DEBRA VALENTINE
General Counsel

BETSY BRODER
Federal Trade Commission
Sixth Street and Pennsylvania Ave., NW
Washington, D.C. 20580
(202) 326-2968

JOHN D. JACOBS
CA Bar No. 134154
FTC Los Angeles Regional Office
10877 Wilshire Blvd., Suite 700
Los Angeles, CA 90024
(310) 824-4360
Attorneys for Plaintiff

FEDERAL TRADE COMMISSION

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

FEDERAL TRADE COMMISSION,

Plaintiff,

v.

NIA CANO, a/k/a, Nghia F. Cano, Nina DeCano, Nia S. Cano, Individually and Doing Business as Credit Development International and Drivers Seat Network;

CHARLES JOHNSON; JAIME MARTINEZ; Defendants, and

LEADERS ALLIANCE, INC., a Nevada Corporation; Relief Defendant.

 

 

Civil No. 97-7947-IH- (AJWx)

Stipulated Final Order for Permanent Injunction Against Defendant
Charles Johnson

Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), commenced this action by filing a Complaint pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. 53(b), charging the defendants with engaging in unfair or deceptive acts or practices in violation of Section 5 of the FTC Act, 15 U.S.C. 45.

The Commission, by and through its counsel, and defendant Charles Johnson pro se, (hereinafter "Stipulating Defendant") has agreed to the entry of this Stipulated Permanent Injunction by this Court. The Commission and Stipulating Defendant have consented to entry of this Final Order without trial or adjudication of any issue of law or fact herein.

NOW, THEREFORE, upon the consent of the parties hereto, IT IS HEREBY ORDERED, ADJUDGED AND DECREED as follows:

FINDINGS

  1. This Court has jurisdiction of the subject matter of this case and of the parties consenting hereto;
  2. The Complaint states a claim upon which relief may be granted against the defendants under Sections 5 and 13(b) of the FTC Act, 15 U.S.C. 45 and 53(b);
  3. Entry of this Stipulated Permanent Injunction is in the public interest;
  4. Stipulating Defendant has waived all rights to seek appellate review or otherwise challenge or contest the validity of this Stipulated Permanent Injunction or the temporary or preliminary orders entered in this proceeding;
  5. The Stipulating Defendant waives any claim they may have under the Equal Access to Justice Act, 28 U.S.C. 2412, concerning the prosecution of this action; and
  6. This Stipulated Permanent Injunction does not constitute and shall not be interpreted to constitute either a finding by the Court or an admission by the Stipulating Defendant he has engaged in violations of the FTC Act.

Definitions

For purposes of this Final Judgment and Order for Permanent Injunction, the following definitions shall apply:

  1. “Stipulating Defendant” means Charles Johnson and his agents, servants, employees, and those persons in active concert or participation with him who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any entity, corporation, subsidiary, division, or other device, unless specified otherwise.
  2. “Defendants” means Nia Cano, a/k/a, Nghia F. Cano, Nina DeCano, Nia S. Cano, individually and doing business as Credit Development International and Drivers Seat Network; Leaders Alliance, Inc.; Charles Johnson; Jaime Martinez and each of them and their successors, assigns, officers, agents, servants, employees, and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any entity, corporation, subsidiary, division, or other device, unless specified otherwise.
  3. "Receivership defendants" Leaders Alliance, Inc., doing business as American Business Consultants, ABC or ABC, LP, Credit Development International, and Drivers Seat Network, their successors, assigns, officers, agents, servants, employees, and those persons in active concert or participation with such entities who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any entity, corporation, subsidiary, division, or other device.
  4. “Assets” means all real and personal property of any defendant or held for the benefit of any 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.
  5. “CDI/DSN Program” means the Credit Development International and Drivers Seat Network program, promoted by the defendants, through which members would purportedly receive an unsecured major credit card, including VISA or MasterCard credit cards, and monthly income through the recruitment of others into such program.
  6. “Prohibited Marketing Scheme ” means a pyramid sales scheme, Ponzi scheme, chain marketing scheme, or other marketing plan or program in which a person who participates, makes a payment and receives the right, license or opportunity to derive income as a participant primarily from: (I) the recruitment of additional recruits by the participant, program promotor or others; (ii) sales made to or by such recruits or their recruits; or (iii) any other payments made by recruits. A “Prohibited Marketing Scheme ” does not include a marketing plan or program in which the program promotor demonstrates that it has instituted and enforced rules that have the actual effect of insuring that a participant derives income primarily from the sale of goods or services to persons who do not recruit participants into the program. For purposes of this Order, “goods or services” does not include sales aids, membership certificates, or an opportunity to participate in a sales or marketing program.
  7. “Receiver ” means Nathan Hochman, Esq., appointed by this Court as Receiver for the corporate defendants in this matter.

I.

INJUNCTION AGAINST PARTICIPATION
IN PROHIBITED MARKETING SCHEME

IT IS THEREFORE ORDERED that Stipulating Defendant is permanently enjoined from offering for sale or selling to any person the right to participate in any prohibited marketing scheme.

II.

INJUNCTION AGAINST MISREPRESENTATIONS

IT IS FURTHER ORDERED that in connection with the offering for sale or sale of

the right to participate in any marketing scheme, Stipulating Defendant is hereby permanently restrained and enjoined from making or assisting in the making of, directly or by implication, orally or in writing, any statement or representation of material fact that is false or misleading including, but not limited to:

A. Misrepresentations that consumers who participate in such program will receive a certain sum of money through such participation; and

B.Misrepresentations that consumers who participate in such program will receive certain benefits such as an unsecured VISA or MasterCard credit card or other unsecured credit card.

III.

INJUNCTION AGAINST PROVIDING OTHERS WITH
THE MEANS AND INSTRUMENTALITIES TO
VIOLATE SECTION 5 OF THE FTC ACT

IT IS FURTHER ORDERED that in connection with the offering for sale or sale of the right to participate in any marketing scheme, Stipulating Defendant is hereby permanently restrained and enjoined from providing to others the means and instrumentalities with which to make, directly or by implication, orally or in writing, any statement or representation of material fact that is false or misleading including, but not limited to:

A. Misrepresentations that consumers who participate in such program will receive a certain sum of money through such participation; and

B.Misrepresentations that consumers who participate in such program will receive certain benefits such as an unsecured VISA or MasterCard credit card or other unsecured credit card.

IV.

PROHIBITION ON RELEASING NAMES

IT IS FURTHER ORDERED that the Stipulating Defendant is hereby permanently restrained and enjoined from providing to any person, except agents of the Commission, the Receiver, or other law enforcement authorities, the name, address, telephone number, or credit card or bank account number, of any person who purchased membership in the CDI/DSN program from any of the defendants.

V.

REPORTING REQUIREMENT

IT IS FURTHER ORDERED that, within ten (10) days of notice of entry of this Order and for a period of three (3) years commencing with the date of entry of this Final Order, defendant Stipulating Defendant shall:

A.Notify the Commission in writing of his current address and any change in his residential address within ten (10) days of such change;

B.Notify the Commission in writing of his current employment and any change in his employment status within ten (10) days of such change. Such notice shall include the name and address of each business that defendant Charles Johnson is affiliated with or employed by, a statement of the nature of the business, and a statement of his duties and responsibilities in connection with the business; and

C.Notify the Commission in writing at least thirty (30) days prior to 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, creation or dissolution of subsidiaries, or any other changes that may affect compliance obligations arising out of this Stipulated Permanent Injunction.

VI.

COMPLIANCE OBLIGATIONS

IT IS FURTHER ORDERED that for purposes of determining or securing compliance with this Final Order, in connection with any business owned or controlled in whole or in part by Stipulating Defendant, said defendant, upon reasonable written notice, shall permit representatives of the Federal Trade Commission:

A.Access during normal business hours to the offices of any such business to inspect and copy all documents; and

B.Subject to such defendant’s reasonable convenience and without restraint or interference from him, to interview the officers, directors or employees of any such business with regard to compliance with the terms of this Stipulated Permanent Injunction. Such officers, directors or employees may have counsel present.

VII.

DISTRIBUTION OF STIPULATED
PERMANENT INJUNCTION

IT IS FURTHER ORDERED that, for a period of three (3) years from the date of the entry of this Order, Stipulating Defendant, immediately upon being employed or retained, or employing, directing, or managing any person, in connection with that part of any business entity that is engaged in the advertising, offering for sale, promotion or sale of any program in which participants recruit other consumers to participate in a marketing scheme, and which has been engaged in such conduct for fewer than two years, shall provide a copy of this Order to any person or entity by whom Stipulating Defendant are employed or retained, whether as employee, consultant, independent contractor or otherwise, and to any person or entity whom Stipulating Defendant retains, whether as employee, consultant, independent contractor or otherwise. As to each such person, Stipulating Defendant shall either secure a signed statement acknowledging receipt of such Order or prepare a sworn affidavit attesting to the fact that Stipulating Defendant has provided a copy of the Order to that person. The information in the affidavit shall include, but is not limited to, the name and address of the person or entity to whom the order was provided and the date the order was provided.

VIII.

RELEASE OF FROZEN ASSETS

IT IS FURTHER ORDERED that the freeze on the assets of Charles Johnson shall be lifted upon the entry of this Stipulated Permanent Injunction. Financial institutions holding the assets of Charles Johnson, including safe deposit boxes, shall release these assets immediately upon receiving a copy of this Stipulated Permanent Injunction.

IX.

RIGHT TO REOPEN BASED ON
UNTRUTHFUL FINANCIAL DISCLOSURES

IT IS FURTHER ORDERED that the Commission’s acceptance and the Court's approval of this Stipulated Permanent Injunction is expressly premised upon the truthfulness, accuracy, and completeness of the financial statements provided by Charles Johnson to counsel for the Commission on or about November 24, 1997. If, upon motion by the Commission, this Court finds that the financial statement of Charles Johnson either failed to disclose any material asset, or materially misrepresented the value of any asset, or made any other material misrepresentations in or omissions of assets, the Commission may request that the Judgment herein be reopened for the purpose of requiring full restitution from Charles Johnson; provided, however, that in all other respects this Injunction shall remain in full force and effect unless otherwise ordered by this Court; and provided further, that proceedings instituted under this section 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 may initiate to enforce this Final Order. Solely for the purposes of reopening or enforcing this Paragraph, Stipulating Defendant waives any right to contest any of the allegations contained in the Complaint in this matter.

X.

ATTORNEYS’ FEES

IT IS FURTHER ORDERED that each party to this Final Order shall bear its own costs and attorneys’ fees, if any.

XI.

COOPERATION WITH RECEIVER

IT IS FURTHER ORDERED that Stipulating Defendant shall cooperate fully with the Receiver in: (A) pursuing any and all claims by the receivership against third parties; (B) assisting the Receiver in defending any and all actions or claims brought against the receivership by third parties; and (C) executing any documents necessary to transfer assets or ownership interests to the Receiver pursuant to the terms of this Final Order. Stipulating defendant further waives any claims he may have against the receivership or Receivership Defendants herein, and relinquish ownership of any property that may have been located at the business premises of the Receivership Defendants.

XII.

RETENTION OF JURISDICTION

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

SO ORDERED, this ___ day of ____________________, 1998.

United States District Judge
Central District of California

Submitted by:

Betsy Broder
Counsel for Plaintiff
Federal Trade Commission

The parties hereby consent to the terms and conditions set forth above and hereby consent to the entry of this Final Order at the Court's convenience and without further notice to the parties.

Betsy Broder
Attorney for Plaintiff
Federal Trade Commission
Sixth Street and Pennsylvania Ave., NW
Washington, D.C. 20580
(202) 326-2968

Charles Johnson
Defendant Pro Per
17 Corte Palazzo
Lake Elsinore, CA
92532
(909) 674-9585

Dated: