UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION

FEDERAL TRADE COMMISSION,
Plaintiff

v.

MICHAEL A. SAFFER and
DANIEL L. COUTINHO,
Defendants.

No. 96-6081-CIV-LENARD

FINAL JUDGMENT AND ORDER FOR PERMANENT INJUNCTION AGAINST MICHAEL A. SAFFER

WHEREAS, plaintiff Federal Trade Commission ("Commission") commenced this action on January 22, 1996 by filing a complaint for a permanent injunction and other equitable relief against North East Telecommunications, Ltd., Tannen Advertising, Inc., Strategies Telecom, Inc., Mark Goldstein, Anthony Vandeputte, Dilraj Mathauda and Daniel Coutinho, pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C.  53(b);

WHEREAS, on December 30, 1996, the Commission filed a Second Amended Complaint that named as additional defendants Michael A. Saffer ("Saffer") and Lance Kennedy;

WHEREAS, the Second Amended Complaint alleges that defendants have engaged in deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C.  45(a);

WHEREAS, the Court entered a judgment by default and order for permanent injunction against all other defendants besides defendant Saffer who have been served with a summons and complaint in this matter;

THEREFORE, the Court, being advised in the premises, now 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). The Second Amended Complaint alleges that defendants have engaged in unfair or deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C.  45(a), in connection with the offering of application preparation services for Federal Communications Commission paging licenses. The Second Amended Complaint seeks both permanent injunctive relief and monetary relief in the form of consumer redress and/or disgorgement.
  2. This Court has jurisdiction over the subject matter of this case, and jurisdiction over defendant Saffer. Venue as to defendant Saffer in the Southern District of Florida is proper.
  3. The Second Amended Complaint states a claim upon which relief may be granted.
  4. The Commission has the authority under Section 13(b) of the FTC Act to seek the relief it has requested.
  5. The activities of defendant Saffer as alleged in the Complaint are in or affecting commerce, as defined in 15 U.S.C.  44.
  6. Process and service of process as to defendant Saffer is proper.
  7. Entry of this Order is in the public interest.

DEFINITIONS

A. "FCC" shall mean Federal Communications Commission.

B. "Investment Opportunity" shall mean any product or service, including but not limited to any license issued by the FCC, any beneficial interest in a limited liability company, partnership or other entity, or any other tangible or intangible asset or item, that in any way is (1) offered for sale or sold, to be held, wholly or in part, for purposes of economic benefit, profit, or income, or (2) offered for sale or sold, based on representations, wholly or in part, express or implied, about past or future income, appreciation, or resale value.

C. "Telemarketing" shall mean any business activity (including, but not limited to, initiating or receiving telephone calls, managing others who initiate or receive telephone calls, operating an enterprise that initiates or receives telephone calls, owning an enterprise 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, good, service, investment opportunity, partnership interest, trust interest or other beneficial interest, 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 not completed until after a face-to-face contact between the seller or solicitor and the consumers solicited.

D. "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, potential customers for an entity engaged in telemarketing; or (4) performing marketing services of any kind for an entity engaged in telemarketing.

PROHIBITED BUSINESS ACTIVITIES

IT IS HEREBY ORDERED that defendant Saffer and his agents, servants, employees, attorneys, 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, in connection with the advertising, promotion, offer for sale, or sale of any item, product, good, service, or investment opportunity of any kind, are each hereby permanently restrained and enjoined from:

A. Falsely representing, directly or by implication, that customers are likely to earn substantial profit through leasing, transferring or selling FCC paging licenses;

B. Falsely representing, directly or by implication, that customers will derive income or profit from their FCC licenses without the customers having to construct a paging system themselves;

C. Falsely representing, directly or by implication, that no entity or individual may obtain multiple paging licenses directly from the FCC for use in a given geographic area;

D. Falsely representing, directly or by implication, that the FCC typically requires a paging license applicant to submit or conduct any technical studies, analyses or statements, including but not limited to engineering studies, site analyses, environmental impact statements, service coverage maps or interference studies for the type of licenses acquired through defendants' services;

E. Falsely representing, directly or by implication, that the purchase of any investment opportunity, including but not limited to FCC paging license application services, sold, offered for sale or leased by it or him is a relatively low risk or excellent investment opportunity that is likely to generate substantial profits;

F. Falsely representing, directly or by implication, that anyone has earned, or is likely to earn, profits from any investment opportunity, including but not limited to FCC license application services, sold or offered for sale or leased by it or him;

G. Falsely representing any other fact material to a consumer's decision to purchase any investment opportunity; and

H. Using for any purpose whatsoever any aliases, assumed names or telephone names that are different from their legal names.

BOND PROVISION

IT IS FURTHER ORDERED that defendant Saffer is permanently restrained and enjoined from either (1) engaging in telemarketing of investment opportunities, or (2) assisting others engaged in telemarketing of investment opportunities, unless he first obtains a performance bond in the principal sum of TWO MILLION EIGHT HUNDRED THOUSAND DOLLARS ($2,800,000):

A. This bond shall be conditioned upon compliance with Section 5 of the Federal Trade Commission Act, 15 U.S.C.  45, and with the provisions of this Order. The bond shall be deemed continuous and remain in full force and effect as long as defendant Saffer continues to engage in telemarketing of investment opportunities, or assist others engaged in telemarketing of investment opportunities, and for at least three years after he has ceased to engage in such activity. The bond shall cite this Order as the subject matter of the bond, and shall provide surety thereunder against financial loss resulting from whole or partial failure of performance due, in whole or in part, to any violation of Section 5 of the Federal Trade Commission Act, the provisions of this Order, or to any other violation of law.

B. The performance bond required pursuant to this Section shall be an insurance agreement providing surety for financial loss issued by a surety company that is admitted to do business in each of the states in which defendant Saffer does business and that holds a Federal Certificate of Authority As Acceptable Surety On Federal Bond and Reinsuring. Each such performance bond shall be in favor of both: (1) the Federal Trade Commission for the benefit of any consumer injured as a result of any false or misleading representation made by defendant Saffer, his agents or any other persons acting in concert with him or under his authority, supervision or control, while engaged in telemarketing of investment opportunities or assisting others engaged in telemarketing of investment opportunities; and (2) any consumer so injured.

C. The bond required pursuant to this Section is in addition to, and not in lieu of, any other bond required by any other federal, state, or local law, or by any other court order not entered in this action.

D. At least ten days before the commencement of telemarketing of investment opportunities or assisting others engaged in telemarketing of investments opportunities, defendant Saffer shall provide a copy of the bond required by this Section to the Associate Director for Service Industry Practices at the address specified in Section V of this Order.

E. Defendant Saffer shall not disclose the existence of the performance bond to any consumer, or other purchaser or prospective purchaser of any product or service that is advertised, promoted, offered for sale, sold, or distributed via telemarketing, without also disclosing clearly and prominently, at the same time, "AS REQUIRED BY ORDER OF THE U.S. DISTRICT COURT ARISING FROM CHARGES OF FALSE AND MISLEADING REPRESENTATIONS IN THE PROMOTION AND SALE OF INVESTMENT OPPORTUNITIES." RECORD KEEPING AND DOCUMENT RETENTION

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, in connection with any business where

(1) defendant Saffer is the majority owner of the business or otherwise directly or indirectly manages or controls the business, and where

(2) the business engages in, or is assisting others engaged in, telemarketing, or engages in the advertising, promotion, offer for sale, or sale of any investment opportunity,

defendant Saffer is hereby restrained and enjoined from failing to create, and from failing to retain for a period of five (5) 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 the date and reason for the person's termination, if applicable. The businesses subject to this Section shall retain such records for any terminated employee for a period of two 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 salesperson 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 reason 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.

ORDER DISTRIBUTION

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, defendant Saffer shall:

A. Provide a copy of this Order to, and obtain a signed and dated acknowledgment of receipt of same from, 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

(1) defendant Saffer is the majority owner of the business or otherwise directly or indirectly manages or controls the business, and where
(2) the business engages in, or is assisting others engaged in, telemarketing, or engages in the advertising, promotion, offer for sale, or sale of any investment opportunity;

B. Should defendant Saffer become affiliated in any way with a business entity engaged in telemarketing and/or engaged in the sale, by any means, of any investment opportunity, defendant Saffer shall provide a copy of this Order to, and obtain a signed and dated acknowledgment of receipt of same from, an owner, principal, officer, or director of the business entity within fifteen business days of the affiliation; and

C. Maintain for a period of five (5) years after creation, and upon reasonable notice make available to representatives of the Commission, the original signed and dated acknowledgments of the receipt of copies of this Order, as required in this Section.

ACCESS AND MONITORING

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

A. Defendant Saffer shall notify the Commission in writing, within ten (10) days of the date of entry of this Order, of his current residence address, mailing address, business and home telephone numbers, and employment status, including the names, telephone numbers, and business addresses of any current employers;

B. For a period of five (5) years from the date of entry of this Order, defendant Saffer shall notify the Commission in writing within thirty (30) days of any changes in his residence or mailing addresses;

C. For a period of five (5) years from the date of entry of this Order, defendant Saffer shall notify the Commission in writing within thirty (30) days of any changes in employment status, including the name and business address of any new employer(s);

D. For the purposes of this Order, all written notifications to the Commission shall be mailed to:

Associate Director for Service Industry Practices
Room H-200
Federal Trade Commission
Washington, D.C. 20580
Re: FTC v. North East Telecommunications, Ltd.,
CV-96-6081-CIV-LENARD (S.D. Fla.)

E. For the purposes of this Section, "employment" includes the performance of services as an employee, consultant, or independent contractor; and "employers" include any individual or entity for whom defendant Saffer performs services as an employee, consultant, or independent contractor.

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, for the purpose of further determining compliance with this Order, defendant Saffer shall permit representatives of the Commission, within seven (7) business days of receipt of written notice from the Commission:

A. Access during normal business hours to his offices, or facility storing documents, and to any offices of any business where

(1) defendant Saffer is the majority owner of the business or otherwise directly or indirectly manages or controls the business, and where
(2) the business engages in, or is assisting others engaged in, telemarketing, or engages in the advertising, promotion, offer for sale, or sale of any investment opportunity;

In providing such access, defendant Saffer shall permit representatives of the Commission to inspect and copy all documents relevant to any matter contained in this Order; and

B. To interview or depose the officers, directors, and employees, including all personnel involved in responding to consumer complaints or inquiries, and all sales personnel, whether designated as employees, consultants, independent contractors or otherwise, of any business to which Subsection (A) of this Section applies, concerning matters reasonably relating to compliance with the terms of this Order. The person interviewed or deposed may have counsel present.

IT IS FURTHER ORDERED that the Commission is authorized to monitor defendant Saffer's compliance with this Order by all lawful means, including but not limited to the following means:

A. The Commission is authorized, without further leave of Court, to obtain discovery from any person in the manner provided by Chapter V of the Federal Rules of Civil Procedure, Fed. R. Civ. P. 26 - 37, including the use of compulsory process pursuant to Fed. R. Civ. P. 45, for the purpose of monitoring and investigating defendant Saffer's compliance with any provision of this Order;

B. The Commission is authorized to use representatives posing as consumers and suppliers to defendant Saffer, his employees, or any other entity managed or controlled in whole or in part by defendant Saffer, without the necessity of identification or prior notice;

C. Nothing in this Order shall limit the Commission's lawful use of compulsory process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C.  49, 57b-1, to investigate whether defendant Saffer has violated any provision of this Order or Section 5 of the FTC Act, 15 U.S.C.  45.

ACKNOWLEDGMENT OF RECEIPT OF ORDER

IT IS FURTHER ORDERED that, within five (5) business days after receipt by defendant Saffer of this Order as entered by the Court, defendant Saffer shall submit to the Commission a truthful sworn statement, in the form shown on Appendix A to this Order, that shall acknowledge receipt of this Final Order.EQUITABLE MONETARY RELIEF

IT IS FURTHER ORDERED that

A. Judgment is hereby entered against defendant Saffer in the amount of $2,804,971.50, with post-judgment interest at the legal rate, for equitable monetary relief.

B. 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 by a Redress Administrator to consumers who purchased investment 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. This equitable monetary relief is solely remedial in nature and is not a fine, penalty, punitive assessment, or forfeiture.

C. Defendant Saffer is hereby required, in accordance with 31 U.S.C.  7701 to furnish to the Federal Trade Commission his taxpayer identifying number which shall be used for purposes of collecting and reporting on any delinquent amount arising out of such person's relationship with the government.

RETENTION OF JURISDICTION

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 THIS JUDGMENT

IT IS FURTHER ORDERED that there is no just reason for delay of entry of this judgment, and, pursuant to Fed. R. Civ. P. 54(b), the Clerk shall enter this Order immediately.

DONE AND ORDERED in Chambers at Miami, Florida, this day of , 1998.

JOAN A. LENARD
UNITED STATES DISTRICT JUDGE

APPENDIX A

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

FEDERAL TRADE COMMISSION

Plaintiff

v.

MICHAEL A. SAFFER

Defendant.

No. 96-6081-CIV-LENARD

AFFIDAVIT OF DEFENDANT MICHAEL A. SAFFER

Michael A. Saffer, being duly sworn, hereby states and affirms as follows:

1. My name is Michael A. Saffer. My current residence address is . I am a citizen of the United States and am over the age of eighteen. I have personal knowledge of the facts set forth in this Affidavit.

2. I am a defendant in FTC v. Michael A. Saffer, United States District Court for the Southern District of Florida.

3. On , 1998, I received a copy of the Final Judgment and Order for Permanent Injunction Against Michael A. Saffer, which was signed by the Honorable Joan A. Lenard and entered by the Court on , 1998.

I declare under penalty of perjury that the foregoing is true and correct.

Michael A. Saffer
State of , City of
Subscribed and sworn to before me this day of , 1998.
Notary Public
My Commission Expires: