DEBRA A. VALENTINE
General Counsel

DARREN A. BOWIE
JULIE ABBATE
Federal Trade Commission
6th. St. and Penn. Ave., N.W., Rm. 200
Washington, D.C. 20580
(202) 326-2018, -3639
(202) 326-3392 (facsimile)

MONICA E. TAIT
Federal Trade Commission
10877 Wilshire Blvd., Suite 700
Los Angeles, CA 90024
(310) 824-4343
(310) 824-4380 (facsimile)

Attorneys for Plaintiff

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

FEDERAL TRADE COMMISSION, Plaintiff,

v.

AUTOMATED SYSTEMS & CONCEPTS INTERNATIONAL, INC.; CREATIVE MARKETING CONCEPTS, INC.; PREMIER ENTERTAINMENT, INC.; JOHN R. MUNOZ; TIMOTHY MUNOZ; and FRANK GALE, Defendants.

CIV. NO.

COMPLAINT FOR INJUNCTION AND OTHER EQUITABLE RELIEF

Plaintiff, the Federal Trade Commission ("Commission"), by its undersigned attorneys, alleges as follows:

1. The Commission brings this action under Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C.  53(b), and the Telemarketing and Consumer Fraud and Abuse Prevention Act ("Telemarketing Act"), 15 U.S.C. 6101-6108, to secure a permanent injunction and other equitable relief, including rescission, restitution, and disgorgement, against defendants for engaging in deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. 45(a) and for violating the Commission's Telemarketing Sales Rule, 16 C.F.R. Part 310 (1996, p. 276).

JURISDICTION AND VENUE

2. This Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C.  1331, 1337(a), and 1345, and 15 U.S.C.  45(a) and 53(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. The Commission is an independent agency of the United States government created by the FTC Act, 15 U.S.C.  41-58. The Commission enforces Section 5(a) of the FTC Act, which prohibits deceptive acts or practices in or affecting commerce, and the Telemarketing Sales Rule, which specifically prohibits deceptive or abusive telemarketing acts or practices. The Commission may initiate federal district court proceedings to enjoin violations of the FTC Act and the Telemarketing Sales Rule, and to secure such equitable relief as is appropriate in each case, including restitution and disgorgement. 15 U.S.C.  53(b), 57b, and 6105(b).

5. Defendant Automated Systems and Concepts International, Inc. ("ASCI") is a Nevada corporation that does business at 5777 West Century Blvd., Suite 1400, Los Angeles, CA 90045. ASCI also has offices at 7300 Pirates Cove Road, Suite 1036, Las Vegas, NV 89128; 16000 Ventura Blvd., Suite 1000, Encino, CA 91436; and 333 N. Rancho Drive, Suite 131, Las Vegas, NV 89106. ASCI solicits or has solicited consumers to invest in at least three general partnerships, North American Broadcasting Partners, North American Broadcasting Partners II, and North American Broadcasting Partners III (collectively "NABP"), formed to make infomercials to market various products. ASCI transacts or has transacted business in the Central District of California.

6. Defendant Creative Marketing Concepts, Inc. ("Creative Marketing") is another corporation through which defendants conduct their business. Creative Marketing is a Nevada Corporation that does business at 5777 West Century Blvd., Suite 1400, Los Angeles, CA 90045. Creative Marketing also has an office at 333 N. Rancho Drive, Suite 131, Las Vegas, NV 89106. Creative Marketing transacts or has transacted business in the Central District of California.

7. Defendant Premier Entertainment, Inc. ("Premier Entertainment") is another corporation through which defendants conduct their business. Premier Entertainment is a Nevada corporation that does business at 5777 West Century Blvd., Suite 1400, Los Angeles, CA 90045. Premier Entertainment also has an office at 333 N. Rancho Drive, Las Vegas, NV 89106. Premier Entertainment transacts or has transacted business in the Central District of California.

8. The foregoing defendant corporations -- ASCI, Creative Marketing, and Premier Entertainment -- operate together as part of a common enterprise (hereinafter "the ASCI Enterprise") to solicit consumers to invest in general partnerships formed for the purpose of making infomercials.

9. Defendant John R. Munoz ("J.R. Munoz") is the President, Secretary, Treasurer and Director of ASCI. Defendant J.R. Munoz is the Secretary, Treasurer, and a member of the Board of Directors of Creative Marketing. Defendant J.R. Munoz also describes himself as the Interim Managing Partner of NABP. Individually or in concert with others, defendant J.R. Munoz directs, controls, formulates, or participates in the acts and practices of the ASCI Enterprise. He resides and transacts or has transacted business in the Central District of California.

10. Defendant Timothy Munoz ("T. Munoz") is the President and Director of Premier Entertainment. Individually or in concert with others, defendant T. Munoz directs, controls, formulates, or participates in the acts and practices of the ASCI Enterprise. He resides and transacts or has transacted business in the Central District of California.

11. bDefendant Frank Gale ("Gale") holds himself out as the Vice President of ASCI. Individually or in concert with others, defendant Gale directs, controls, formulates, or participates in the acts and practices of the ASCI Enterprise. He resides and transacts or has transacted business in the Central District of California.

DEFENDANTS' COURSE OF CONDUCT

12. Since at least July 1997, and continuing thereafter, defendants have maintained a substantial course of trade in the offering and sale of investments in the NABP general partnerships. Defendants represent that the partnerships will produce infomercials to market various products, and that NABP investors will profit through sales of the products advertised in the infomercials. Defendants offer and sell their investment opportunities to consumers across the country using telephone sales presentations and written promotional materials.

13. Defendants represent to consumers that they are raising raising $4 million in units of $10,000 for each NABP partnership, so that the partnerships can produce several infomercials for various products.

14. Defendants represent that an investment in one of the NABP partnerships is likely to be highly profitable. For example, defendants represent that NABP investors will receive an initial fifty percent return within three to four months of their investment, and that thirty days after the initial return investors will receive monthly royalty checks for another three to four years.

15. Defendants have represented that the first NABP partnership will make an infomercial to sell an Elvis Presley memorabilia package called "Elvis Immortal" that will include a compact disc featuring a previously unreleased Elvis Presley song, a coffee table book that includes hundreds of photographs by Elvis Presley's personal photographer, and a collection of Elvis Presley stamps. Defendants have also represented that the first NABP partnership will make an infomercial to sell Susan Anton's Power Dome, an exercise product.

16. Defendants have represented that the NABP II partnership will have the opportunity to produce various infomercials, including infomercials to sell a book about Frank Sinatra, a book about Milton Berle, a yogurt maker, the "Flame Stopper" personal fire extinguisher, and a product called the "Kid Finder."

17. Defendants represent that retailers such as QVC, Inc. and Target Stores have sold, or have agreed to sell, thousands of NABP products, thus demonstrating the likely success of an investment in the NABP partnerships.

18. Defendants represent that NABP investors have received a substantial return on their investments, such as a two to one return on their investments in a seven month period based on sales of "Elvis Immortal," thus demonstrating the likely success of an investment in the NABP partnerships.

19. Defendants represent that they have been involved with the production of successful infomercials in the past, including infomercials for Vanna White's "Perfect Smile" Tooth Whitening System, the Ron Popeil Food Dehydrator, The Health Rider exercise system, and Susan Powter's "Stop the Insanity" nutrition and weight-loss program, thus demonstrating the likely success of an investment in the NABP partnerships.

20. Defendants, individually or in concert with others, have used the above representations, or others similar to those described above, to induce the purchase of investments in the NABP partnerships.

21. Defendants' course of trade is in or affecting commerce, within the meaning of Section 4 of the FTC Act, 15 U.S.C. 44.

COUNT ONE:
DEFENDANTS' VIOLATIONS OF THE FEDERAL TRADE COMMISSION ACT

22. Defendants represent or have represented, expressly or by implication, that the "Elvis Immortal" memorabilia that the first NABP partnership will market will include a compact disc featuring a previously unreleased song recorded by Elvis Presley; that "Elvis Immortal" will include several hundred photographs by Elvis Presley's personal photographer; that an infomercial to market "Elvis Immortal" would be aired on or around August 16, 1997, the twentieth anniversary of Elvis Presley's death; and that Graceland, Elvis Presley's estate in Memphis, Tennessee and a division of Elvis Presley Enterprises, Inc., is considering making "Elvis Immortal" the official book of Graceland.

In truth and in fact, "Elvis Immortal" does not include a compact disc featuring a previously unreleased song recorded by Elvis Presley; "Elvis Immortal" does not include several hundred photographs by Elvis Presley's personal photographer; an infomercial to market "Elvis Immortal" did not air on or around August 16, 1997, the twentieth anniversary of Elvis Presley's death; and Graceland, Elvis Presley's estate in Memphis, Tennessee and a division of Elvis Presley Enterprises, Inc., is not considering making "Elvis Immortal" the official book of Graceland.

23. Defendants represent, expressly or by implication, that retailers such as QVC, Inc. and Target Stores have sold, or have agreed to sell, thousands of NABP products. In truth and in fact, retailers such as QVC, Inc. and Target Stores have not sold or agreed to sell thousands of NABP products.

24. Defendants represent, expressly or by implication, that consumers have received substantial returns on their investments in NABP. In truth and in fact, consumers have not received substantial returns on their investments in NABP.

25. Therefore, defendants' representations as set forth in Paragraphs 23-25, above, are false and misleading, and constitute deceptive acts or practices in violation of the FTC Act, 15 U.S.C.  45(a).

THE TELEMARKETING SALES RULE

26. Defendants are "sellers" or "telemarketers" engaged in "telemarketing" of "investment opportunities," as those terms are defined in the Telemarketing Sales Rule, 16 C.F.R.  310.2(r), (t), (u), and (j).

27. The Telemarketing Sales Rule prohibits: "Misrepresenting, directly or by implication . . . any material aspect of an investment opportunity." 16 C.F.R.  310.3(a)(2)(vi).

28. Pursuant to Section 3(c) of the Telemarketing Act, 15 U.S.C.  6102(c), and Section 18(d)(3) of the FTC Act, 15 U.S.C.  57a(d)(3), violations of the Telemarketing Sales Rule constitute deceptive acts or practices in or affecting commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C.  45(a).

COUNT TWO:
DEFENDANTS' VIOLATIONS OF THE
TELEMARKETING SALES RULE

29. In the course of telemarketing since at least July 1997, defendants have misrepresented, directly or by implication, material aspects of their investment opportunities. These misrepresentations include statements:

a) that the "Elvis Immortal" memorabilia that the first NABP partnership will market will include a compact disc featuring a previously unreleased song recorded by Elvis Presley; that "Elvis Immortal" will include several hundred photographs by Elvis Presley's personal photographer; that an infomercial to market "Elvis Immortal" would be aired on or around August 16, 1997, the twentieth anniversary of Elvis Presley's death; and that Graceland, Elvis Presley's estate in Memphis, Tennessee and a division of Elvis Presley Enterprises, Inc., is considering making "Elvis Immortal" the official book of Graceland.
 
b) retailers such as QVC, Inc. and Target Stores have sold, or have agreed to sell, thousands of NABP products; and
 
c) consumers have received substantial returns on their investments in NABP.

30. In truth and in fact:

a) the "Elvis Immortal" memorabilia does not include a compact disc featuring a previously unreleased song recorded by Elvis Presley; "Elvis Immortal" does not include several hundred photographs by Elvis Presley's personal photographer; an infomercial to market "Elvis Immortal" did not air on or around August 16, 1997, the twentieth anniversary of Elvis Presley's death; and Graceland, Elvis Presley's estate in Memphis, Tennessee and a division of Elvis Presley Enterprises, Inc., is not considering making "Elvis Immortal" the official book of Graceland.
 
b) retailers such as QVC, Inc. and Target Stores have not sold or agreed to sell thousands of NABP products; and
 
c) consumers have not received substantial returns on their investments in NABP.

Therefore, defendants' representations as set forth in Paragraphs 30-31, above, violate Section 310.3(a)(2)(vi) of the Telemarketing Sales Rule, 16 C.F.R.  310.3(a)(2)(vi).

CONSUMER INJURY

Defendants' violations of Section 5(a) of the FTC Act and Section 310.3(a)(2)(vi) of the Telemarketing Sales Rule have injured and will continue to injure consumers. Because of defendants' misrepresentations about their general partnership offerings, consumers have made and will continue to make investments that are likely to cause substantial financial injury, absent injunctive relief.

THIS COURT'S POWER TO GRANT RELIEF

31. Section 13(b) of the FTC Act empowers this Court to issue injunctive and other relief against violations of the FTC Act and, in the exercise of its equitable jurisdiction, to award redress to remedy the injury to consumers, to order disgorgement of monies resulting from defendants' unlawful acts or practices, and to order other ancillary equitable relief.

32. Section 19 of the FTC Act, 15 U.S.C.  57b, and Section 6(b) of the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C.  6105(b), authorize this Court to grant such relief as the Court finds necessary to redress injury to consumers or other persons resulting from defendants' violations of the Telemarketing Sales Rule, including the rescission and reformation of contracts, and the refund of money.

PRAYER FOR RELIEF

WHEREFORE, plaintiff respectfully requests that this Court:

(1) Award the Commission all temporary and preliminary injunctive and ancillary relief that 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, including, but not limited to, temporary and preliminary injunctions, the appointment of a receiver, and an order freezing each defendant's assets;
 
(2) Enjoin defendants permanently from violating Section 5(a) of the FTC Act and the Telemarketing Sales Rule;
 
(3) Award such relief as the Court finds necessary to redress injury to investors resulting from defendants' violations of Section 5(a) of the FTC Act and the Telemarketing Sales Rule, including, but not limited to, the rescission of contracts or refund of money, and the disgorgement of unlawfully obtained monies; and
 
(4) Award plaintiff the cost of bringing this action as well as such additional equitable relief as the Court may determine to be just and proper.

Respectfully submitted,

DEBRA A. VALENTINE
General Counsel

DARREN A. BOWIE
JULIE ABBATE
Federal Trade Commission
6th St. & Penn. Ave., N.W.
Room 200
Washington, D.C. 20580
(202) 326-2018, -3639
(202) 326-3392 (facsimile)

MONICA E. TAIT
Federal Trade Commission
10877 Wilshire Blvd., Suite 700
Los Angeles, CA 90024
(310) 824-4343
(310) 824-4380 (facsimile)

Attorneys for Plaintiff
FEDERAL TRADE COMMISSION

Dated:______________