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

FEDERAL TRADE COMMISSION,

Plaintiff,

v.

MEGA SYSTEMS INTERNATIONAL, INC., a corporation,
JEFFREY SALBERG, individually and as an officer of the corporation, Defendants.

Civil Action No.

COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF

Plaintiff, Federal Trade Commission (“Commission”), for its complaint, alleges as follows:

1. Plaintiff brings this action under Sections 5(l), 9, and 16(a)(1) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. 45(l), 49, and 56(a)(1), as amended, for injunctive and other relief for defendants’ violations of a final Order issued by the Commission against Mega Systems International, Inc. ("Mega Systems") and Jeffrey Salberg, individually and as an officer of Mega Systems.

JURISDICTION AND VENUE

2. This Court has jurisdiction over this matter pursuant to 28 U.S.C. 1331, 1337(a), 1345, and 1355, and under 15 U.S.C. 45(l), 49, and 56 (a)(1), as amended.

3. Venue in the Northern District of Illinois is proper under 28 U.S.C. 1391(b-c) and 1395 (a).

PLAINTIFF

4. Plaintiff, the Federal Trade Commission, is an independent agency of the United States Government created by statute. The Commission enforces the FTC Act, 15 U.S.C. 41 et seq., which prohibits unfair and deceptive acts or practices. The Commission is also authorized by the FTC Act, 15 U.S.C. 56(a)(1), to initiate court proceedings to obtain a civil penalty and injunctive relief for violations of Commission orders if the Attorney General does not file within 45 days of the Commission's referral the Commission's complaint alleging violations of the Commission’s Order.

DEFENDANTS AND THEIR BUSINESS

5. Defendant Mega Systems is an Indiana corporation with its office and principal place of business located within the Northern District of Illinois at 2025 East 175th Street, Lansing, Illinois 60438. Defendant Mega Systems transacts business in the Northern District of Illinois.

6. Defendant Jeffrey Salberg is the Chief Executive Officer of Mega Systems. His principal office and principal place of business is within the Northern District of Illinois and is the same as that of the corporate defendant. Individually or in concert with others, defendant Jeffrey Salberg has formulated, directed and controlled the acts and practices of the corporate defendant. In connection with the matters alleged herein, Jeffrey Salberg transacted business in the Northern District of Illinois.

PRIOR COMMISSION PROCEEDING

7. In a Commission proceeding bearing Docket No. C-3811, in which defendants Mega Systems and Jeffrey Salberg were charged with violating sections 5(a)(1) and 12 of the FTC Act, 15 U.S.C. 45(a)(1) and 52, the Commission on June 8, 1998, entered against Mega Systems and Jeffrey Salberg, their successors and assigns, and their officers, agents, representatives and employees, a consent order to cease and desist from certain practices in connection with the advertising, packaging, labeling, promotion, offering for sale, sale or distribution of various products, and requiring them to pay the sum of Five Hundred Thousand Dollars ("$500,000.00") no later than fifteen days after the date of service of the order.

8. Specifically, the Commission's Order contains the following provision:

XIII.

IT IS FURTHER ORDERED that:

A. Respondent Mega Systems International, Inc., its successors and assigns, and respondent Jeffrey Salberg, shall pay to the Federal Trade Commission by electronic funds transfer the sum of five hundred thousand dollars ($500,000) no later than fifteen (15) days after the date of service of this order. In the event of any default on any obligation to make payment under this Part, interest, computed pursuant to 28 U.S.C. 1961(a) shall accrue from the date of default to the date of payment. In the event of default, respondent Mega System, Inc., its successors and assigns, and respondent Jeffrey Salberg, shall be jointly and severally liable.

Copies of the Commission's Complaint (exhibits omitted) and the Commission's Order are attached to this Complaint as Exhibit A.

9. The Commission's Order was served upon defendants on June 25, 1998, and by operation of law became final and enforceable thereafter. It has remained in full force and effect ever since.

DEFENDANTS’ VIOLATION OF THE COMMISSION’S ORDER

10. As of July 10, 1998, fifteen (15) days after service of the Commission’s Order, defendants Mega Systems and Jeffrey Salberg were liable for the payment of $500,000 plus accrued interest to the Federal Trade Commission as consumer redress pursuant to Section XIII of the Commission’s Order.

11. Defendants Mega Systems and Jeffrey Salberg have failed to pay any of the amount due and owing, thereby violating Section XIII of the Commission’s Order.

INJUNCTION AND CIVIL PENALTIES

12. Pursuant to Section 5(l) of the FTC Act, 15 U.S.C. 45(l), each day of the continuing failure by defendants Mega Systems and Jeffrey Salberg to pay $500,000 plus accrued interest, as described in paragraphs 10 and 11 above, constitutes a separate violation of the Commission’s Order.

13. Section 5(l) of the FTC Act, 15 U.S.C. 45(l), authorizes the Court to grant mandatory injunctions and such other and further equitable relief as it deems appropriate in the enforcement of final orders of the Commission.

14. Section 5(l) of the FTC Act, 15 U.S.C. 45(l), authorizes the Court to award monetary civil penalties of not more than $10,000 for each violation of the Commission’s Order. Section 4 of the Federal Civil Penalties Inflation Adjustment Act of 1990, 28 U.S.C. 2461 note, and as implemented by 16 C.F.R. 1.98(d) (1997), authorizes the Court to award monetary civil penalties of not more than $11,000 for each violation of the Order that occurs after November 20, 1996.

PRAYER FOR RELIEF

WHEREFORE, plaintiff respectfully requests that this Court, pursuant to 15 U.S.C. 45(l) and 56(a)(1), and to the Court's own equity powers:

(1) Award plaintiff such preliminary injunctive and ancillary relief as may be necessary to preserve the possibility of effective final relief, including, but not limited to, temporary and preliminary injunctions and an order freezing each defendant’s assets;
 
(2) Enter judgment against defendants, jointly and severally, for the violations alleged in this Complaint;
 
(3) Order defendants Mega Systems and Jeffrey Salberg to pay $500,000 and all interest accruing thereon since July 11, 1998, as specified in Part XIII of the Commission’s Order;
 
(4) Award plaintiff monetary civil penalties against the defendants for their violations of the Commission’s Order;
 
(5) Enjoin defendants’ from further violations of the Commission’s Order in FTC Docket No. C-3811 (1998);
 
(6) Order defendants to pay the costs of this action; and
 
(7) Award plaintiff such additional relief as the court may deem just and proper.

Dated: , 1998

Respectfully submitted,

DEBRA A. VALENTINE
General Counsel

KAREN D. DODGE
THERESA M. McGREW
Attorneys for Plaintiff
Federal Trade Commission
55 East Monroe, Ste. 1860
Chicago, IL 60603
(312) 960-5634