GREGG SHAPIRO
Federal Trade Commission
600 Pennsylvania Ave., N.W., Rm. 200
Washington, D.C. 20580
(202) 326-3549 (voice)
(202) 326-3392 (facsimile)

JEROME M. STEINER, JR.
Federal Trade Commission
901 Market St., Ste. 570
San Francisco, CA 94103
(415) 356-5270

BLAINE T. WELSH
Assistant United States Attorney
701 E. Bridger Ave., Ste. 800
Las Vegas, NV 89101
(702) 388-6336

Attorneys for Plaintiff

UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA

FEDERAL TRADE COMMISSION, )

Plaintiff,

v.

DAYTON FAMILY PRODUCTIONS, INC., et al.,

Defendants.

CV-S-97-00750-PMP (LRL)

[proposed] JUDGMENT BY DEFAULT AND PERMANENT INJUNCTION AGAINST DEFENDANT JOHN RUBBICO

Plaintiff, the Federal Trade Commission (“Commission”), commenced this action by filing its complaint seeking an injunction and other relief against various defendants, including defendant John Rubbico dba J J Family Film Productions (“Rubbico”), in connection with the operation of an allegedly fraudulent telemarketing business that promoted investments in films produced and/or directed by Lyman Dayton. On July 3, 1997, the Commission filed a first amended complaint that named additional parties. The amended complaint alleges that the defendants engaged in unfair or deceptive acts or practices in violation of Section 5 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. 45, and seeks a permanent injunction and monetary relief pursuant to Section 13(b) of the FTC Act. Pursuant to Rule 55(a) of the Federal Rules of Civil Procedure, default was entered against defendant Davidson on September 8, 1997, and against defendant Hart on September 29, 1997. The Commission now has moved this Court for entry of a judgment by default against defendants Davidson and Hart, pursuant to Rule 55(b)(2) of the Federal Rules of Civil Procedure. Having considered the memorandum and exhibits filed in support of this motion, and all other pleadings and files in this action, and now being fully advised in the premises, the Court finds:

  1. This is an action by the Commission instituted under Sections 5 and 13(b) of the FTC Act, 15 U.S.C. 45 and 53(b), and the Telemarketing Sales Rule ("TSR"), 16 C.F.R. Part 310. The amended complaint seeks both permanent injunctive relief and consumer redress for alleged unfair or deceptive acts or practices by the defendants in connection with the telephonic solicitations of investments for films.
  2. The Commission has the authority under Section 13(b) of the FTC Act to seek the relief it has requested.
  3. This Court has jurisdiction over the subject matter of this case and has jurisdiction over defendant Rubbico. Venue in the District of Nevada is proper, and the amended complaint states a claim upon which relief may be granted against defendant Rubbico under Sections 5 and 13(b) of the FTC Act and the TSR.
  4. The activities of defendant Rubbico are in or affecting commerce, as defined in 15 U.S.C. 44.
  5. Defendant Rubbico has failed to answer the amended complaint or otherwise defend himself in this action. Accordingly, defendant Rubbico is in default.
  6. To the best of this Court’s information and knowledge, defendant Rubbico is not an infant, he has not been declared incompetent, and he is not currently in the military or otherwise exempted from default judgment under the Soldiers’ and Sailors’ Civil Relief Act of 1940.
  7. It is proper in this case to issue a permanent injunction prohibiting defendant Rubbico from engaging in telemarketing or assisting others engaged in telemarketing, and to prohibit him from making misrepresentations in connection with the advertising, promotion, marketing or sale of products, services or investments of any kind, and to provide for monitoring by the Commission of defendant Rubbico’s compliance with such a permanent injunction.
  8. It is proper in this case to enter a monetary judgment against defendant Rubbico to redress consumer injury which resulted from violations of the FTC Act by defendants. The proper measure of consumer injury is the amount of money paid by consumers solicited by defendant Rubbico or persons under his direction or control that resulted from these violations. Redress to consumers is warranted because defendants’ misrepresentations are of a type generally relied upon by consumers. Defendant Rubbico is liable for the full amount of redress to consumers for all sales by himself and those over whom he had the authority to direct and control, even though it may exceed his unjust enrichment.
  9. Defendant Rubbico was responsible for selling at least $300,000 worth of investment interests in defendants’ partnerships.
  10. This action and the relief awarded herein are in addition to, and not in lieu of, other remedies as may be provided by law, including both civil and criminal remedies.
  11. Entry of this Order is in the public interest.

DEFINITIONS

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

A. “Telemarketing” shall mean any business activity (whether or not covered by the TSR and including, but not limited to, initiating or receiving telephone calls, managing others who initiate or receive telephone calls, operating an enterprise that initiates or receives telephone calls, owning an enterprise that initiates or receives telephone calls, or otherwise participating as an officer, director, employee or independent contractor in an enterprise that initiates or receives telephone calls) that involves attempts to induce consumers to purchase any item, good, service, partnership interest, trust interest or other beneficial interest, to make a charitable contribution, or to enter a contest for a prize, by means of telephone sales presentations, either exclusively or in conjunction with the use of other forms of marketing. Provided that the term “telemarketing” shall not include transactions that are not completed until after a face-to-face contact between the seller or solicitor and the consumers solicited.

B. “Assisting others engaged in telemarketing” means knowingly providing any of the following goods or services to any person or entity engaged in telemarketing: (1) performing customer service functions for an entity engaged in telemarketing, including, but not limited to, receiving or responding to consumer complaints; (2) formulating or providing, or arranging for the formulation or provision of, any telephone sales script or any other marketing material for an entity engaged in telemarketing; (3) providing names of, or assisting in the generation of, potential customers for an entity engaged in telemarketing; or (4) performing marketing services of any kind for an entity engaged in telemarketing.

PROHIBITED BUSINESS PRACTICES

I. THEREFORE, IT IS HEREBY ORDERED that defendant Rubbico is permanently restrained and enjoined from either (1) engaging in telemarketing, or (2) assisting others engaged in telemarketing.

IT IS FURTHER ORDERED that defendant Rubbico and his agents, employees, officers, servants and attorneys, and all other persons or entities in active concert or participation with him who receive actual notice of this order by personal service or otherwise, in connection with the advertising, promotion, offer for sale, or sale of any item, product, good, service, or investment interest of any kind, including but not limited to investments in films, are hereby restrained and enjoined from:

A. Misrepresenting, directly or by implication, the returns, revenues, or profits that any film has generated for investors;

B. Misrepresenting, directly or by implication, the performance (including gross revenues generated and box office receipts) of any film;

C. Misrepresenting, directly or by implication, the awards received by any film or by any person who has worked on or been associated with a film;

D. Misrepresenting the likely profits to be made through any investment involving films or any other investment;

E. Misrepresenting, directly or by implication, the amount of money or other capital that will be raised for any investment involving films or any other investment;

F. Misrepresenting, directly or by implication, the purposes for which funds raised from consumers will be used;

G. Misrepresenting, directly or by implication, the costs associated with the advertising, promotion, offer for sale, or sale of any item, product, good, service, or investment, including but not limited to any investment involving films;

H. Misrepresenting, in any manner, directly or by implication, the risk, liquidity, market value, resale value, or expected income or profit associated with any item, product, good, service, or investment, including but not limited to any investment involving films;

I. Misrepresenting, in any manner, directly or by implication, or failing to disclose any fact material to a consumer's decision to purchase any item, product, good, service, or investment, including but not limited to any investment involving films;

J. Conducting or participating in any telemarketing solicitation without compliance with all applicable federal and state registration and bond requirements; and

K. Violating or assisting others to violate any provisions of the Telemarketing Sales Rule, 16 C.F.R. Part 310, including but not limited to: misrepresenting, directly or by implication "[a]ny material aspect of an investment opportunity including, but not limited to, risk, liquidity, earnings potential, or profitability." 16 C.F.R. 310.3(a)(2)(vi).

RECORD KEEPING PROVISIONS

II. IT IS FURTHER ORDERED that, for a period of five years from the date of entry of this Order, defendant Rubbico, and his officers, agents, servants, employees, and attorneys, and all other persons or entities in active concert or participation with him, are hereby restrained and enjoined from:

A. Failing to make and keep such books, records, accounts, bank statements, current accountants' reports, general ledgers, general journals, cash receipts ledgers, cash disbursements ledgers and sources documents, documents indicating title to real or personal property, and any other documents as may be required to reflect, in reasonable detail, accurately and fairly, all of defendants’ business and financial transactions; and

B. Destroying, throwing away, mutilating, changing, concealing, altering, transferring, or otherwise disposing of, in any manner, directly or indirectly, any books, records, tapes, discs, accounting data, checks (fronts and backs), correspondence, forms, advertisements, brochures, manuals, electronically stored data, banking records, consumer lists, files, invoices, telephone records, ledgers, payroll records, or other business or financial documents of any kind, including information stored in computer-maintained form, in the possession, custody, or control of any defendant or any other person or entity in active concert or participation with any defendant.

MONITORING

III. IT IS FURTHER ORDERED that, in order that compliance with the provisions of this Order may be monitored:

A. Defendant Rubbico shall notify the Commission in writing, within 10 days of the date of entry of this Order, of his current residential address, mailing address, business and home telephone numbers, and employment status, including the names, telephone numbers, and business addresses of any current employers;

B. For a period of seven years from the date of entry of this Order, defendant Rubbico shall notify the Commission in writing within 30 days of any changes in his residential or mailing addresses, telephone numbers, or employment status;

C. For the purposes of this Order, all written notifications to the Commission shall be mailed to:

Associate Director for Service Industry Practices
Room H-200
Federal Trade Commission
Washington, D.C. 20580
Re: FTC v. Dayton Family Productions

D. For the purposes of Subparagraphs IV.A and IV.B, "employment" includes the performance of services as an employee, consultant, or independent contractor; and "employers" include any entity or individual for whom defendant Rubbico performs services as an employee, consultant, or independent contractor.

E. For a period of seven years from the date of entry of this Order, for the purpose of further determining compliance with this Order, defendant Rubbico shall permit representatives of the Commission, within seven business days of receipt of written notice from the Commission:

1. Access during normal business hours to any office, or facility storing documents, of any business where defendant Rubbico is the majority owner of the business or otherwise directly or indirectly manages or controls the business. In providing such access, defendant Rubbico shall permit representatives of the Commission to inspect and copy all documents relevant to any matter contained in this Order; and

2. To interview or depose the officers, directors, and employees of any business to which Subparagraph A of this Paragraph applies, concerning matters relating to compliance with the terms of this Order. The person interviewed or deposed may have counsel present. Provided that the Commission may otherwise monitor defendant Rubbico's compliance with this Order by all lawful means available, including the use of compulsory process seeking production of documents and the use of investigators posing as consumers or suppliers.

3. For purposes of this Paragraph, written notice to defendant Rubbico shall be deemed sufficient if mailed to the most recent residential address he has provided to the Commission.

MONETARY RELIEF

IV. IT IS FURTHER ORDERED that judgment is hereby entered against defendant Rubbico in the amount of $300,000 for equitable monetary relief, including but not limited to consumer redress, and for paying any attendant expenses of administering any redress fund. The Commission in its sole discretion may use a designated agent to administer consumer redress. If the Commission, in its sole discretion, determines that redress is wholly or partially impractical, any funds not so used shall be deposited into the United States Treasury as an equitable disgorgement remedy. This equitable monetary relief is solely remedial in nature and is not a fine, penalty, punitive assessment, or forfeiture.

LISTS

V. IT IS FURTHER ORDERED that defendant Rubbico and his officers, agents, servants, employees, and attorneys, and all other persons or entities in active concert or participation with him who receive actual notice of this Order by personal service or otherwise, are permanently restrained and enjoined from selling, renting, leasing, transferring, or otherwise disclosing the name, address, telephone number, credit card number, bank account number, e-mail address, or other identifying information of any person who paid any money to any defendant, at any time prior to entry of this Order, in connection with investments involving films. Provided that defendant Rubbico may disclose such identifying information to a law enforcement agency or as required by any law, regulation, or court order.

ORDER DISTRIBUTION

VI. IT IS FURTHER ORDERED that, for a period of seven years from the date of entry of this Order, defendant Rubbico shall:

A. Provide a copy of this Order to, and obtain a signed and dated acknowledgment of receipt of same from, each officer or director, each individual serving in a management capacity, all personnel involved in responding to consumer complaints or inquiries, and all sales personnel, whether designated as employees, consultants, independent contractors or otherwise, immediately upon employing or retaining any such persons, for any business where

(1) defendant Rubbico is the majority owner of the business or otherwise directly or indirectly manages or controls the business, and where

(2) the business engages in, or assists others engaged in, telemarketing; and

B. Maintain for a period of three years after creation, and upon reasonable notice make available to representatives of the Commission, the original signed and dated acknowledgments of the receipt of copies of this Order, as required in Subparagraph A of this Paragraph.

RETENTION OF JURISDICTION

VII. IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for all purposes.

ENTRY OF THIS JUDGMENT

VIII.IT IS FURTHER ORDERED that there is no just reason for delay of entry of this judgment, and, pursuant to Fed. R. Civ. P. 54(b), the Clerk shall enter this Order immediately.

IT IS SO ORDERED.

________________________________
The Honorable Philip M. Pro
United States District Judge