Stipulated Final Judgment and Order for Permanent Injunction as to Defendants Jeffrey Shoobs, and Prestige Advertising, Inc. dba Prestige Fragrances, Inc.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

FEDERAL TRADE COMMISSION,

Plaintiff,

RAYMOND URSO, et al

Defendants.

Case No. 97-2680
CIV-Ungaro-Benages
Magistrate Judge Bandstra

Stipulated Final Judgment and Order for Permanent Injunction as to Defendants Jeffrey Shoobs, and Prestige Advertising, Inc. dba Prestige Fragrances, Inc.

On August 19, 1997, plaintiff, the Federal Trade Commission ("FTC" or "Commission"), filed its complaint for a permanent injunction and other relief in this matter, pursuant to Sections 13(b) and 19(a) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b(a), charging Jeffrey Shoobs and Prestige Advertising, Inc., dba Prestige Fragrances, Inc. ("Stipulating Defendants") with violations of (1) Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and (2) the FTC’s Trade Regulation Rule entitled "Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures" ("Franchise Rule"), 16 C.F.R. Part 436. On August 19, 1997, this Court issued an ex parte Temporary Restraining Order pursuant to Rule 65 of the Federal Rules of Civil Procedure, Fed. R. Civ. P. 65, that, inter alia, froze the Stipulating Defendants' assets and appointed Thomas Schultz, Esq., as the receiver for the corporate defendant Prestige Advertising, Inc., dba Prestige Fragrances ("Prestige"). On September 15, this Court entered a stipulated preliminary injunction against both of the Stipulating Defendants.

The Commission, by and through its counsel, and the Stipulating Defendants, by and through their counsel, have agreed and stipulated to the entry of this Stipulated Final Judgment and Order for Permanent Injunction ("Final Order") by this Court. Therefore, the Stipulating Defendants and the Commission having requested the Court to enter this Final Order, the Court makes the following findings of fact and orders the following:

FINDINGS

This Court has jurisdiction over the subject matter of this case and of the parties hereto;
The Commission's complaint states a claim upon which relief may be granted against the Stipulating Defendants under Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the Franchise Rule, 16 C.F.R. Part 436;
The Stipulating Defendants waive any claim they may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action;
The Stipulating Defendants have waived all rights to seek appellate review or otherwise challenge or contest the validity of this Final Order;
Entry of this Final Order is in the public interest.

DEFINITIONS

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

"Stipulating Defendants" means Jeffrey Shoobs and Prestige Advertising, Inc. dba Prestige Fragrances, Inc., and each of them and their successors, assigns, affiliated entities, officers, agents, servants, employees, and those persons in active concert or participation with them who receive actual notice of this Final Order by personal service or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device.
"Defendants" means the individuals and corporate entities named in connection with FTC v. Raymond Urso et al., CIV 97-2780, (S.D. Fla. 1997). These are Raymond Urso, Bernard Koenig, Marcia Koenig, Jeffrey Shoobs, David Bennett, Scott Gunn, Susan Perkins, Bridgeport & Associates, Inc., Prestige Advertising, Inc. dba Prestige Fragrances, Inc., National Bureau of Better Business, Inc., and Maria K Associates, Inc.
"Business opportunity" or "Business venture" means any written or oral business arrangement, however denominated, that is covered by the Franchise Rule, Franchise Rule, 16 C.F.R. Part 436, a copy of which is attached to this Final Order.
“Franchise,” "Franchisee," and "Franchisor" are defined as in Section 436.2(a) of the Franchise Rule, 16 C.F.R. § 436.2(a), a copy of which is attached to this Final Order.
"Assets" means all real and personal property of any Stipulating Defendant, or held for the benefit of any Stipulating Defendant, including but not limited to "goods," "instruments," "equipment," "fixtures," "general intangibles," "inventory," "checks," or "notes," (as these terms are defined in the Uniform Commercial Code), and all cash, wherever located.

ORDER

CONDUCT PROHIBITIONS

IT IS THEREFORE ORDERED that, in connection with the promotion, marketing, offering for sale, or sale of any business opportunities, franchises, business ventures, goods or services, the Stipulating Defendants are hereby permanently restrained and enjoined from making, or assisting others in making, either orally or in writing, expressly or by implication, any false or misleading statements or representations of material fact to any person, including but not limited to representations about the following:

A. The income, profits, or sales volume a purchaser can achieve through the use of the business opportunities, franchises, business ventures, goods or services;

B. The income, profits, or sales volume achieved by other consumers who have used the business opportunities, franchises, business ventures, goods or services;

C. The cost of the business opportunities, franchises, business ventures, goods or services or the cost to use the goods or services;

D. The length of time that it may or will take to recoup the cost of the business opportunities, franchises, business ventures, goods or services;

E. The availability and profitability of locations for the business opportunities, franchises, business ventures, goods or services;

F. The authenticity of references or testimonials who have purportedly used or acquired the business opportunities, franchises, business ventures, goods or services;

G. Stipulating Defendant Jeffrey Shoobs' true identity in the course of his business dealings or in publicly filed documents, including but not limited to the use of any fictitious, false, or assumed title or name, other than his own proper name.

II.

IT IS FURTHER ORDERED that the Stipulating Defendants are hereby permanently restrained and enjoined from violating, or assisting others to violate, any provisions of the Franchise Rule as now promulgated or as it may hereinafter be amended, 16 C.F.R. Part 436, including but not limited to the following:

A. Failing to provide potential franchisees with a complete and accurate disclosure document containing all of the information required under §§ 436.1(a)(1)-(24) of the Franchise Rule, in the manner and within the time required by the Franchise Rule;

B. Failing to have a reasonable basis for any earnings claim at the time such claim is made, as required under by §§ 436.1(b)-(e) of the Franchise Rule;

C. Failing to provide potential franchisees with an earnings claim document when any earnings claim is made, as required by §§ 436.1(e)(3)-(4) of the Franchise Rule;

D. Failing to disclose, in immediate conjunction with any advertised earnings claim, the material basis of the claim (or the lack of such basis) and a warning that the earnings claim is only an estimate, as required by §§ 436.1(e)(3)-(4) of the Franchise Rule; and

E. Engaging in any other act or practice prohibited by §§ 436.1(f)-(h) of the Franchise Rule, or failing to fulfill any obligation imposed by the Franchise Rule.

III.

IT IS FURTHER ORDERED that the Stipulating Defendants are further permanently restrained and enjoined from operating corporate defendants Bridgeport & Associates, Inc. (“Bridgeport”), Prestige Advertising, Inc. dba Prestige Fragrances (“Prestige”), Maria K Associates, Inc. (“Maria K”), and the National Bureau of Better Business, Inc. (“NBBB”). The Stipulating Defendants are further permanently restrained and enjoined from engaging in any business activities with any other individual named as a defendant in the Commission's action, which includes Raymond Urso, Bernard Koenig, Marcia Koenig, Scott Gunn, David Bennett, and Susan Perkins, as well as any former or current individuals employed by these defendants, including but not limited to Ed Jacobs, Mike Barth, Mike Noble, and Giovanni Mastromonaco.

IV.

IT IS FURTHER ORDERED that, in connection with the promotion, telemarketing, marketing, offering for sale, or sale of any franchises, business ventures, business opportunities, goods or services, the Stipulating Defendants are hereby permanently restrained and enjoined from:

A. Failing to take reasonable steps sufficient to monitor and ensure that all employees engaged in sales or customer service functions comply with Paragraphs I and II of this Final Order. Such steps shall include, but are not limited to: adequate monitoring of all sales presentations and customer service telephone calls; blind testing of the oral representations made by each person engaged in sales or customer service functions; random checking of persons who communicated with each employee; and ascertaining the number and nature of complaints regarding any transactions in which each employee is involved;

B. Failing to terminate any employee upon such employee's second action of any sort prohibited by Paragraphs I and II of this Final Order that any Stipulating Defendant knows or should know occurred;

C. Failing to investigate and address promptly any complaint received by any Stipulating Defendant regarding any sales promotion or the sale of any good or service, and to notify the person of the resolution of the complaint and the reason(s) therefor.

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Final Order, Stipulating Defendant Jeffrey Shoobs shall:

A. Provide a copy of this Final Order to, and obtain a signed and dated acknowledgment of receipt of the same from each officer, director, managing agent, or employee of any Stipulating Defendant, as well as any officer or director in any company or other business entity formed by any Stipulating Defendant, and any officer or director in any company or other business entity in which Jeffrey Shoobs is also a principal operator; and

B. Maintain, and upon reasonable notice make available to representatives of the Commission, the original and dated acknowledgments of the receipts of copies of this Final Order required by Paragraph V.A above.

VI.

IT IS FURTHER ORDERED that the Stipulating Defendants are further 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 of the defendants, at any time prior to the entry of this Final Order, in connection with the selling of display-rack business opportunities. Provided, however, that the Stipulating Defendants may disclose such identifying information to a law enforcement agency or as required by any law, regulation, or court order.

RECEIVERSHIP

VII.

IT IS FURTHER ORDERED that Thomas Schultz, Esq., shall continue as receiver, with the full power of an equity receiver, for Stipulating Defendant Prestige and its affiliates and subsidiaries (hereinafter referred to as "the receivership defendant"), and of all the funds, properties, premises, accounts and other assets directly or indirectly owned, beneficially or otherwise, by the receivership defendant, with directions and authority to accomplish the following:

A. Assume full control of the receivership defendant by removing defendants Urso, Bernard Koenig, Marcia Koenig, Jeffrey Shoobs, Scott Gunn and any other officer, independent contractor, employee, or agent of the receivership defendant, from control and management of the affairs of the receivership defendant;

B. Collect, marshal, and take custody, control and possession of all the funds, property (real or personal), accounts, mail and other assets of, or in the possession or under the control of, the receivership defendant, wherever situated. The receiver shall also assume control over the income and profits therefrom, and all sums of money now or hereafter due or owing to the receivership defendants, with full power to collect, receive and take possession of all books, business and financial records, monies on hand in banks and other financial institutions, and all other papers and documents of the receivership defendants, wherever situated. The receiver shall return to consumers any checks received by the receivership defendant but not deposited as of August 19, 1997, the date the temporary restraining order was entered;

C. Perform all acts that the receiver deems necessary to conserve, hold, manage, and preserve the value of the assets of the receivership estate, including, but not limited to, suspending business operations, terminating contracts and leases, and liquidating other non-cash assets;

D. Enter into such agreements in connection with administration of the receivership, including, but not limited to: (1) retaining investigators, attorneys or accountants of the receiver's choice, including, without limitation, members and employees of the receiver's firm, to assist, advise, and represent the receiver; and (2) moving and storing of equipment, furniture, records, files or other physical property of the receivership defendant;

E. Institute, defend, prosecute, compromise, adjust, intervene in or become party to such actions or proceedings in state, federal or foreign courts that the receiver deems necessary and advisable to preserve the value of the properties of the receivership defendant or that the receiver deems necessary and advisable to carry out the receiver's mandate under this Order.

VIII.

IT IS FURTHER ORDERED that, except by leave of this Court, during the pendency of the receivership ordered herein, the Stipulating Defendants and all customers, principals, investors, creditors, stockholders, lessors, and other persons seeking to establish or enforce any claim, right or interest against or on behalf of the receivership defendant, or any of its subsidiaries or affiliates, and all others acting for or on behalf of such persons, including attorneys, trustees, agents, sheriffs, constables, marshals, and other officers and their deputies, and their respective attorneys, servants, agents and employees be and are hereby stayed from:

A. Commencing, prosecuting, continuing or enforcing any suit or proceeding against the receivership defendant, or any of its subsidiaries or affiliates, except that such actions may be filed to toll any applicable statute of limitations;

B. Commencing, prosecuting, continuing or entering any suit or proceeding in the name or on behalf of the receivership defendant, or any of its subsidiaries or affiliates;

C. Accelerating the due date of any obligation or claimed obligation, enforcing any lien upon, or taking or attempting to take possession of, or retaining possession of, a property of the receivership defendant, or any of its subsidiaries or affiliates or any property claimed by any of it or attempting to foreclose, forfeit, alter or terminate any of the receivership defendant’s interests in property, including, without limitation, the establishment, granting, or perfection of any security interest, whether such acts are part of a judicial proceeding or otherwise;

D. Using self-help or executing or issuing, or causing the execution or issuance of any court attachment, subpoena, replevin, execution or other process for the purpose of impounding or taking possession of or interfering with, or creating or enforcing a lien upon any property, wheresoever located, owned by or in the possession of the receivership defendant, or any of its subsidiaries or affiliates, or the receiver appointed pursuant to this Final Order or any agent appointed by said receiver; and

E. Doing any act or thing whatsoever to interfere with the receiver taking control, possession or management of the property subject to this receivership, or to in any way interfere with the receiver, or to harass or interfere with the duties of the receiver; or to interfere in any manner with the exclusive jurisdiction of this Court over the property and assets of the receivership defendant, or its subsidiaries or affiliates.

IX.

IT IS FURTHER ORDERED that, in light of the appointment of a receiver herein, the Stipulating Defendants or the creditors of the receivership defendant are hereby prohibited from filing a petition for relief under the United States Bankruptcy Code, 11 U.S.C. § 101 et seq., as to the receivership defendant without prior permission from this Court.

IT IS FURTHER ORDERED that the receiver and all personnel hired by the receiver are entitled to reasonable compensation for the performance of duties pursuant to this Final Order and for the cost of actual out-of-pocket expenses incurred by them, from the assets now held by or in the possession or control of or which may be received by the receivership defendant. The receiver shall not increase the hourly rates used as the bases for such fee applications without prior approval of the Court.

JUDGMENT

XI.

IT IS FURTHER ORDERED that the Judgment in the amount of five hundred thousand dollars ($500,000) is entered jointly and severally against the Stipulating Defendants and their heirs, assigns, and beneficiaries; provided, however, that upon payment by Stipulating Defendant Jeffrey Shoobs of one thousdand dollars ($1,000), the Commission will consider this Judgment satisfied as to Shoobs only; provided further that all funds contained in any accounts of Stipulating Defendant Prestige shall be turned over to the receiver; provided further that this Judgment shall be subject to the reopening conditions set forth in Paragraph XII.

Payment made by the Stipulating Defendants pursuant to this Paragraph shall be used to provide consumer redress and/or disgorgement and for paying any attendant expenses of administering the receivership estate or distribution of funds. If the Commission determines, in its sole discretion, that consumer redress is wholly or partially impracticable, any funds not so used shall be deposited into the United States Treasury. No portion of the payment as herein provided shall be deemed a payment of any fine, penalty, forfeiture, or punitive assessment.

XII.

IT IS FURTHER ORDERED that the Court's approval of the Judgment against the Stipulating Defendants contained in Paragraph XI is expressly premised upon the truthfulness, accuracy, and completeness of the financial statements which have been submitted to the Commission by the Stipulating Defendants, Jeffrey Shoobs and Prestige. If, upon motion by the Commission, this Court finds that the Stipulating Defendants' financial statements either failed to disclose any material asset or source of income or materially misrepresented the value of any asset or source of income, or contained any other material misrepresentation or omission, the entire amount of the Judgment set forth in Paragraph XI ($500,000) will be rendered immediately due and payable by the Stipulating Defendants.

Provided, however, that in all other respects this Final 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 and/or the receiver may initiate to enforce this Final Order. Solely for the purposes of reopening or enforcing this Final Order under this Paragraph, the Stipulating Defendants waive any right to contest any of the allegations in the Complaint filed in this matter.

RECORD KEEPING

XIII.

IT IS FURTHER ORDERED that, in order to facilitate the Commission's monitoring of compliance with the provisions of this Final Order, Stipulating Defendant Jeffrey Shoobs shall, for five (5) years after the date of entry of this Final Order:

A. Notify the Commission in writing, within thirty days after entry of this Final Order and each and every year thereafter, of his current residence address and employment status, including the name and business address of his current employer(s), if any;

B. Notify the Commission in writing within thirty days of any change in his residential address(es). Such notification shall include his new address(es) and telephone number(s);

C. Notify the Commission in writing within thirty days of any change in his employment status. Such notice shall include the name(s), address(es), and telephone number(s) of his new employer(s), a statement of the nature of the business(es), and a statement of his duties and responsibilities in connection with the business(es);

D. Notify the Commission in writing contemporaneously with the effective date of any proposed change in the structure of any business entity owned or controlled by him, such as creation, incorporation, dissolution, assignment, sale or creation of subsidiaries, or any other changes that may affect compliance obligations arising out of this Final Order;

E. After receiving reasonable notice from the Commission, permit duly authorized representatives of the Commission access during normal business hours to any office of any company or any person under his control, to inspect and copy all documents belonging to him and all documents of any company owned or controlled by him, in whole or in part, relating in any way to any conduct subject to this Final Order; and

F. Refrain from interfering with duly authorized representatives of the Commission who wish to interview his employers, agents and employees relating in any way to any conduct subject to this Final Order.

Provided, that the Commission may otherwise monitor Stipulating Defendant Jeffrey Shoobs' compliance with this Final Order by all lawful means available, including the taking of depositions, the issuance of subpoenas or other requests for production of documents, and the use of investigators posing as consumers or suppliers.

XIV.

IT IS FURTHER ORDERED that Stipulating Defendant Jeffrey Shoobs shall, within sixty (60) days after entry of this Final Order, file with the Commission a preliminary report and on the one hundred-fiftieth (150th) day following entry of this Final Order file a supplemental report, in writing, setting forth in detail the manner and form in which he has complied with this Final Order.

XV.

IT IS FURTHER ORDERED that all notices required of Stipulating Defendant Jeffrey Shoobs by this Final Order shall be made to the following address:

Associate Director
Division of Marketing Practices
Federal Trade Commission
Room 238
6th Street & Pennsylvania Avenue, N.W.
Washington, D.C. 20580

XVI.

IT IS FURTHER ORDERED that each party to this Final Order shall bear its own costs and attorney fees incurred in connection with this action; provided, however, in the event the Commission initiates proceedings to enforce the provisions of this Final Order and provided further the Court determines that some or all of the Stipulating Defendants have violated any term or provision of this Final Order, the Stipulating Defendants determined to have violated this Final Order shall pay the costs and attorney fees incurred by the Commission in connection with proceedings to enforce this Final Order.

XVII.

IT IS FURTHER ORDERED that, notwithstanding any other provision of this Final Order, Stipulating Defendant Jeffrey Shoobs agrees that if he fails to meet the payment obligations set forth in Paragraph XI, he shall pay the costs and attorney fees incurred by the Commission and its agents in any attempts to collect amounts due pursuant to this Final Order. Stipulating Defendant Jeffrey Shoobs further agrees that the facts as alleged in the Complaint shall be taken as true in any subsequent litigation filed by the Commission to enforce its rights pursuant to this Final Order, including but not limited to a nondischargeability complaint in any subsequent bankruptcy proceeding.

XVIII.

IT IS FURTHER ORDERED that, within five (5) business days after receipt by the Stipulating Defendant of this Final Order as entered by the Court, Stipulating Defendant Jeffrey Shoobs shall submit to the Commission a truthful sworn statement that shall acknowledge receipt of this Final Order.

XIX.

IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for the purpose of enabling any of the parties to this Final 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 Final Order, for the enforcement of compliance therewith or the punishment of violations thereof.

SO ORDERED, this _____day of _________, 1997, at __________.m.

__________________________________
Ursula Ungaro-Benages
United States District Judge

REVIEWED, STIPULATED AND AGREED TO BY:

_________________________________Dated:______________
Jeffrey Shoobs, Defendant

_________________________________Dated:______________
Stanley Riskin on behalf of Defendants
Jeffrey Shoobs
Prestige Advertising, Inc., dba Prestige Fragrances, Inc.

_________________________________Dated:______________
Richard Quaresima (A5500332)
Mona S. Spivack (A5500333)
Federal Trade Commission