UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
FORT LAUDERDALE DIVISION

FEDERAL TRADE COMMISSION,

Plaintiff

v.

NATIONAL GRANT FOUNDATION, INC., GRANT RESEARCH & PUBLISHING, INC., WALLACE MILLMAN, ANTHONY CONSALVO, DENNIS J. COLONNA, ANTHONY LUCCA, HARRIET KAYE, BEVERLY JANSEN, and CAROL CLOUGH,

Defendants.

Case No. 97-7339-civ-LENARD

Magistrate Judge GARBER

STIPULATED FINAL JUDGMENT AND ORDER FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF AGAINST DEFENDANT ANTHONY CONSALVO

On November 3, 1997, Plaintiff Federal Trade Commission (“Commission”), pursuant to Section 13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. 53(b), filed a complaint in this matter seeking injunctive and other relief, including redress to consumers, and moved ex parte for a temporary restraining order with asset freeze and other relief. That same day, the Court granted the Commission’s motion and issued an ex parte temporary restraining order against the defendants. The Court entered a Preliminary Injunction With Asset Freeze, Appointment of a Permanent Receiver, and Other Equitable Relief on November 12, 1997.

The Commission and defendant Anthony Consalvo (“defendant Consalvo”) have stipulated to the entry of the following Final Judgment and Order in settlement of the Commission’s complaint against him, and the Court, being advised in this premises, finds:

  1. This is an action by the Commission instituted under Sections 5 and 13(b) of the Federal Trade Commission Act, 15 U.S.C. 45 and 53(b) (“FTC Act”). The complaint seeks permanent injunctive relief and redress for injured consumers for alleged unfair or deceptive acts or practices by defendant Consalvo in the promotion and sale of services related to identifying potential scholarships or grants for high school and college students or their families (hereinafter referred to as “scholarship services”).
  2. This Court has jurisdiction of the subject matter of this case and jurisdiction over all parties hereto. Venue in the Southern District of Florida is proper.
  3. The activities of defendant Consalvo are in or affecting commerce, as defined in 15 U.S.C. 44.
  4. The Commission alleges that, from approximately March 1997, and continuing until November 1997, defendant Consalvo conducted a program to telemarket scholarship services to high school and college students and their parents throughout the United States, and that defendant Consalvo made material misrepresentations to consumers that were false and misleading, as set forth in the Commission’s complaint.
  5. The Commission has the authority under Section 13(b) of the FTC Act to seek the relief it has requested, and the complaint states a claim upon which relief may be granted.
  6. Defendant Consalvo has not filed an answer to the complaint, but neither admits nor denies the Commission’s allegations.
  7. Defendant Consalvo, for the purposes of settling the Commission’s complaint against him, agrees to entry of this Final Judgment and Order for Permanent Injunction and Other Equitable Relief under Section 13(b) of the FTC Act.
  8. 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, except that this action and the relief awarded herein constitute a final settlement with respect to scholarship services, as of the date this order is entered, between the Commission and defendant Consalvo.
  9. Defendant Consalvo waives any claim that he may have under the Equal Access to Justice Act, 28 U.S.C. 2412, amended by Pub. L. 104-121, 110 Stat. 847, 863-64 (1996), concerning the prosecution of this action to the date of this Order.
  10. Entry of this Order is in the public interest.

IT IS THEREFORE ORDERED, ADJUDGED, AND DECREED AS FOLLOWS:

DEFINITIONS

A. “Scholarship services” shall mean any business activity that purports to assist consumers with obtaining scholarships, grants, or any other financial assistance for an educational purpose.

B. “Telemarketing” shall mean any business activity (whether or not covered by the Telemarketing Sales Rule, 16 C.F.R. Part 310, and including, but not limited to, initiating or receiving telephone calls, managing others who initiate or receive telephone calls, operating an entity that initiates or receives telephone calls, owning an entity 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, product, good or service, 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, however, that the term “telemarketing” shall not include transactions that are completed only after a face-to- face contact between the seller or solicitor and the consumers solicited.

C. “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 the names of, potential customers for an entity engaged in telemarketing; (4) verifying any information, including financial information, provided by consumers in connection with telemarketing; or (5) performing marketing services of any kind for an entity engaged in telemarketing.

PERMANENT BAN AGAINST SCHOLARSHIP SERVICES

I.

IT IS HEREBY ORDERED that Defendant Consalvo, and his officers, directors, agents, servants, employees, salespersons, attorneys, corporations, subsidiaries, affiliates, successors, assigns, and other entities or persons directly or indirectly under his control, and all persons or entities in active concert or participation with him who receive actual notice of this Order by personal service, facsimile, or otherwise, are hereby permanently restrained and enjoined from promoting, advertising, marketing, telemarketing, assisting others engaged in telemarketing, selling or offering for sale scholarship services.

PERMANENT BAN AGAINST TELEMARKETING

II.

IT IS FURTHER ORDERED that defendant Consalvo and his officers, directors, agents, servants, employees, salespersons, attorneys, corporations, subsidiaries, affiliates, successors, assigns, and other entities or persons directly or indirectly under his control, and all persons or entities in active concert or participation with him who receive actual notice of this Order by personal service, facsimile, or otherwise, are hereby permanently restrained and enjoined from engaging in the Business of Telemarketing or assisting others engaged in telemarketing.

PROHIBITION AGAINST MISREPRESENTATIONS

III.

IT IS FURTHER ORDERED that defendant Consalvo, and his officers, directors, agents, servants, employees, salespersons, attorneys, corporations, subsidiaries, affiliates, successors, assigns, and other entities or persons directly or indirectly under their control, and all persons or entities in active concert or participation with him who receive actual notice of this Order by personal service, facsimile, or otherwise, in connection with the advertising, promotion, offer for sale, or sale of any item, product, good, or service, are hereby permanently restrained and enjoined from:

A. Misrepresenting, directly or by implication, that any entity will provide consumers with names of sources from which they likely will receive at least a stated amount of money in grants or scholarships;

B. Misrepresenting, directly or by implication, any material aspect of a scholarship service, including but not limited to:

  1. misrepresenting that any entity will provide consumers with personal portfolios of scholarships and grant sources that are specifically tailored to the consumers’ qualifications;
  2. misrepresenting that students are pre-selected to receive scholarships and grants;
  3. misrepresenting that any entity obtains grants or scholarships on behalf of consumers;
  4. misrepresenting any entity’s business relationship with any corporation or other entity that awards, or may award, scholarships or grants;

C. Withdrawing money from a consumer’s bank account or billing charges to a consumer’s credit card without obtaining either: (i) written authorization by the customer; or (ii) oral authorization from the consumer that is tape recorded and made available upon request to the customer’s bank and which evidences clearly the customer’s authorization of payment for the goods and services that are the subject of the sales offer, and the customer’s receipt of the following information: (a) date of the charge or demand draft; (b) the amount of the charge or demand draft; (c) the payor’s name; (d) the number of draft payments (if more than one); (e) a telephone number for customer inquiry that is answered during normal business hours; (f) and the date of the customer’s oral authorization.

D. Misrepresenting, directly or by implication, that any entity is non-profit, charitable, or otherwise not in business to generate profits for its employees, independent contractors, managers, directors, officers, or owners;

E. Misrepresenting, directly or indirectly, any fact material to a consumer’s decision to purchase any item, product, good, or service of any kind;

F. Assisting others in making, directly or by implication, any false or misleading oral or written statement or representation enumerated in subparts A-E of this Paragraph.

G. Violating, or assisting others in violating, any provision of the Telemarketing Sales Rule, 16 C.F.R. Part 310, or as the Rule may be hereafter amended.

RECORD KEEPING PROVISIONS

IV.

IT IS FURTHER ORDERED that, for a period of seven (7) years from the date of entry of this Order, defendant Consalvo, and his officers, agents, servants, employees, and attorneys, and all other persons or entities in active concert or participation with him, in connection with any business where defendant Consalvo is the majority owner of the business or otherwise directly or indirectly manages or controls the business, 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 disbursement ledgers, 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 defendant Consalvo or any other person or entity in active concert or participation with any defendant.

V.

IT IS FURTHER ORDERED that, for a period of seven (7) years from the date of entry of this order, defendant Consalvo, his officers, agents, servants, employees, and attorneys, and all other persons or entities in active concert or participation with him in connection with any business where defendant is the majority owner of the business or otherwise directly or indirectly manages or controls the business, is hereby restrained and enjoined from failing to create, and from failing to retain for a period of three years following the date of such creation (unless otherwise specified):

A. Books, records, and accounts that, in reasonable detail, accurately and fairly reflect the cost of goods or services sold, revenues generated, and the disbursement of such revenues;

B. Records accurately reflecting: the name, address, and telephone number of each person that any of the above-referenced businesses employs in any capacity, including as an independent contractor; that person’s job title or position; the date upon which the person commenced work; and that date and reason for the person’s termination, if applicable. The businesses subject to this Paragraph shall retain such records for any terminated employee for a period of two (2) years following the date of termination;

C. Records containing the names, addresses, phone numbers, dollar amounts paid, quantity of items purchased, and description of items purchased, for all consumers to whom any of the above-referenced businesses has sold, invoiced or shipped any goods or services, or from whom any of the above-referenced businesses accepted money or other items of value;

D. Records that reflect, for every consumer complaint or refund request, whether received directly or indirectly or through any third party:

  1. the consumer’s name, address, telephone number, and the dollar amount paid by the consumer;
  2. the written complaint, if any, and the date of the complaint or refund request;
  3. the basis of the complaint, including the name of any salespersons complained against, and the nature and result of any investigation conducted concerning the validity of any complaint;
  4. each response and the date of the response;
  5. any final resolution and the date of the resolution; and
  6. in the event of a denial of a refund request, the reasons for such denial, or if the complaint was cured, the basis for determining that the complaint was cured; and

E. Copies of all sales scripts, training packets, advertisements, or other marketing materials utilized.

ACCESS AND MONITORING

VI.

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

A. For a period of seven (7) years from the date of entry of this Order, defendant Consalvo shall notify the Commission in writing within thirty (30) days of any changes in his residence or mailing addresses, or telephone numbers;

B. For a period of seven (7) years from the date of entry of this Order, defendant Consalvo shall notify the Commission in writing within thirty days (30) of any change in his business address 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 200
Federal Trade Commission
Washington, D.C. 20580
Re: FTC v. National Grant Foundation, et al.
97-7339-civ-LENARD (S.D. Fla).

D. For the purposes of this Paragraph, “employment” includes the performance of services as an employee, consultant, or independent contractor; and “employers” include any individual or entity for whom defendant Consalvo performs services as an employee, consultant, or independent contractor.

E. For a period of seven (7) years from the date of entry of this Order, for the purpose of further determining compliance with this Order, defendant Consalvo shall permit representatives of the Commission, within seven (7) 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 Consalvo is the majority owner of the business or otherwise directly or indirectly manages or controls the business. In providing such access, defendant Consalvo 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 where defendant Consalvo is the majority owner of the business or otherwise directly or indirectly manages or controls the business, 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 Consalvo’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.

MONETARY RELIEF

VII.

IT IS FURTHER ORDERED that:

A. Judgment is hereby entered against defendant Consalvo in the amount of FIVE HUNDRED EIGHTY FIVE THOUSAND DOLLARS ($585,000.00), with post-judgment interest at the rate of _____________ percent per annum. All amounts that the Commission collects toward this sum shall be contributed to a consumer redress fund which, in accordance with a plan submitted by the Commission or its agents and approved by the Court, shall be (i) distributed to consumers who purchased scholarship services from defendants; and/or (ii) if, at the sole discretion of the Commission or its agents, redress is determined impractical, then paid over to the U.S. Treasury, as disgorgement in lieu of redress.

B. If the Commission, in its sole discretion, determines that consumer redress is practical, the Commission shall submit a plan for the disbursement of funds to the Court for review and approval. In establishing this plan, the Commission shall have full and sole discretion to determine the criteria and parameters for participation by injured consumers in a redress program, and may delegate any and all tasks connected with such redress program to any individuals, partnerships, or corporations, and pay the fees, salaries, and expenses incurred thereby in carrying out said tasks from the funds received pursuant to this section;

C. Upon entry of this Order, the freeze of defendant Consalvo’s assets and the assets of Lorraine Consalvo shall be lifted.

D. Defendant Consalvo acknowledges and agrees that this judgment for equitable monetary relief, as with all other relief provided in this Order, is solely remedial in nature as restitution and is not a fine, penalty, punitive assessment, or forfeiture.

E. Each party to this Order hereby agrees to bear its own costs and attorneys’ fees incurred in connection with this action; provided, however, in the event the Commission determines that defendant Consalvo has violated any term or provision of this Order, defendant Consalvo shall pay the costs and attorneys’ fees incurred by the Commission or its agents in connection with proceedings to enforce this Order.

F. Notwithstanding any other provision of this Order, defendant Consalvo agrees that the facts as alleged in the complaint shall be taken as true in any subsequent litigation to collect amounts due pursuant to this Order, including but not limited to a nondischargeability complaint in any bankruptcy proceeding.

CONSUMER LISTS

VIII.

IT IS FURTHER ORDERED that defendant Consalvo, and his officers, agents, servants, employees, and attorneys, and all other persons or entities in active concert or participation with them 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 scholarship services. Provided, however,, that defendant Consalvo may disclose such identifying information to a law enforcement agency or as required by an law, regulation, or court order.

ORDER DISTRIBUTION

IX.

IT IS FURTHER ORDERED that, for a period of seven (7) years from the date of entry of this Order, defendant Consalvo shall:

A. Provide a copy of this Order to, and obtain a signed and dated acknowledgment of receipt of same form, 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 defendant Consalvo is the majority owner of the business or otherwise directly or indirectly manages or controls the business;

B. Maintain for a period of three (3) years after creation the original signed and dated acknowledgments of the receipt of copies of this Order, as required in Subparagraph A; and

C. Send a copy of the signed and dated acknowledgment of the receipt of the Order to the Commission at the address specified in Paragraph VI.

RETENTION OF JURISDICTION

X.

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for purposes of construction, modification and enforcement of this Order.

ENTRY OF JUDGMENT

XI.

There being no just reason for delay of entry of this judgment, pursuant to Fed. R. Civ. P. 54(b), the Clerk is directed to enter this Final Judgment and Order immediately.

IT IS SO ORDERED this ___________ day of ___________________, 1998.

Dated: ____________________________________________

JOAN A. LENARD
United States District Judge
Southern District of Florida

STIPULATION

The parties hereby stipulate and agree to entry of the foregoing Order, which shall constitute a final judgment in this action as to defendant Anthony Consalvo (“defendant Consalvo”). The foregoing Order constitutes resolution of all charges made against defendant Consalvo by the Commission in its complaint. Defendant Consalvo and Lorraine Consalvo hereby expressly waive any claim they may have under the Equal Access to Justice Act, 28 U.S.C. 2412, amended by Pub. L. 104-121, 110 Stat. 847, 863-64 (1996), concerning the prosecution of this action to the date of entry of this Order.

Dated:________________

______________________________
Dana J. Lesemann
James Reilly Dolan
Julie Abbate
Attorneys for Plaintiff

Federal Trade Commission

Dated: _________________

_______________________________
Defendant Anthony Consalvo

Dated:__________________

______________________________
Lorraine Consalvo

As to form only:

Dated: _________________

________________________________
Jack Blumenfeld
Attorney for Defendant Anthony Consalvo and Lorraine Consalvo