UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA

FEDERAL TRADE COMMISSION, Plaintiff,

v.

TRADENET MARKETING, INC., a corporation, L.W. COOPER, individually and as an officer of Tradenet Marketing, Inc., ALBERTO GUERRERO, individually and as an officer of Tradenet Marketing, Inc., TOP MARKETING BUSINESS CONSULTING, INC. a corporation, and ERWIN RICHARD ANNAU, individually and as an officer of Top Marketing Business Consulting, Inc., Defendants.

Civil Action No.

COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF

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

  1. The FTC brings this action under Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C.  53(b), to secure a permanent injunction, rescission of contracts, restitution, disgorgement, and other equitable relief for Defendants' unfair or deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C.  45(a).
  2. This Court has jurisdiction over this matter pursuant to 28 U.S.C.  1331, 1337(a) and 1345, and 15 U.S.C. 53(b). This action arises under 15 U.S.C.  45(a)(1).
  3. Venue in the United States District Court for the Middle District of Florida is proper under 28 U.S.C.  1391(b) and (c), and 15 U.S.C.  53(b).

THE PARTIES

  1. Plaintiff, the Federal Trade Commission, is an independent agency of the United States Government created by statute. 15 U.S.C.  41-58. 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 is authorized to initiate federal district court proceedings to enjoin violations of the FTC Act in order to secure such equitable relief as may be appropriate in each case. 15 U.S.C.  53(b).
  2. Defendant Tradenet Marketing, Inc. ("Tradenet") is a Florida corporation with its principal place of business at 1497 Main Street, Dunedin, Florida. Tradenet transacts business in the Middle District of Florida.
  3. Defendant L.W. Cooper ("Cooper") is, and at all relevant times was, the President and a director of Defendant Tradenet and owns 50% of its shares. His business address is the same as that of corporate Defendant Tradenet. In connection with the matters alleged herein, Cooper transacts business in the Middle District of Florida.
  4. At all times material to this Complaint, individually or in concert with others, Cooper has formulated, directed, and controlled the acts and practices of Tradenet, including the various acts and practices set forth herein.
  5. Defendant Alberto Guerrero ("Guerrero") is, and at all relevant times was, Vice-President and a director of defendant Tradenet and owns 20% of its shares. His business address is the same as that of corporate defendant Tradenet. In connection with the matters alleged herein, Guerrero transacts business in the Middle District of Florida.
  6. At all times mentioned in this Complaint, individually or in concert with others, Guerrero has formulated, directed, and controlled the acts and practices of Tradenet, including the various acts and practices set forth herein.
  7. Defendant Top Marketing Business Consulting, Inc. ("Top Marketing") is a Florida corporation with its principal place of business at 1497 Main Street, Dunedin, Florida. Top Marketing transacts business in the Middle District of Florida.
  8. Defendant Erwin Richard Annau ("Annau"), until about July 1997, owned 50% of the shares of Tradenet and was one of its three directors. Annau is currently sole owner, officer, and director of Defendant Top Marketing. His business address is the same as that of corporate Defendant Top Marketing. In connection with the matters alleged herein, Annau transacts business in the Middle District of Florida.
  9. At all times material to this Complaint, individually or in concert with others, Annau has formulated, directed, and controlled the acts and practices of Top Marketing, including the various acts and practices set forth herein.

COMMERCE

  1. At all times relevant to this Complaint, the Defendants have maintained a substantial course of trade in the offering for sale and sale of laundry aid products, in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C.  44.

DEFENDANTS' COURSE OF CONDUCT

  1. Since at least January 1, 1996, Defendants have maintained a substantial course of trade promoting, offering for sale, and selling a product called "The Laundry Solution" (a sealed plastic ball filled with blue liquid) and a product called "The SuperGlobe" (a sphere divided into two portions, one a translucent plastic filled with blue liquid and the other half an opaque blue plastic with openings allowing access to particulate materials). Tradenet has recommended that The SuperGlobe be used in conjunction with a liquid surfactant it sells called "The Booster."
  2. Cooper, Guerrero and Annau formed Tradenet to market The Laundry Solution and other products by means of a multilevel marketing system utilizing distributors. Top Marketing developed Tradenet's marketing and promotional materials and has sold The Laundry Solution and The SuperGlobe to purchasers.
  3. Cooper and Guerrero developed the idea of marketing "structured water" as a laundry detergent substitute. Tradenet contracted for the manufacture of The Laundry Solution. Tradenet initially represented that The Laundry Solution contained "structured" water and later represented that The Laundry Solution and The SuperGlobe contained "IE structures," "IE crystals," or "IE solution."
  4. Defendants developed and disseminated promotional materials regarding the characteristics, ingredients, uses, and benefits of The Laundry Solution. Defendants' advertisements and promotional materials include but are not necessarily limited to the attached Exhibits "A" and "B." Among the statements made in these advertisements and materials are the following:

A. "What is 'The Laundry Solution'?"

"It is Structured water that emits a negative charge through the walls of the [Laundry Solution] container into your laundry water. This causes the water molecule cluster to disassociate, allowing much smaller individual water molecules to penetrate into the innermost part of the fabric. The Laundry Solution replaces detergent, thus eliminating the use of the chemical." (Exhibit "A").

B. "The Laundry Solution activates your laundry water naturally through a confidential process which changes the molecular structure of your water. It forces the dirt to leave the fabric because dirt is positively charged and The Laundry Solution is negatively charged, thus creating an electronic release of dirt." (Exhibit "A").

C. "The Laundry Solution is a chemical free, hypoallergenic, biodegradable and recyclable solution to the massive problem of laundry detergent pollution. Our rivers, streams, lakes and oceans are being aggressively spoiled by harsh, toxic chemicals released from most detergents." (Exhibit "B").

D. Consumer endorser: "'The Laundry Solution' is now THE only product I will use on my clothes! I do not have to buy anything else! VGW"

E. Consumer endorser: "Last night I purchased 'The Laundry Solution'. I immediately went home and loaded up the washer. When the load was done I called my husband over to see if he would notice a difference. . . . [W]e both noticed that the colors were noticeably brighter. . . . My Husband and I calculated that The Laundry Solution costs 10% of the price of detergents. Needless to say I am completely sold on your products and will refer your company at every opportunity. Thank you very much! DM"

F. Consumer endorser: "I am writing to you because I am most impressed with your product 'The Laundry Solution'. I have a small long-haired dog. I bathe the dog every week and he has his own set of towels. Everyone knows that wet dogs have a very distinctive smell. This smell was transferred to the dog's towels. No matter how many times I washed the towels they still contained that terrible dog smell. I used The Laundry Solution once on those towels and not only was the smell removed but the towels came out very, very clean. This was proof that your product works as well as you said and better than I ever expected. Thank you! MAG"

G. Consumer endorser: "I'm the mother of 2 small boys and frankly, when I heard about The Laundry Solution I really didn't think it would work on the kind of dirt we make. I borrowed a friend's Laundry Solution and threw it in a load that included a pair of jeans that my three-year-old rubbed chocolate into, a pajama bottom that was peed on and other cloths [sic] that were very dirty. Not only were those items totally clean -- there was NO ODOR at all. It all smelled fresh and clean! I'm absolutely amazed. JHR" (Exhibit "A").

  1. Commencing on or about July 1997, Defendants began to market a second version of The Laundry Solution and a new product, The SuperGlobe, which they represented as similar to The Laundry Solution. Defendants marketed both the new version of The Laundry Solution and The SuperGlobe as containing "IE crystals," "IE structures," or "IE solution."
  2. Defendants disseminated promotional materials regarding the characteristics, ingredients, uses, and benefits of The SuperGlobe and the second version of The Laundry Solution, including but not necessarily limited to the attached Exhibit "C." Among the statements made in these advertisements and materials are the following:

A. "TradeNet's laundry products use a revolutionary new technology which enhances nature's most perfect solvent -- pure water. By manipulating the electric fields associated with hydrogen and oxygen atoms, solid crystals are formed in the shape of electric keys. . . . Termed IETM Crystals, these particles although completely benign to man and the environment, can perform and enhance reactions formerly only possible by chemicals, soaps, and detergents. . . . 'The smaller the particle you can manipulate, the greater the effect,' said Dr. Shui-yin Lo, nuclear physicist. . . . 'IE Crystals reduce the surface tension of water and create "bubbles" in water similar to the effect of soap.'" (Exhibit "C").

B. "But we can supply these little workers with our IE Crystals. They can work just as hard as the detergents but they are harmless to our world." (Exhibit "C").

  1. Defendants disseminated promotional materials entitled "Supporting Scientific Data and Reports" and "Innovation Scientific Journal, The Laundry Solution and its IE Crystals" (attached as Exhibits "C" and "D") containing articles and excerpts from test results concerning and describing the purported properties of "IE structures," "IE crystals" or "IE solution" and "The Laundry Solution."

DEFENDANTS' VIOLATIONS OF SECTION 5 OF THE FTC ACT

  1. As set forth below, in connection with the advertising, offering for sale, sale, and distribution of both versions of The Laundry Solution and The SuperGlobe, Defendants, individually or in concert with others, have misrepresented material facts or made representations without having a reasonable basis for such representations at the time they were made, in violation of Section 5(a) of the FTC Act.

COUNT ONE: FALSE CLAIMS

  1. Through the means described in Paragraphs 17.A., B., D., E., F., and G., as well as Paragraph 19 and Paragraph 20 of this Complaint, Defendants have represented, expressly or by implication, that:

A. The Laundry Solution cleans laundry as well as conventional laundry detergents.

B. The Laundry Solution cleans laundry by emitting a negative charge that forces positively charged dirt to leave fabric.

C. "Structured water," "IE crystals," IE solution" or "IE structures" are the active ingredients of The Laundry Solution and/or of The SuperGlobe.

D. Scientific experiments and tests prove that The Laundry Solution and The SuperGlobe clean laundry as well as conventional laundry detergents.

E. Testimonials from consumers appearing in advertisements for The Laundry Solution or The SuperGlobe reflect the typical or ordinary experience of members of the public who use the product.

  1. In truth and in fact:

A. The Laundry Solution does not clean laundry as well as conventional laundry detergents.

B. The Laundry Solution does not clean laundry by emitting a negative charge that forces positively charged dirt to leave fabric.

C. "Structured water," "IE crystals," IE solution" and "IE structures" are not active ingredients of The Laundry Solution or The SuperGlobe.

D. Scientific experiments and tests do not prove that The Laundry Solution and The SuperGlobe clean laundry as well as conventional laundry detergents.

E. Testimonials from consumers appearing in advertisements for The Laundry Solution or The SuperGlobe do not reflect the typical or ordinary experience of members of the public who use the product.

  1. Therefore, Defendants' representations as set forth in Paragraph 22 are false or misleading and constitute unfair or deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. 45(a).

COUNT TWO: FAILURE TO POSSESS A REASONABLE BASIS

  1. Through the means described in Paragraph 17.C., Defendants have represented, expressly or by implication, that The Laundry Solution is a solution to the problem of the pollution of rivers, streams, lakes, and oceans caused by toxic chemicals released from most detergents.
  2. Through the means described in Paragraphs 17, 19, and 20, Defendants have represented, expressly or by implication, that they possessed and relied upon a reasonable basis that substantiated the representations set forth in Paragraphs 22.A. through C. and 25 at the time the representations were made.
  3. In truth and in fact, Defendants did not possess and rely upon a reasonable basis that substantiated the representations set forth in Paragraphs 22.A. through C. and 25 at the time the representations were made. Therefore, the representation set forth in Paragraph 26 was, and is, false or misleading and constitutes an unfair or deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. 45(a).

CONSUMER INJURY

  1. Consumers have suffered substantial monetary loss as a result of Defendants' unlawful acts or practices. Absent injunctive relief by this Court, Defendants are likely to continue to injure consumers and harm the public interest.

THIS COURT'S POWER TO GRANT RELIEF

  1. Section 13(b) of the FTC Act, 15 U.S.C. 53(b), empowers this Court to grant injunctive and other ancillary relief, including consumer redress, disgorgement and restitution, to prevent and remedy any violations of any provision of law enforced by the Federal Trade Commission.
  2. This Court, in the exercise of its equitable jurisdiction, may award other ancillary relief to remedy injury caused by the Defendants' law violations.

    PRAYER FOR RELIEF

WHEREFORE, Plaintiff requests that this Court, as authorized by Section 13(b) of the FTC Act, 15 U.S.C. 53(b), and pursuant to its own equitable powers:

1. Permanently enjoin the Defendants from violating Section 5 of the FTC Act, as alleged herein, in connection with the offering for sale and promotion of laundry or cleaning products;

2. Award such relief as the Court finds necessary to redress injury to consumers resulting from the Defendants' violations of the FTC Act, including but not limited to, rescission of contracts, the refund of monies paid, and the disgorgement of ill-gotten monies; and

3. Award Plaintiff the costs of bringing this action, as well as such other and additional relief as the Court may

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determine to be just and proper.

DATED: Respectfully submitted,

DEBRA A. VALENTINE
General Counsel

ELAINE D. KOLISH
Associate Director
Division of Enforcement
Federal Trade Commission

MARY K. ENGLE
Assistant Director
Division of Enforcement
Federal Trade Commission

_____________________________
CONSTANCE M. VECELLIO
PABLO M. ZYLBERGLAIT
Trial Counsel
Division of Enforcement
Federal Trade Commission
Washington, D.C. 20580
202-326-2966 or 202-326-3260