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

THE FEDERAL TRADE COMMISSION,

Plaintiff,

v.

JOHN MANCINI, an individual, doing business as CREDIT SERVICES,

Defendant.

CIVIL ACTION NO.

COMPLAINT FOR INJUNCTION AND OTHER RELIEF

Plaintiff, the Federal Trade Commission ("FTC" or "the Commission"), for its complaint, alleges as follows:

1. The Commission brings this action under Sections 13(b) and 19 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. 53(b) and 57b, and Section 410(b) of the Credit Repair Organizations Act, 15 U.S.C. 1679h(b), to obtain preliminary and permanent injunctive relief, restitution, rescission, disgorgement and other equitable relief for defendant’s deceptive acts or practices in connection with the sale and offering for sale of credit repair services in violation of Section 5(a) of the FTC Act, 15 U.S.C. 45(a), and the Credit Repair Organizations Act , 15 U.S.C. 1679 et seq.

JURISDICTION AND VENUE

2. This Court has jurisdiction of this matter pursuant to 28 U.S.C. 1331, 1337(a), and 1345, and 15 U.S.C. 53(b), 57b and 1679h((b).

3. Venue in this district is proper under 28 U.S.C. 1391(b) and (c), and 15 U.S.C. 53(b).

THE PARTIES

4. Plaintiff, the Federal Trade 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 also enforces the Credit Repair Organizations Act. 15 U.S.C. 1679h(a). The Commission is authorized to initiate federal district court proceedings, by its own attorneys, to enjoin violations of the FTC Act and the Credit Repair Organizations Act in order to secure such equitable relief, including consumer redress, as may be appropriate in each case. 15 U.S.C. 53(b), 57b, and 1679h(b).

5. Defendant John Mancini is an individual doing business as Credit Services. Mr. Mancini resides at 13661 Lakeside Place Drive, Willis, Texas, and maintains places of business at 8500 N. Stemmons Frwy., Suite 5055, Dallas, Texas, and 700 N.E. Loop 820, Suite 200A, Hurst, Texas. Mr. Mancini also maintains a place of business at 1110 N. Loop 336, West Suite 200A, Conroe, Texas. Defendant transacts or has transacted business in this District. At all times material to this complaint, acting alone or in concert with others, defendant has formulated, directed, controlled or participated in the acts and practices of Credit Services, including the acts and practices set forth in this complaint.

COMMERCE

6. At all times relevant to this complaint, defendant has maintained a substantial course of trade in the offering for sale and selling of credit repair services, in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. 44.

DEFENDANT’S BUSINESS PRACTICES

7. Since at least 1984, defendant has advertised, promoted, offered for sale, and sold credit repair services to consumers.

8. Through his representatives, defendant has offered "credit repair" services purporting to remove derogatory information from, or improve, consumers' credit histories, credit records, and credit ratings. Defendant claims to be able to remove bankruptcies, school loans, repossessions, and all other negative information from consumers' credit reports, even where such information is accurate and not obsolete. Before providing any of the promised services, defendant’s representatives request and obtain at least partial payment for these services.

9. Typical and illustrative of defendant’s claims about his credit repair services are the following:

a. "We legally remove all negative credit from your reports. All work is guaranteed and 100% legal."

b. "We use the credit laws to go in and dispute and remove all the negative items from the credit report regardless of what it is, why it’s there or how it got there."

c. "Once it is removed, if for any reason it did reappear, you just give us a call and we will take it back off free of charge."

d. "For both you and your wife to have the bankruptcy removed and the 6-10 items, you’re looking at a total cost of $895; we can get started with as little as $95 down and work out a payment plan with you on the balance, with a minimum of $50 monthly. The $95 would be paid at the initial appointment."

e. "[Consumer: the thing I want to make sure is that you can get this bankruptcy, even though it’s truthful,] Yes, sir. We can get it taken off. It can take approximately two to three months, it depends."

10. Consumers have agreed to purchase defendant’s services based on the representations set forth above, among others. Defendant has usually charged $495 or more for these services.

THE CREDIT REPAIR ORGANIZATIONS ACT

11. The Credit Repair Organizations Act, signed by the President on September 30, 1996, took effect on April 1, 1997, and has since that date remained in full force and effect.

12. Defendant is a "credit repair organization" as that term is defined in the Credit Repair Organizations Act, 15 U.S.C. 1679a(3).

13. The purposes of the Credit Repair Organizations Act, according to Congress, are:

(1) to ensure that prospective buyers of the services of credit repair organizations are provided with the information necessary to make an informed decision

regarding the purchase of such services; and (2) to protect the public from unfair or deceptive advertising and business practices by credit repair organizations. 15 U.S.C. 1679(b).

14. Section 404(b) of the Credit Repair Organizations Act prohibits credit repair organizations from charging or receiving any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform before such service is fully performed. 15 U.S.C. 1679b(b).

15. Section 404(a)(3) of the Credit Repair Organizations Act prohibits all persons from making or using any untrue or misleading representation of the services of the credit repair organization. 15 U.S.C. 1679b(a)(3).

16. Pursuant to Section 410(b)(1) of the Credit Repair Organizations Act, 15 U.S.C. 1679h(b)(1), any violation of any requirement or prohibition of the Credit Repair Organizations Act constitutes an unfair and deceptive act or practice in commerce in violation of Section 5(a) of the FTC Act, 15 U.S.C. 45(a).

VIOLATIONS OF THE CREDIT REPAIR ORGANIZATIONS ACT

COUNT ONE

17. In connection with the performance of services for consumers by a credit repair organization, as that term is defined in Section 403(3) of the Credit Repair Organizations Act, 15 U.S.C. 1679a(3), defendant has charged or received money or other valuable consideration for the performance of credit repair services that defendant has agreed to perform before such services were fully performed. Defendant has thereby violated Section 404(b) of the Credit Repair Organizations Act. 15 U.S.C. 1679b(b).

COUNT TWO

18. In connection with the performance of services for consumers by a credit repair organization, as that term is defined in Section 403(3) of the Credit Repair Organizations Act, 15 U.S.C. 1679a(3), defendant has made untrue or misleading statements to induce consumers to purchase his credit repair services, including, but not limited to, the representation that defendant can improve substantially most consumers’ credit reports or profiles by permanently removing bankruptcies, school loans, repossessions, and other negative information from consumers' credit reports, even where such information is accurate and not obsolete.

19. In truth and fact defendant cannot improve substantially most consumers’ credit reports or profiles by permanently removing bankruptcies, school loans, repossessions and other negative information from consumers' credit reports, even where such information is accurate and not obsolete.

20. Defendant has thereby violated Section 404(a)(3) of the Credit Repair Organizations Act. 15 U.S.C. 1679b(a)(3).

VIOLATIONS OF SECTION 5 OF THE FTC ACT

21. Section 5(a) of the FTC Act, 15 U.S.C. 45(a), prohibits unfair or deceptive acts or practices in or affecting commerce.

22. Misrepresentations of material fact constitute deceptive acts or practices prohibited by Section 5(a) of the FTC Act.

COUNT THREE

23. In connection with the advertising, marketing, promotion, offering for sale, or sale of credit repair services, defendant has made untrue or misleading statements to induce consumers to purchase his services, including, but not limited to, the representation that defendant can improve substantially most consumers’ credit reports or profiles by permanently removing bankruptcies, school loans, repossessions, and other negative information from consumers' credit reports, even where such information is accurate and not obsolete.

24. In truth and fact defendant cannot improve substantially most consumers’ credit reports or profiles by permanently removing bankruptcies, school loans, repossessions and other negative information from consumers' credit reports, even where such information is accurate and not obsolete.

25. Therefore, defendant’s representations are false and misleading constituting deceptive acts or practices in violations of Section 5(a) of the FTC Act. 15 U.S.C. 45(a).

CONSUMER INJURY

26. Consumers have suffered or are likely to suffer substantial monetary loss as a result of defendant’s unlawful acts or practices. Absent injunctive relief by this Court, defendant is likely to continue to injure consumers and harm the public interest.

THIS COURT'S POWER TO GRANT RELIEF

27. Sections 13(b) and 19 of the FTC Act, 15 U.S.C. 53(b) and 57b, and Section 410(b) of the Credit Repair Organizations Act, 15 U.S.C. 1679h(b), empower this Court to issue a permanent injunction against defendant’s violations of the Credit Repair Organizations Act and the FTC Act and, in the exercise of its equitable jurisdiction, to order such ancillary relief as preliminary injunction, rescission, restitution, disgorgement of profits resulting from defendant’s unlawful acts or practices, and other remedial measures.

PRAYER FOR RELIEF

WHEREFORE, plaintiff requests that this Court, as authorized by Section 410(b) of the Credit Repair Organizations Act, 15 U.S.C. 1679h(b), Sections 13(b) and 19 of the FTC Act, 15 U.S.C. 53(b) and 57b, and pursuant to its own equitable powers:

(a) 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;

(b) Permanently enjoin defendant from violating the Credit Repair Organizations Act and the FTC Act, as alleged herein, in connection with the advertising, promoting, offering for sale, and sale of credit repair services;

(c) Award such relief as the Court finds necessary to redress injury to consumers resulting from defendant’s violations of the Credit Repair Organizations Act 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

(d) Award plaintiff the costs of bringing this action, including reasonable attorney’s fees, as well as such other and additional relief as the Court may determine to be just and proper.

Dated:_____________, 1998

Respectfully Submitted,

DEBRA A. VALENTINE
General Counsel
Federal Trade Commission

THOMAS B. CARTER
Director, Dallas Regional Office

W. DAVID GRIGGS, . Texas Bar No. 08491100
JOHN R. HOAGLAND
District of Columbia Bar No. 183699
Federal Trade Commission
1999 Bryan Street, Suite 2150
Dallas, Texas 75201-6848
(214) 979-9378 (Griggs)
(214) 979-9395 (Hoagland)
(214) 953-3079 (Facsimile)
Attorneys for Plaintiff