UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

FEDERAL TRADE COMMISSION, Plaintiff,

v.

JOHN WILLIAMS, individually and doing business as SPEED CREDIT, Defendant.

CIVIL NO.

INJUNCTIVE AND OTHER COMPLAINT FOR 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 John Williams is an individual doing business as Speed Credit, with his office and principal place of business at 2016 Main Streeet, Apt. 1211, Houston, Texas 77002. Defendant 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 Speed Credit, 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 October 1998, 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 improve consumers' credit histories, credit records, or credit ratings by assisting them in establishing new credit files. Defendant further claims that creating new credit files is legal.

9. Typical and illustrative of defendant's claim about his credit repair products include the following:

$PEED CREDIT REBUILD

Are you like MILLIONS of people waiting 10 YEARS for bad credit to go away?

File segregation - it's been a well guarded and costly secret to obtain for many years - but no longer!

* * * *

Before, you had two choices: wait 10 years for bad credit to go away, or spend a lot of money for a credit repair service to remove the negative information.. Guess what? They DO NOT work if the information is accurate!

NOW you can get a brand new start and the major credit bureaus do 99% of the work!

What are the advantages of our system? We don't show you how to repair your existing credit history; we provide you with the chance to create a brand new one, free of bankruptcies, tax liens, and other blemishes!

* * *

The secret to our system is FILE SEGREGATION. What is it? We'll show you!

Currently, your credit file is based on your social security number. That's because it's a common and easy way for your employer, credit companies, and other businesses to keep track of you with one simple, unique number. The bad news is that you only get one social security number.

However!

There IS another option! By federal law you get one chance to file for a new tax identification number. The new tax id has the same number of digits and serves the same purpose as your SSN, BUT WITH THE ADVANTAGE OF A TOTALLY NEW CREDIT FILE! It's important to remember that you only have one chance to do this, so be sure to pay attention to the carefully designed steps in our program!

* * *

Is this really legitimate?

Our plan is based on existing government law! The IRS will GLADLY supply you with the necessary paperwork, and by following the guidelines in our report, YOU can re-establish your personal credit rating!

* * * *

What about credit reporting agencies?

If you follow our plan, these agencies will HELP you create a good personal credit rating! Your new file will NOT be associated with your current or old file! You can and will re-establish your personal credit rating with ALL major credit reporting agencies!

* * * *

Return this form, along with your payment to:

SPEED CREDIT
8621 Wilshire Blvd.,
Beverly Hills, CA 90211
1-888-851-8793 (24-hours)

* * *

All orders paid by money order will be shipped within 10 days, allow 30 days for checks.

10. The Beverly Hills address listed on the Internet site is that of a private mail box business. Mail addressed to Speed Credit is forwarded to defendant in Houston, Texas.

VIOLATIONS OF THE CREDIT REPAIR ORGANIZATIONS ACT

11. 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.

12. 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).

13. 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

14. 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.

15. 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

16. 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 alternative tax identifications to use, instead of their Social Security Numbers, for credit purposes.

17. 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 alternative tax identifications to use, instead of their Social Security Numbers, for credit purposes.

18. Therefore, the representation set forth in paragraph 13 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

19. 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

20. 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.

Dated:_____________, 1999 Respectfully Submitted,

DEBRA A. VALENTINE
General Counsel

THOMAS B. CARTER
Director, Dallas Regional Office

W. DAVID GRIGGS,
Texas Bar No. 08491100

JOHN R. HOAGLAND
District of Columbia Bar No. 183699
Federal Trade Commission
1999 Bryan Street, Suite 2150
Dallas, Texas 75201-6848
(214) 979-9378 (Griggs)
(214) 979-9395 (Hoagland)
(214) 953-3079 (Facsimile)
Attorneys for Plaintiff