UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
NORTHERN DIVISION

FEDERAL TRADE COMMISSION, Plaintiff,

v.

PHILIP D. MILLER dba NEW START, Defendants

Civil Action No.

COMPLAINT FOR INJUNCTIVE AND OTHER EQUITABLE RELIEF

Plaintiff, the Federal Trade Commission ("FTC" or "Commission") for its Complaint alleges:

1. The Commission brings this action under 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, 15 U.S.C. 1679h(b), to obtain preliminary and permanent injunctive relief, restitution, rescission, disgorgement and other equitable relief for Defendant's deceptive acts or practices in connection with the sale and offering for sale of credit repair products in violation of Section 5(a) of the FTC Act, 15 U.S.C.  45(a), and Section 404(a)(2) of the Credit Repair Organizations Act, 15 U.S.C. 1679b(a)(2).

    JURISDICTION AND VENUE

2. This Court has jurisdiction of this matter pursuant to 28 U.S.C. 1331, 1337(a), and 1345, and 15 U.S.C. 53(b), 57b, and 1679h(b).

3. Venue in the United States District Court for the District of Maryland, Northern Division, is proper under 28 U.S.C.  1391 and 15 U.S.C.  53(b).

THE PARTIES

4. Plaintiff, the Federal Trade Commission, is an independent agency of the United States Government created by statute. 15 U.S.C.  41 et seq. The Commission is charged, inter alia, with enforcement of Section 5(a) of the FTC Act, 15 U.S.C.  45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The Commission also enforces the Credit Repair Organizations Act. 15 U.S.C.  1679h(a). The Commission is authorized to initiate federal district court proceedings, by its own attorneys, to enjoin violations of the FTC Act and the Credit Repair Organizations Act in order to secure such equitable relief, including consumer redress, as may be appropriate in each case. 15 U.S.C.  53(b), 57b, and 1679h(b).

5. Defendant Philip D. Miller transacts or has transacted business in this District as New Start, an unregistered and unincorporated company operated through a mailing address of 20 Liberty Road, Suite E, Sykesville, Maryland, 21784.

6. At all times material to this complaint, acting alone or in concert with others, defendant has formulated, directed, controlled or participated in the acts and practices set forth in this complaint. He resides in this district.

COMMERCE

7. At all times relevant to this complaint, defendant has maintained a course of trade in the offering for sale and sale of credit repair products, in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C.  44.

DEFENDANT'S BUSINESS PRACTICES

8. Since at least July, 1998, defendant has advertised, promoted, offered for sale, and sold credit repair manuals to consumers through advertisements, including but not limited to, Internet advertisements on the World Wide Web ("Web").

9. Defendant claims that by following the program outlined in his manual consumers can establish new credit histories, credit records, or credit ratings by obtaining a new identification number to use in place of their Social Security Number for banking and credit purposes. Defendant has further claimed that use of the new identification number in this manner is legal.

10. Typical and illustrative of defendant's claims about his credit repair program are the following:

ENJOY CLEAN CREDIT GET A CLEAN CREDIT REPORT AND A NEW CREDIT FILE

YOU WILL GET A BRAND-NEW IDENTIFYING NUMBER THAT CAN BE USED IN PLACE OF YOUR SOCIAL SECURITY NUMBER WHEN APPLYING FOR CREDIT!

And it's perfectly legal. In fact, IT'S YOUR RIGHT!

WHEN YOU FOLLOW THESE STEPS, YOU CANNOT BE DENIED A NEW FILE!

11. Consumers who respond to defendant's advertisements receive a packet of materials that advise consumers to obtain a Taxpayer Identification Number ("TIN") from the Internal Revenue Service, or, as an alternative, to obtain an Employer Identification Number ("EIN") or second Social Security Number. Using the new number, the consumer is directed to open a bank account, obtain a small loan from the bank using the account as collateral, and use the loan proceeds to repeat the process with another bank. The consumer is told to repeat the process several times, apply for secured credit cards, and gradually create a new credit profile.

12. Defendant charges consumers $21.00 or more to purchase his materials.

VIOLATIONS OF THE CREDIT REPAIR ORGANIZATIONS ACT

13. The Credit Repair Organizations Act, 15 U.S.C. 1679a-j (1997), was enacted on September 30, 1996, and has been in full force and effect since April 1, 1997.

14. Section 404(a)(2) of the Credit Repair Organizations Act prohibits all persons from making any statement, or counseling or advising any consumer to make any statement, the intended effect of which is to alter the consumer's identification to prevent the display of the consumer's credit record, history, or rating for the purpose of concealing adverse information that is accurate and non-obsolete 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. 15 U.S.C.  1679b(a)(2).

15. Pursuant to Section 410(b)(1) of the Credit Repair Organizations Act, 15 U.S.C.  1679h(b)(1), any violation of any requirement or prohibition of the Credit Repair Organizations Act constitutes an unfair and deceptive act or practice in commerce in violation of Section 5(a) of the FTC Act, 15 U.S.C. 45(a).

COUNT ONE

16. In numerous instances, defendant has counseled or advised consumers to make statements, the intended effect of which has been to alter the consumer's identification to prevent the display of the consumer's credit record, history, or rating for the purpose of concealing adverse information that is accurate and non-obsolete to consumer reporting agencies, as that term is defined in 15 U.S.C.  1681(f), or to persons who have extended credit to those consumers or to whom those consumers have applied or are applying for extensions of credit.

17. Defendant has thereby violated Section 404(a)(2) of the Credit Repair Organizations Act, 15 U.S.C.  1679b(a)(2).

VIOLATIONS OF THE FEDERAL TRADE COMMISSION ACT

COUNT TWO

18. In connection with the advertising, marketing, promotion, offering for sale, or sale of credit repair products, to induce consumers to purchase his products, defendant has, expressly or by implication, represented that through the use of his product, consumers can legally alter their identifications to conceal adverse credit information from consumers' credit records, credit histories, or credit ratings by obtaining a new identifying number, for consumers to use, instead of their Social Security Numbers, for credit purposes.

19. In truth and in fact, through the use of defendant's products, consumers cannot legally alter their identifications to conceal adverse credit information from consumers' credit records, credit histories, or credit ratings by obtaining a new identifying number to use, instead of their Social Security Numbers, for credit purposes.

20. Therefore, the representation set forth in paragraph 18 is false and misleading and constitutes a deceptive act or practice in or affecting commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C. 45(a).

CONSUMER INJURY

21. Consumers throughout the United States, including those in the State of Maryland, have suffered or are likely to suffer substantial monetary loss as a result of defendant's unlawful acts or practices. Absent injunctive relief by this Court, defendant is likely to continue to injure consumers and harm the public interest.

THIS COURT'S POWER TO GRANT RELIEF

22. Sections 13(b) and 19 of the FTC Act, 15 U.S.C.   53(b) and 57b, and Section 410(b) of the Credit Repair Organizations Act, 15 U.S.C. 1679h(b), empower this Court to issue a permanent injunction against defendant's violations of the Credit Repair Organizations Act and the FTC Act and, in the exercise of its equitable jurisdiction, to order such ancillary relief as preliminary injunction, rescission, restitution, disgorgement of profits resulting from defendant's unlawful acts or practices, and other remedial measures.

PRAYER FOR RELIEF

WHEREFORE, plaintiff requests that this Court, as authorized by Section 410(b) of the Credit Repair Organizations Act, 15 U.S.C.  1679h(b), Sections 13(b) and 19 of the FTC Act, 15 U.S.C.  53(b) and 57b, and pursuant to its own equitable powers:

(a) Award plaintiff such preliminary injunctive and ancillary relief as 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;

(b) Permanently enjoin defendant from violating the Credit Repair Organizations Act and the FTC Act, as alleged herein, in connection with the advertising, promoting, offering for sale, and sale of credit repair products and services;

(c) Award such relief as the Court finds necessary to redress injury to consumers resulting from defendant's violations of the Credit Repair Organizations Act and the FTC Act, including, but not limited to, rescission of contracts, the refund of monies paid, and the disgorgement of ill-gotten monies; and

(d) Award plaintiff the costs of bringing this action, as well as such other and additional relief as the Court may determine to be just and proper.

Dated:_____________, 1999 Respectfully Submitted,

DEBRA A. VALENTINE
General Counsel

____________________________________
Michael W. Donohue (MD Fed. Bar # 09546)
Nancy Pineles
Attorneys for Plaintiff
Federal Trade Commission
600 Pennsylvania Avenue, NW, Room 238
Washington, DC 20580
(202) 326-3563, (202) 326-2484