DEBRA A. VALENTINE
General Counsel

THERESA M. McGREW
Federal Trade Commission
55 East Monroe Street, Suite 1860
Chicago, Illinois 60603
(312) 960-5634
(312) 960-5600/05 [Fax]

RAYMOND E. McKOWN (CA Bar #150975)
Federal Trade Commission
10877 Wilshire Boulevard, Suite 700
Los Angeles, California 90024
(310) 824-4343
(310) 824-4380 [Fax]

Attorneys for Plaintiff
FEDERAL TRADE COMMISSION

UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION

FEDERAL TRADE COMMISSION, Plaintiff,

v.

FREDERICK P. RAY, individually and doing business as F.P.R., Defendant.

CIVIL 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 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 Frederick P. Ray is an individual doing business as F.P.R., with his office and principal place of business located at 2210 Nella Vista Avenue, Los Angeles, California 90027. Defendant Frederick P. Ray transacts or has transacted business in this District. At all times material to this Complaint, acting alone or in concert with others, he has formulated, directed, controlled or participated in the acts and practices of F.P.R., including the acts and practices set forth in this Complaint.

COMMERCE

6. At all times relevant to this Complaint, defendant has maintained a substantial course of trade in the offering for sale and selling 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

7. Since at least November, 1996, defendant has advertised, promoted, offered for sale, and sold credit repair products to consumers through the use of the Internet.

8. Defendant has claimed that he can legally improve consumers' credit histories, credit records, or credit ratings by assisting them in establishing new credit files.

Bad Credit? Bankruptcy? Foreclosure?

"New Credit File Start Package"

Now you can start a new second credit file within 30 days time!!!

We have been providing people with the information they need to build a BRAND NEW 2nd Credit File in less than 30 days time. This information could possibly be the most important information you will ever read. Whether you have average credit, poor credit, a foreclosure or even have filed for bankruptcy in the past, you will be able to LEGALLY build credit under a new credit file in your name. This credit file will have absolutely nothing to do with your current credit file. In short, you will be able to start all over again with a clean slate. NO CATCHES! NO RESTRICTIONS! and most of all, it's GUARANTEED!

* * *

HOW YOU CAN OPEN A NEW CREDIT FILE

By law you can obtain a T.I.N. (Tax Identification Number). This is a number you can use under YOUR NAME (as a business entity) for receiving and applying for credit, conducting banking affairs and paying taxes. However, you must realize that your new T.I.N. is not meant to replace your social security number. You cannot use you [sic] T.I.N. with your employer for withholding purposes; that is what your social security number is intended to do.

* * *

The "NEW CREDIT FILE START PACKAGE" costs only $21.95 . . . . . . . .

* * *

F.P.R.
P.O. Box 291935
Los Angeles, California 90029

9. Consumers who send in the amount indicated on the advertisement and order as instructed by defendant's advertisements, receive a brochure entitled "NEW CREDIT FILE: Get a Fresh Start" that advises consumers how to apply for a Tax Identification Number ("TIN") or an Employer Identification Number ("EIN") and to use that number for the purpose of applying for credit.

VIOLATIONS OF THE CREDIT REPAIR ORGANIZATIONS ACT

10. 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.

11. 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 not 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).

12. 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

13. In numerous instances, defendant has made statements to consumers or 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 not 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.

14. 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

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

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

17. Therefore, the representation set forth in Paragraph 15 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

18. Consumers throughout the United States 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

19. 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 or 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.

Respectfully Submitted,

DEBRA A. VALENTINE
General Counsel

DATED:

THERESA M. McGREW
Federal Trade Commission
55 East Monroe Street, Suite 1860
Chicago, Illinois 60603
(312) 960-5634
(312) 960-5600/05 [Fax]

RAYMOND E. McKOWN (CA Bar #150975)
Federal Trade Commission
10877 Wilshire Boulevard, Suite 700
Los Angeles, California 90024
(310) 824-4343
(310) 824-4380 [Fax]