transacted business in the Northern District of Texas.
  1. Defendant JOHN LOVELACE is an owner of Summit. 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. In connection with the matters alleged herein, he has transacted business in the Northern District of Texas.
  1. Defendant BRADLEY DOUGLAS HIGHUM is an officer of Summit. 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. In connection with the matters alleged herein, he has transacted business in the Northern District of Texas.
  1. Defendant BRUCE E. CAMPBELL is an officer of Summit. 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. In connection with the matters alleged herein, he has transacted business in the Northern District of Texas.

COMMERCE

  1. At all times relevant to this complaint, the defendants have maintained a substantial course of trade or business in the offering and sale of trading cards and postcard 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

  1. Beginning in at least March of 1994, the defendants engaged in a common scheme to offer for sale and sell purportedly profitable pre-paid trading card and postcard business ventures to members of the public. Defendants sent written materials to consumers inviting them to attend seminars located in hotels around the country at which the business ventures were discussed. In order to induce purchasers to invest substantial amounts of money, the defendants, directly or through their agents, represented at the seminars that these business ventures were successful and highly profitable. Consumers were informed that they could earn from $3,000 to $10,000 each month by investing in the business.
  1. Shortly after consumers purchased the business ventures, they received follow-up telephone calls from the defendants during which they were again told that they could make substantial earnings, as much as $175,000 a year, from their investments and from participating in group sales programs offered by the defendants. Representations were made relating to the ease of operating the business venture and achieving substantial sales; the provision of support and training; the exclusivity of sales in a geographic area; the earnings potential of the business venture; the timely delivery of finished products; the quality of the finished product; and the inclusion of free vouchers in the sale of prepaid vouchers. As a result, they were induced to purchase significant additional amounts of products and advertising materials from the defendants. Individual consumers spent from $2,000 to $8,000 on defendants' products and materials.

VIOLATIONS OF SECTION 5 OF THE FTC ACT

COUNT ONE

  1. In the course of offering for sale and selling pre-paid trading card and postcard business ventures, defendants, directly or indirectly, have represented, expressly or by implication, that purchasers can reasonably expect to operate exclusively in a specific geographic territory.
  1. In truth and in fact, in numerous instances, purchasers did not operate exclusively in a specific geographic territory.
  1. Therefore, defendants' representations as set forth in Paragraph 13 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).

COUNT TWO

  1. In the course of offering for sale and selling pre-paid trading card and postcard business ventures, defendants, directly or indirectly, have represented, expressly or by implication, that purchasers can reasonably expect to achieve a specific level of earnings.
  1. In truth and in fact, in numerous instances, purchasers did not attain the specific level of earnings represented by the defendants.
  1. Therefore, defendants' representations as set forth in Paragraph 16 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

  1. Consumers in many areas of 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

  1. Section 13(b) of the FTC Act, 15 U.S.C.  53(b), empowers this Court to grant injunctive and other equitable relief, including consumer redress, disgorgement and restitution, to prevent and remedy any violations of any provision of law enforced by the Commission.
  1. This Court, in the exercise of its equitable jurisdiction, may award other relief to remedy injury caused by the defendants' law violations.

PRAYER FOR RELIEF

WHEREFORE, the Commission 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;
  1. Enter judgment against the defendants and in favor of the plaintiff for each violation alleged in this complaint;
  1. Permanently enjoin the defendants from violating the FTC Act, as alleged herein;
  1. Award such relief as the Court finds necessary to redress injury to consumers resulting from the defendants' violations of the Franchise Rule and the FTC Act, including but not limited to, rescission of contracts, the refund of monies paid, and the disgorgement of ill-gotten monies; and
  1. Award plaintiff the costs of bringing this action, as well as such other and additional relief as the Court may determine to be just and proper.

DATED: February 19, 1998 Respectfully submitted,

DEBRA A. VALENTINE
General Counsel

______________________________
JAMES E. ELLIOTT
TX State Bar No. 06557100

______________________________
JAMES R. GOLDER
TX State Bar No. 08089520

FEDERAL TRADE COMMISSION
Dallas Regional Office
1999 Bryan Street, Ste 2150
Dallas TX 75201-6808
214 979-9350
214 979-9373 (James E. Elliott)
214 979-9376 (James R. Golder)
214 953-3079 (Facsimile Machine)

ATTORNEYS FOR PLAINTIFF
FEDERAL TRADE COMMISSION