UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

FEDERAL TRADE COMMISSION, Plaintiff,

v.

G. ANDREW WATSON, individually and as an officer of defendant corporation, and MIDWEST MANAGEMENT ASSOCIATES, INC., a corporation,

Defendants.

Civil Action No. 98 C 1218

Judge Castillo
Magistrate Judge Guzman

Stipulated Permanent Injunction and Final Order

Plaintiff, the Federal Trade Commission ("FTC" or "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 ("CROA"), 15 U.S.C. 1679h(b), charging defendants, G. Andrew Watson ("Watson") and Midwest Management Associates, Inc. ("Midwest"), with deceptive acts or practices in connection with the sale and offering for sale of services to credit repair clients in violation of Section 5 of the FTC Act, 15 U.S.C. 45, and the CROA, 15 U.S.C. 1679h(b), et seq.

The parties have consented to the entry of this Stipulated Permanent Injunction and Final Order ("Stipulated Order") without a trial or adjudication of any issue of law or fact herein. The defendants enter into this Stipulated Order without admission of any fact alleged by the plaintiffs.

NOW, THEREFORE, the defendants and the plaintiff have requested the Court to enter this Stipulated Order. It is therefore ORDERED, ADJUDGED, AND DECREED as follows:

FINDINGS

1. This Court has jurisdiction over the subject matter of this case and all parties hereto.

2. This is an action by the FTC instituted under Sections 13(b) and 19 of the FTC Act, 15 U.S.C. 53(b) and 57b, and Section 410(b) of the CROA, 15 U.S.C. 1679h(b), et seq. Pursuant to these sections of the FTC Act and the CROA, the FTC has authority to seek the relief it has requested.

3. Entry of this Stipulated Order is in the public interest.

4. This Stipulated Order does not constitute, and shall not be interpreted to constitute, either an admission by the defendants or a finding by the Court that the defendants have engaged in violations of the FTC Act or the CROA.

5. The defendants have waived all claims under the Equal Access to Justice Act, 28 U.S.C.  2412, and all rights to seek judicial review, or otherwise to challenge the validity of this Stipulated Order.

 

Definitions

1. "Assets" means all real and personal property of defendants Midwest Management Associates, Inc., or G. Andrew Watson, or held for the benefit of the defendants, 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), lines of credit, and all cash, wherever located.

2. "Credit Repair Client(s)" means persons who purchased or are obligated to pay any person who sells, provides, or performs (or represents that such person can or will sell, provide, or perform) any product or service, in return for the payment of money or other valuable consideration, for the express or implied purpose of improving any consumer's credit record, credit history, or credit rating, or for the express or implied purpose of providing advice or assistance to any consumer with regard to any activity or service involved in the improvement of any consumer's credit record, credit history, or credit rating.

3. "Credit Repair Organization," as defined in the CROA, 15 U.S.C.  1679a(3), means any person who uses any instrumentality of interstate commerce or the mails to sell, provide, or perform (or represents 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 improving any consumer's credit record, credit history, or credit rating, or for the express or implied purpose of providing advice or assistance to any consumer with regard to any activity or service involved in the improvement of any consumer's credit record, credit history, or credit rating.

4. "Credit Reporting Agency(ies)" means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumers' credit records, credit histories, or credit ratings to third parties, and which uses any means or facility of interstate commerce or the mails for the purpose of preparing or furnishing credit records, credit histories, or credit ratings; 

5. "Defendants" means G. Andrew Watson, individually, and Midwest Management Associates, Inc., and their successors, assigns, officers, agents, servants, employees, and those persons in active concert or participation with them who receive actual notice of this Stipulated Order by personal service or otherwise, whether acting directly or through any entity, corporation, subsidiary, division, or other device.

6. "Document" is synonymous in meaning and equal in scope to the usage of the term in Federal Rule of Civil Procedure 34(a) and includes writings, drawings, graphs, charts, photographs, audio and video recordings, computer records, and other data compilations from which information can be obtained and translated, if necessary, through detection devices into reasonably usable form. A draft or non-identical copy is a separate document within the meaning of the term.

7. "Material" means likely to affect a person's choice of, or conduct regarding, goods or services.

8. "Person" means any individual, group, unincorporated association, limited or general partnership, corporation, or other business entity.

I.

Prohibited Business Practices Pursuant to the Federal Trade Commission Act

IT IS THEREFORE ORDERED that the defendants are hereby permanently restrained and enjoined from:

A. Representing, directly or by implication, that anyone can improve substantially an appreciable number of consumers' credit reports or profiles by permanently removing bankruptcies, liens, judgments, charge-offs, late payments, foreclosures, repossessions, and other negative information from consumers' credit reports, even where such information is accurate and not obsolete;
 
B. Misrepresenting that any consumer's credit reports or profiles can be substantially improved by permanently removing bankruptcies, liens, judgments, charge-offs, late payments, foreclosures, repossessions, and other negative information from the consumer's credit reports;
 
C. Misrepresenting any fact concerning their ability to perform or provide any credit-related products or services for consumers, including but not limited to consolidating debt, obtaining or arranging a loan, or obtaining or arranging any extension of credit; and
 
D. Misrepresenting any fact material to a consumer's decision to purchase the defendants' services or products.

II.

Prohibition on Advance Payments

IT IS FURTHER ORDERED that the defendants are hereby permanently restrained and enjoined from charging or receiving any money or other valuable consideration for products or services which the defendants have agreed to perform for the purpose of improving any consumer's credit record, credit history, or credit rating before all such services have been fully performed. Provided, however, that this Section shall not be construed to apply to any payments received by defendant Watson for the representation of legal clients in bankruptcy cases filed in bankruptcy court that do not otherwise involve credit repair activities.

III.

Prohibited Business Activities Pursuant to the Credit Repair Organizations Act

IT IS FURTHER ORDERED that the defendants are hereby permanently restrained and enjoined from violating the Credit Repair Organizations Act, ("CROA"), 15 U.S.C.  1679 to 1679k, as presently enacted or as it may hereinafter be amended, by including, but not limited to:

A. Violating 15 U.S.C.  1679c(a) by failing to provide consumers with a written statement of consumer credit file rights under state and federal law at the time and in the manner prescribed therein;
 
B. Violating 15 U.S.C.   1679b(a)(1) by making any untrue or misleading statement, or counseling or advising any consumer to make any untrue or misleading statement, with respect to any consumer's credit worthiness, credit standing, or credit capacity to any consumer reporting agency as defined in 15 U.S.C.  1681(f), or to any person who has extended credit to the consumer, or to whom the consumer has applied or is applying for an extension of credit;
 
C. Violating 15 U.S.C.   1679b(a)(3) by making or using any untrue or misleading representation of the services of a credit repair organization; or
 
D. Violating 15 U.S.C. 1679d(a), 1679d(b)(4), or 1679e(b), by providing services to consumers without first having the consumers sign written contracts that:
(a) include a prescribed statement of the consumer's right to cancel the transaction within three business days; and
 
(b) are accompanied by a notice of cancellation in the form and manner prescribed.

IV.

Consumer Redress

IT IS FURTHER ORDERED that:

A. Defendants Watson and Midwest shall pay to the FTC the sum of twenty-five thousand dollars ($25,000) ("the total payment owing" or "the funds to be paid by defendants Watson and Midwest"), as follows:
 

1. Payment of thirteen thousand dollars ($13,000) is due and owing to the FTC immediately upon the Court signing this Order, with such sum to be made payable to the "Federal Trade Commission" by certified check only, and to be hand delivered during business hours either to the Regional Director of the FTC's Regional Office in Chicago, at the address specified in Section XIV, below, or to the Regional Director's designated agent; and

2. Payment of twelve thousand dollars ($12,000), or the outstanding balance of the total payment owing, is due and owing to the FTC on or before July 1, 1999, with such sum to be made payable to the "Federal Trade Commission" by certified check only, and to be hand delivered during business hours either to the Regional Director of the FTC's Regional Office in Chicago, at the address specified in Section XIV, below, or to the Regional Director's designated agent.

B. In the event that defendants Watson or Midwest default on their obligations to pay the FTC pursuant to Subsections A.1 or A.2, above, defendant Watson (or his lawful heirs then holding title) shall
 

1. arrange forthwith for a licensed real estate professional to use his or her best efforts, including but not limited to the use of the Multiple Listing Service, to accomplish an arm's length sale for fair market value, and close said sale by October 1, 1999, of that certain parcel of land situated at 2144 Lincoln Park West, Unit 22A, Chicago, Illinois 60614 ("the condominium"), also known as Assessor's Parcel Number 14-33-206-052-1073, the legal description of which is UNIT: 22a; SUBDIVISION: 2144 LINCOLN PARK WEST CONDOMINIUM; SEC/TWN/RNG/MERIDIAN: SEC 33 TWN 40N RNG 14E; ASSESSOR'S MAP REFERENCE 14-33-NE (A&B); and

2. by October 1, 1999, after giving reasonable notice to the Regional Director of the FTC's Regional Office in Chicago, or his designated agent, of the date and location of the closing of the sale of the condominium, pay to the FTC, from the proceeds inuring to defendant Watson (or to his lawful heirs then holding title) from the sale of the condominium, either (a) the outstanding balance of the total payment owing to the FTC, or (b) the sum of one-half of the proceeds inuring to defendant Watson (or to his lawful heirs then holding title) from the sale of the condominium, whichever of (a) or (b) is greater; Provided, however, that the proceeds arising from the sale of the condominium shall equal the difference between (1) the final sale price of the condominium, i.e., the sum paid to defendant Watson (or to his lawful heirs then holding title) by the buyer, and (2) the amount owing to any parties with an interest in the condominium that is prior to the FTC's lien on the condominium, as recorded with the Cook County, Illinois Recorder of Deeds. Provided, further, that the proceeds to defendant Watson (or to his lawful heirs then holding title) from the sale of the condominium shall neither include nor be reduced by any liabilities related to the use of the condominium or its sale, including but not limited to any commission for the services of the real estate agency, real estate closing costs or fees, outstanding balances owed by defendant Watson (or his lawful heirs then holding title) for property taxes, condominium assessments, transfer fees, seals, or any other costs or fees arising from the sale of the condominium. Provided, additionally, that defendant Watson (or his lawful heirs then holding title) shall make the payment required under this Subsection at the closing of the sale of the condominium, by certified check made payable to the "Federal Trade Commission."

C. In the event that Subsection B, above, is triggered, defendant Watson (or his lawful heirs then holding title) shall refrain from interfering with the sale of the condominium. Provided, further, that the condominium must not be occupied by July 1, 1999, and that defendant Watson has represented that the current lease on the condominium expires on April 30, 1999. The FTC shall be held harmless for any action arising under this Subsection.
 
D. In the event that Subsection B, above, is triggered, defendant Watson is prohibited, without the FTC's prior express approval, from transferring to any other party his interests in or title to the condominium, except in the manner provided for in Subsection B.1, above.
 
E. The funds paid by defendants Watson and Midwest shall be deposited into a redress fund, administered by the FTC, to be used for equitable relief, including but not limited to consumer redress and any attendant expenses for the administration of any redress fund. If the FTC determines, in its sole discretion, that redress to purchasers is wholly or partially impracticable, any funds not so used shall be paid to the United States Treasury. Defendants Watson and Midwest shall be notified as to how the funds are disbursed but shall have no right to contest the manner of distribution chosen by the FTC. The FTC, in its sole discretion, may use a designated agent to administer consumer redress. The FTC and defendants Watson and Midwest acknowledge and agree that this judgment for equitable monetary relief is solely remedial in nature and is not a fine, penalty, punitive assessment, or forfeiture; and
 
F. In the event of any default on any obligation to make payment under this Section of the Stipulated Order, interest, computed pursuant to 28 U.S.C.  1961(a), shall accrue from the date of default to the date of payment.
 
G. Defendants Watson and Midwest are hereby required, in accordance with 31 U.S.C.  7701, to furnish to the FTC their social security number and employer identification number, respectively, which shall be used for purposes of collecting and reporting on any delinquent amount arising out of such persons' relationship with the government.

V.

Cessation of Collections, Notices to Consumers,
Correction of Consumer Reports, and
Treatment of Lawsuits Filed Against Consumers

IT IS FURTHER ORDERED that the defendants shall:

A. Cease all collection efforts on accounts arising from contracts signed between the defendants and their credit repair clients prior to the date this Stipulated Order is entered, if any such efforts have been undertaken;
 
B. Within ten (10) days after the date this Stipulated Order is entered, or within ten (10) days of receiving payment, (1) return to credit repair clients all payments, if any, that have been or may be received by the defendants, directly or indirectly, since the date the Temporary Restraining Order and Asset Freeze was entered (i.e., February 26, 1998), on accounts arising from contracts signed between the defendants and the credit repair clients prior to the date this Stipulated Order is entered; and (2) include with each such returned payment a notice to the credit repair client stating that as a result of an agreement between the defendants and the plaintiff settling allegations that the defendants misrepresented their ability to improve any credit repair client's credit record, credit history, or credit rating, those credit repair clients owe no further payments;
 
C. Within ten (10) days after the date this Stipulated Order is entered, mail notices to all credit repair clients, if any, who have payments that are due, or may become due, on contracts signed prior to the date this Stipulated Order is entered. Such notices shall state that as a result of an agreement between the defendants and the plaintiff settling allegations that the defendants misrepresented their ability to improve any credit repair client's credit record, credit history, or credit rating, those credit repair clients owe no further payments;
 
D. Within thirty (30) days after the date this Stipulated Order is entered, provide a list of names and addresses of credit repair clients, if any, on whom the defendants have reported negative credit information, to:
1. all credit reporting agencies to whom the defendants have previously reported credit information, and
 
2. all other credit reporting agencies designated by the plaintiff,
directing those credit reporting agencies to remove any negative credit information provided by the defendants from those credit repair clients' reports;
 
E. Within thirty (30) days after the date this Stipulated Order is entered, move for voluntary dismissal of legal actions filed by the defendants against consumers, if any, in which the defendants seek to recover money allegedly owed by credit repair clients and notify the court(s) in such motions that voluntary dismissal is sought pursuant to an agreement between the defendants and the plaintiff settling allegations that the defendants misrepresented their ability to improve any credit repair client's credit record, credit history, or credit rating;
 
F. Within thirty (30) days after the date this Stipulated Order is entered, file motions to vacate judgments obtained against consumers in any court, if any, pursuant to legal actions filed by the defendants against consumers in which the defendants sought to recover money allegedly owed by credit repair clients, and notify the court(s) that the motions to vacate are sought pursuant to an agreement between the defendants and the plaintiff settling allegations that the defendants misrepresented their ability to improve any credit repair client's credit record, credit history, or credit rating; and
 
G. Within sixty (60) days after the date this Stipulated Order is entered, provide (1) the names and addresses of those credit repair clients to whom payments were returned and/or notices were sent pursuant to Subsections B and C, above, if any; (2) a copy of the list of credit repair clients' names and addresses provided to credit reporting agencies pursuant to Subsection D above, if any; (3) copies of the motions to dismiss filed pursuant to Subsection E above, if any; and (4) copies of the motions to vacate filed pursuant to Subsection F above, if any, to the address indicated in Section XIV, below.

VI.

Lifting of Asset Freeze

IT IS FURTHER ORDERED that the asset freeze against defendant Midwest Management Associates, Inc.'s assets, ordered by this Court on February 26, 1998, and extended thereafter, is hereby lifted.

VII.

Right to Reopen

IT IS FURTHER ORDERED that, within three (3) business days after the date of entry of this Stipulated Order, defendants Watson and Midwest shall submit to the FTC a truthful sworn statement (in the form shown on Appendix A to this Stipulated Order) that shall reaffirm and attest to the truthfulness, accuracy, and completeness of their respective financial statements, namely that of defendant G. Andrew Watson on February 27, 1998, as amended, and of defendant Midwest Management Associates on March 2, 1998, as amended. The plaintiff's agreement to this Stipulated Order is expressly premised upon the financial condition of defendants Watson and Midwest, as represented in their financial statements, which contains material information upon which the plaintiff relied in negotiating and agreeing upon this Stipulated Order.

If, upon motion by the plaintiff, this Court finds that defendants Watson and Midwest failed to file the sworn statement required by this Section, or if defendants Watson and Midwest failed to disclose any material asset, or materially misrepresented the value of any asset, or made any other material misrepresentation in or omissions from their respective financial statements, the plaintiff may either (1) request that the judgment herein be reopened for the purpose of requiring additional monetary consumer redress or obtaining other equitable relief in an amount approximately equivalent to any resulting understatement of assets, overstatement of liabilities, or understatement of net worth, provided that the total monetary consumer redress ordered against defendant Watson herein shall not exceed the total amount of the gross receipts (less refunds issued) arising from the activities described in the Complaint, the total of which is agreed to be $1,000,000, or (2) seek to obtain other equitable relief.

Provided, however, that in all other respects this judgment shall remain in full force and effect, unless otherwise ordered by this Court; and provided further, that proceedings instituted under this Section in that event are in addition to and not in lieu of any other civil or criminal remedies as may be provided by law, including but not limited to contempt proceedings, or any other proceedings that the plaintiff or the United States might initiate to enforce this Stipulated Order.

VIII.

Distribution of Stipulated Order by the Defendants

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

A. Provide a copy of this Stipulated 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 in which

1. any defendant is the majority owner of the business or directly or indirectly manages or controls the business, and in which

2. the business seeks credit repair clients;

B. Maintain for a period of three (3) years after creation and, upon reasonable notice, make available to representatives of the FTC the original signed and dated acknowledgments of the receipt of copies of this Stipulated Order, as required in Subsection A of this Section.

IX.

Record Keeping Provisions

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Stipulated Order, the defendants, in connection with any business in which (1) any defendant is the majority owner of the business or directly or indirectly manages or controls the business, and (2) the business seeks credit repair clients, are hereby restrained and enjoined from failing to create, and from failing to retain for a period of three (3) 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 employed in any capacity by such business, 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 business subject to this Section 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 or services purchased, and description of items or services purchased, for all consumers to whom such business has sold, invoiced, or shipped any goods or services;

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 or refund request, 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 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 the denial; and

E. Copies of all sales scripts, training materials, advertisements, or other marketing materials utilized; provided that copies of all sales scripts, training materials, advertisements, or other marketing materials utilized shall be retained for (3) years after the last date of dissemination of any such materials.

X.

Compliance Monitoring

IT IS FURTHER ORDERED that, within five (5) business days after receipt by the defendants of this Stipulated Order as entered by the Court, the defendants shall submit to the FTC a truthful sworn statement, in the form shown in Appendix B, that shall acknowledge receipt of this Stipulated Order.

XI.

Compliance Reporting by the Defendants

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

A. For a period of five (5) years from the date of entry of this Stipulated Order, defendant Watson shall notify the FTC of the following:

1. Any changes in defendant Watson's residence, mailing addresses, or telephone numbers, within ten (10) days of the date of such change;

2. Any changes in defendant Watson's employment status (including self-employment) within ten (10) days of such change. Such notice shall include the name and address of each business that defendant Watson is affiliated with or employed by, a statement of the nature of the business, and a statement of defendant Watson's duties and responsibilities in connection with the business or employment; and

3. Any proposed change in the structure of any business entity owned or controlled by the defendants, such as creation, incorporation, dissolution, assignment, sale, merger, creation or dissolution of subsidiaries, proposed filing of a bankruptcy petition, change in the corporate name or address, or any other change that could affect compliance obligations arising out of this Stipulated Order, thirty (30) days prior to the effective date of any proposed change; provided, however, that, with respect to any proposed change in the business about which the defendants learn less than thirty (30) days prior to the date such action is to take place, the defendants shall notify the FTC as soon as is practicable after learning of such proposed change.

B. One hundred eighty (180) days after the date of entry of this Stipulated Order, the defendants shall provide a written report to the FTC, sworn to under penalty of perjury, setting forth in detail the manner and form in which the defendants have complied and are complying with this Stipulated Order. This report shall include but not be limited to:

1. Defendant Watson's then-current residence address and telephone number;

2. Defendant Watson's then-current employment, business addresses and telephone numbers, a description of the business activities of each employer, and defendant Watson's title and responsibilities for each employer;

3. A copy of each acknowledgment of receipt of this Stipulated Order obtained by the defendants pursuant to Section VIII of this Stipulated Order, if any; and

4. A statement describing the manner in which the defendants have complied and are complying with Sections II, III, and V of this Stipulated Order.

C. Upon written request by a representative of the FTC, the defendants shall submit additional written reports (under oath, if requested) and produce documents on fifteen (15) days' notice with respect to any conduct subject to this Stipulated Order.

D. For the purposes of this Stipulated Order, the defendants shall, unless otherwise directed by the FTC's authorized representatives, mail all written notifications to the FTC to the address indicated in Section XIV, below.

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 Watson performs services as an employee, consultant, or independent contractor.

F. For purposes of the compliance reporting required by this Section, the FTC is authorized to communicate directly with defendant Watson.

XII.

The FTC's Authority to Monitor Compliance

IT IS FURTHER ORDERED that the FTC is authorized to monitor the defendants' compliance with this Stipulated Order by all lawful means, including but not limited to the following:

A. The FTC 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 the defendants' compliance with any provision of this Stipulated Order;

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

C. Nothing in this Stipulated Order shall limit the FTC'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 the defendants have violated any provision of this Stipulated Order or Section 5 of the FTC Act, 15 U.S.C.  45.

XIII.

Access to Business Premises

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Stipulated Order, for the purpose of further determining compliance with this Stipulated Order, the defendants shall permit representatives of the FTC, within three (3) business days of receipt of written notice from the FTC:

A. Access during normal business hours to any office, or facility storing documents, of any business in which

1. any defendant is the majority owner of the business or directly or indirectly manages or controls the business, and in which

2. the business seeks credit repair clients.

In providing such access, the defendants shall permit representatives of the FTC to inspect and copy all documents relevant to any matter contained in this Stipulated Order, except those protected by a privilege; and shall permit FTC representatives to remove documents relevant to any matter contained in this Stipulated Order, except those protected by a privilege, for a period not to exceed five (5) business days so that the documents may be inspected, inventoried, and copied; and

B. To interview 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 relating to compliance with the terms of this Stipulated Order. The persons interviewed may have counsel present.

Provided that, upon application of the FTC, and for good cause shown, the Court may enter an ex parte order granting immediate access to the defendants' business premises for the purposes of inspecting and copying all documents relevant to any matter contained in this Stipulated Order, except those protected by a privilege.

XIV.

Notices

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

Regional Director
Federal Trade Commission
55 E. Monroe St., Suite 1860
Chicago, Illinois 60603

Re: FTC v. Watson, et al.

or any such other addresses as the plaintiff shall specify.

XV.

Retention of Jurisdiction

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for all purposes. The Clerk's office shall mark the instant case administratively closed.

The parties agree and stipulate to entry of the foregoing Stipulated Permanent Injunction and Final Order.

For the FEDERAL TRADE COMMISSION:

DATED: __________________

__________________________
EVAN SIEGEL
Ill. ARDC # 06211459
Attorney for Plaintiff
Federal Trade Commission
55 East Monroe Street, Suite 1860
Chicago, Illinois 60603
(312) 960-5603/5634

For the DEFENDANTS

DATED: __________________

______________________________
MATTHEW F. KENNELLY
Illinois ARDC # 6180755
Attorney for Defendants
Cotsirilos Stephenson Tighe & Streicker, Ltd.
33 N. Dearborn St., Suite 600
Chicago, IL 60602
(312) 263-0345

DEFENDANTS

DATED: _________________

________________________________
G. Andrew Watson

DATED: _________________

________________________________
Midwest Management Associates, Inc.
By G. Andrew Watson, President
and Chief Executive Officer

There being no just reason for delay, the Clerk of Court is hereby directed to enter this Stipulated Order.

Issued at , .m.

United States District Judge

, 1998