UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON

FEDERAL TRADE COMMISSION, Plaintiff,

v.

CRA CHAMPION CREDIT, INC., a Washington corporation,

CRA FINANCIAL SERVICES, INC., a Washington corporation, and

AVSHALOM HAZAN, individually and as an officer of CRA Champion Credit, Inc., and CRA Financial Services, Inc., and

JOEL YOUNKER, individually and as a former officer of CRA Champion Credit, Inc., Defendants.





Civ. No.

STIPULATED FINAL ORDER AS TO CRA CHAMPION CREDIT, INC., CRA FINANCIAL SERVICES, INC., AND AVSHALOM HAZAN



Plaintiff, the Federal Trade Commission ("Commission"), has filed a complaint for a permanent injunction and other relief pursuant to 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), alleging that defendants CRA Champion Credit, Inc. ("CRA Champion"), CRA Financial Services, Inc. ("CRA Financial"), and Avshalom Hazan (collectively "defendants") have violated 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.

Plaintiff and defendants, by and through their respective counsel, have agreed to entry of this Stipulated Final Order ("Order") by this Court, without trial or adjudication of any issue of fact or law.

NOW THEREFORE, plaintiff and defendants having requested the Court to enter this Order, it is therefore ORDERED, ADJUDGED, AND DECREED as follows:

FINDINGS

A. This Court has jurisdiction of defendants and the subject matter of this action and the parties consenting hereto;

B. The Commission has the authority under 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), to seek the relief it has requested;

C. The Complaint states a claim upon which relief may be granted under Sections 5(a) and 13(b) of the FTC Act, 15 U.S.C.  45(a) and 53(b), and Section 410(b) of the Credit Repair Organizations Act, 15 U.S.C.  1679h(b);

D. Defendants have waived all rights to seek judicial review or otherwise challenge or contest the validity of this Order;

E. This Order does not constitute and shall not be interpreted to constitute either an admission by defendants or a finding of the Court that defendants have engaged in violations of the FTC Act or the Credit Repair Organizations Act; and

F. Entry of this Order is in the public interest.

DEFINITIONS

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

A. "Credit repair organization" means any person who uses any instrumentality of interstate commerce or the mails to sell, provide, or perform (or represent that such person can or will sell, provide, or perform) any service, in return for the payment of money or other valuable consideration, for the express or implied purpose of (1) improving any consumer's credit record, credit history, or credit rating; or (2) providing advice or assistance to any consumer with regard to any activity or service the purpose of which is to improve a consumer's credit record, credit history, or credit rating;
 
B. "Credit repair service " means any service, in return for the payment of money or other valuable consideration, for the express or implied purpose of (1) improving any consumer's credit record, credit history, or credit rating; or (2) providing advice or assistance to any consumer with regard to any activity or service the purpose of which is to improve a consumer's credit record, credit history, or credit rating;
 
C. "Defendants" means CRA Champion Credit, Inc., CRA Financial Services, Inc., and Avshalom Hazan, as well as their successors and assigns, and, as applicable, their directors, officers, agents, employees, sales persons, corporations, subsidiaries, affiliates, attorneys, and other persons or entities directly or indirectly under their control or under common control with them, and all other persons or entities in active concert or participation with them, who receive actual notice of this Order by personal service, facsimile or otherwise, whether acting directly or through any business, entity, corporation, subsidiary, division, or other device;
 
D. "Material" means likely to affect a person's choice of, or conduct regarding, goods or services; and
 
E. "Person" means a natural person, organization or other legal entity, including a corporation, partnership, proprietorship, association, cooperative, government or governmental subdivision or agency, or any other group or combination acting as an entity.

ORDER

I.

IT IS THEREFORE ORDERED that defendants are hereby permanently restrained and enjoined from the advertising, marketing, promotion, offering for sale, or sale of credit repair services, directly or through any intermediary, or otherwise inducing consumers to purchase credit repair services.

II.

IT IS FURTHER ORDERED that:

A. Defendants, jointly and severally, are liable to pay consumer redress in the total amount of $7,938 to those consumers referred to in Attachment A to this Order who entered into contracts with defendants for credit repair services from January 1, 1997, through December 31, 1997. Consumer redress shall be paid in the manner prescribed in Paragraph II.B. - II.F. of this Order;
 
B. Defendants shall send a check by first class mail to each consumer represented by the contracts listed in Attachment A. The amount of the check will be the total dollar amount each consumer paid to the defendants, as reflected in Attachment A. The check will be mailed to the consumer's last known address. If the United States Postal Service provides a new address for any consumer, the defendants shall remail the check by first class mail to the new address;
 
C. If a redress check is (1) returned to the defendants by the Postal Service as undeliverable, or (2) any person receiving a redress check returns it to defendants, the defendants shall pay this amount by cashier's or certified check payable to the United States Treasury as disgorgement. Defendants shall deliver this check to the Regional Director, Federal Trade Commission, 915 Second Avenue, Suite 2896, Seattle, Washington 98174. Defendants shall complete the mailing of the redress checks no later than 180 days after the date this Order is entered;
 
D. No later than 180 days after the date this Order is entered, the defendants shall submit in writing a final report to the Seattle Regional Office containing: (1) the names and addresses of all consumers who received a redress check from the defendants, (2) the names and addresses of all consumers defendants were unable to locate or who returned the money to defendants, and (3) the dollar amount, if any, paid to the United States Treasury as disgorgement. This report shall be accompanied by a declaration, signed by defendants, attesting to its accuracy and completeness;
 
E. In the event of any portion of the $7,938 is not paid within 180 days after the date this Order is entered, which default continues for ten (10) days beyond the due date, the entire unpaid amount, together with interest, at the rate computed pursuant to 28 U.S.C. 1961, from the date of default to the date of payment, shall immediately become due and payable; and
 
F. All administrative costs associated with distribution of consumer redress shall be paid by the defendants. No portion of the $7,938 shall be used to cover these costs.

III.

IT IS FURTHER ORDERED that defendants shall:

A. Cease all collection efforts on all outstanding accounts not fully paid as of the date this Order is entered that are in any way related to credit repair services that defendants sold or participated in selling since January 1, 1995. Within ten (10) business days after the date this Order is entered, defendants shall mail to all clients with such accounts a notice stating that customers may opt not to make payments which are due or may become due to defendants, and to have defendants render no further services; and
 
B. Within ten (10) days after the date this Order is entered, provide the names and addresses of those customers to whom notices were sent pursuant to Paragraph III.A. above to:
 

Regional Director
Federal Trade Commission
915 Second Avenue, Suite 2896
Seattle, Washington 98174

IV.

IT IS FURTHER ORDERED that defendants, within three (3) business days after the date of entry of this Order, shall submit to the Commission sworn statements, in the form shown in Attachment B to this Order, that reaffirms and attests to the truthfulness, accuracy, and completeness of (1) the defendants' financial statements that were executed on February 18, 1998, (designated the "Financial Statements"), and (2) the list of consumers who purchased defendants' credit repair services in 1997, submitted on February 23, 1998, and which is attached to this Order as Attachment A (designated as "Consumer List"). The Commission's agreement to this Order is expressly premised upon the truthfulness, accuracy, and completeness of (1) defendants' financial condition as represented in the Financial Statements referenced above, and (2) the defendants' Consumer List referenced above, which both contain material information upon which the Commission relied in negotiating and agreeing to the terms of this Order. If, upon motion by the Commission, this Court finds that defendants failed to file the sworn statements required by this Paragraph, or filed Financial Statements that failed to disclose any material asset, or materially misrepresented the value of any asset, or made any other material misrepresentation in or omission from the Financial Statements or the Consumer List, the judgment herein shall be reopened for the purpose of determining an appropriate amount for defendants to pay as redress; provided, however, that in all other respects, this Order shall remain in full force and effect unless otherwise ordered by this Court.

V.

IT IS FURTHER ORDERED that defendants, for a period of two (2) years from the date of entry of this Order, and upon reasonable written notice from the Commission, shall permit duly authorized representatives of the Commission, without restraint or interference from defendants:

A. Access during normal business hours to any office or facility owned, managed, or controlled by a defendant, or the successor or assign of a defendant, to inspect and copy any document that relates in any way to credit repair services or credit repair organizations; and
 
B. To interview directors, officers, and employees (including consultants, independent contractors, and the like) of any business entity that is owned, managed, or controlled, in whole or in part, by any defendant, regarding any matter that relates in any way to credit repair services or credit repair organizations. The person interviewed may have counsel present.

The Commission may otherwise monitor defendants' compliance with this Order by all lawful means available, including, but not limited to, the use of investigators posing as consumers, potential investors, suppliers and other entities.

VI.

IT IS FURTHER ORDERED that, for a period of two (2) years from the date of entry of this Order:

A. Defendants CRA Champion and CRA Financial, and their successors and assigns, shall notify the Commission in writing, at least thirty (30) days prior to any proposed change in the corporation including, but not limited to, dissolution, merger, assignment, or sale that will result in the emergence of a successor corporation, the creation or dissolution of a subsidiary or franchise, the transfer of the business by assignment to another entity, or any other change in the corporation that may affect compliance obligations arising under this Order; and
 
B. Defendant Avshalom Hazan shall notify the Commission in writing, within fourteen (14) days, of any change in his present business or employment or of his affiliation with any new business or employment if that employment or affiliation is related to credit repair services or credit repair organizations. Each such notice shall include the defendant's then-current business address and telephone number, current home address, and a statement of the nature of the new business or employment along with a description of his interest, duties and responsibilities in such business or employment.

VII.

IT IS FURTHER ORDERED that defendants, within 180 days after the date of entry of this Order, shall file with the Commission a written report setting forth in detail the manner and form in which they have complied with this Order including, but not limited to, the report required in Paragraph II.D. of this Order.

VIII.

IT IS FURTHER ORDERED that all notices and reports required of defendants by this Order shall be made to the following address:

Regional Director
Federal Trade Commission
915 Second Avenue, Suite 2896
Seattle, Washington 98174

IX.

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for all purposes, including construction, modification, and enforcement of this Order, and each party to bear its own costs and attorney fees incurred in connection with this action.

IT IS SO ORDERED, this _____ day of _____________, 1998.

UNITED STATES DISTRICT JUDGE

The parties hereby stipulate and agree to the terms and conditions set forth above and consent to entry of this Stipulated Final Order. Defendants waive any rights that may arise under the Equal Access to Justice Act, 28 U.S.C.  2412.

FOR PLAINTIFF FEDERAL TRADE COMMISSION:

Nadine S. Samter
George J. Zweibel
Kathryn C. Decker

Charles A. Harwood
Regional Director

Attorneys for the
Federal Trade Commission

FOR THE DEFENDANTS:

CRA CHAMPION, INC.
By: Avshalom Hazan, President

CRA FINANCIAL SERVICES, INC.
By: Avshalom Hazan, President

AVSHALOM HAZAN
Avshalom Hazan, Individually

ROHAN, GOLDFARB & SHAPIRO
By: Anthony Shapiro
1601 One Union Square
600 University Street
Seattle, WA 98101-3112

Attorney for Defendants