UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION

FEDERAL TRADE COMMISSION,
Plaintiff,
v.
T.E.M.M. MARKETING, INC.,
a corporation, and
RODNEY L. TURNER, and
BRIAN A. EDWARDS, and
MICHAEL D. MERRYMAN,
individually and as officers
of said corporation,
Defendants.

CIVIL NO. 1:98CV0300
JUDGE WILLIAM C. LEE
U.S. MAGISTRATE JUDGE
ROGER B. COSBEY

STIPULATED FINAL JUDGMENT AND ORDER

Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), filed its Complaint pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C.  53(b), charging defendants with violations of Section 5(a) of the FTC Act, 15 U.S.C.  45(a). On October 5, 1998, this Court granted the FTC's motion for a temporary restraining order with asset freeze, appointment of a temporary receiver and other equitable relief, and ordered defendants to show cause why a preliminary injunction should not issue against them. The parties subsequently agreed to entry of a stipulated preliminary injunction, which this Court granted on October 16, 1998.

NOW, the FTC, by and through its counsel, and defendants T.E.M.M. Marketing, Inc., and Rodney L. Turner, Brian A. Edwards and Michael D. Merryman, by and through their counsel, have agreed to the entry of this Stipulated Final Judgment and Order ("Order") by this Court to resolve all matters of dispute between them in this action without trial or adjudication of any issue of law or fact. The said parties having requested the Court to enter this Order, it is therefore ORDERED, ADJUDGED and DECREED as follows:

FINDINGS

1. This Court has jurisdiction over the subject matter of this case and has jurisdiction over the defendants. Venue in the Northern District of Indiana is proper.

2. The Complaint states a claim upon which relief may be granted under Sections 5(a) and 13(b) of the FTC Act, 15 U.S.C.  45(a) and 53(b).

3. The Commission has the authority under Section 13(b) of the FTC Act, 15 U.S.C.  53(b), to seek the relief it has requested.

4. The activities of defendants are in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C.  44.

5. Defendants Rodney L. Turner, Brian A. Edwards and Michael D. Merryman are the owners and officers of defendant T.E.M.M. Marketing, Inc., an Indiana corporation. At all times material to this proceeding, individually or in concert with others, they have formulated, directed, controlled or participated in the acts and practices of defendant T.E.M.M. Marketing, Inc., including the acts and practices set forth in the FTC's Complaint. Defendant T.E.M.M. Marketing, Inc., has also done business under the names Drug Enforcement Review, Special Edition--Drug Enforcement Review, Health and Child Safety Digest, and HACS Coloring Book, as well as others.

6. By stipulating and consenting to the entry of this Order, defendants do not admit any of the allegations in the Complaint, except those contained in paragraphs 1 through 5 herein. Likewise, by executing this Order, plaintiff does not admit that any defense to the Complaint is valid.

7. This action and the relief awarded herein is in addition to, and not in lieu of, other remedies as may be provided by law, including both civil and criminal remedies.

8. Defendants enter into this Order freely and without coercion and acknowledge that they understand the provisions of this Order and are prepared to abide by its terms. At all times, defendants have been represented by counsel, including throughout the negotiations that led to this Order.

9. Defendants waive all rights to seek judicial review or otherwise challenge or contest the validity of this Order, and further waive and release any claims defendants may have against the Commission and the Commission's employees, agents, or representatives. Defendants also waive any claim they may have under the Equal Access to Justice Act.

10. Any voluntary bankruptcy petition filed by defendants does not automatically stay this action, which the Court finds is the "commencement or continuation of any action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power," as set forth in 11 U.S.C.  362(b)(4).

11. Any voluntary bankruptcy petition filed by any defendant does not divest this Court of jurisdiction to enter this final judgment against defendants.

12. Entry of this Order is in the public interest.

DEFINITIONS

For purposes of this Order, the following definitions shall apply:

1. "Defendants," unless otherwise specifically identified, means T.E.M.M. Marketing, Inc., and Rodney L. Turner, Brian A. Edwards and Michael D. Merryman, and each of them, and their officers, agents, directors, servants, employees, salespersons, independent contractors, corporations, subsidiaries, affiliates, successors, assigns, all other persons or entities directly or indirectly under their control or under common control with them, and all other persons or entities in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any trust, corporation, subsidiary, division, or other device, and each of them.
 
2. "Individual defendants" means Rodney L. Turner, Brian A. Edwards and Michael D. Merryman, and each of them.
 
3. "Receivership defendant" means T.E.M.M. Marketing, Inc.
 
4. "Person" means a natural person, organization or other legal entity, including a corporation, partnership, proprietorship, association, cooperative, government or governmental subdivision or agency, or any other group or combination acting as an entity.
 
5. "Consumer" includes any individual, group, unincorporated association, limited or general partnership, corporation or other business entity.
 
6. The terms "and" and "or" shall be construed conjunctively or disjunctively as necessary, and to make the applicable phrase or sentence inclusive rather than exclusive.
 
7. "Donation" means money or any item of value provided in response to a solicitation made on behalf of, or in the name of, any nonprofit organization, including any payment for advertising or any listing in any magazine, journal or other publication produced by, on behalf of or in the name of any nonprofit organization. As used in this definition, "nonprofit organization" means any person that is, or is represented to be, a nonprofit entity or that has, or is represented to have, a charitable purpose, specifically including any entity that claims to benefit, either in whole or in part, purported law enforcement, firefighting, drug education or veterans' organizations, personnel or programs.

P R O H I B I T I O N S

I

PERMANENT BAN

IT IS THEREFORE ORDERED that the individual defendants are hereby permanently restrained and enjoined from:

  1. Engaging or participating--whether directly, in concert with others or through any business entity, investment or other device--in the offering for sale, sale, marketing or distribution of advertisements, listings, or sponsorships in any publication or program;
  2. Engaging or participating--whether directly, in concert with others or through any business entity, investment or other device--in asking for or collecting donations to any publication, program or organization; and
  3. Using any aliases, pen names or pseudonyms, or otherwise misrepresenting their true identities in the course of business dealings or in publicly filed documents.

II

PROHIBITED BUSINESS ACTIVITIES

IT IS HEREBY ORDERED that defendants are hereby restrained and enjoined from making or assisting others in making, expressly or by implication, any false or misleading oral or written statement or representation in connection with the sale or offering for sale of any good or service, including, but not limited to:

  1. any misrepresentation concerning the distribution of any publication or program;
  2. any misrepresentation concerning the printing or publishing of any publication;
  3. any misrepresentation concerning agreement to approve, authorize or pay for advertising or to support any publication or program;
  4. any misrepresentation concerning prior approval of advertising or sponsorship of a program by any person;
  5. any misrepresentation concerning the printing of any advertisement or listing in reliance on prior authorization to do so;
  6. any misrepresentation concerning any person's obligation to pay for any advertisement or to sponsor any program or publication;
  7. any misrepresentation concerning the costs incurred in printing, publishing or distributing any advertisement, publication or program;
  8. any misrepresentation concerning any payment constituting a donation;
  9. any misrepresentation concerning any publication or program being in any way associated with any state, county, municipality, community, school(s) or group;
  10. any misrepresentation concerning their identity(ies) and/or relationship with each other and/or to any publication, program, corporation or any other entity.

III
PROHIBITIONS AGAINST DISTRIBUTION OF CUSTOMER LISTS

IT IS FURTHER ORDERED that defendants are permanently restrained and enjoined from selling, renting, leasing, transferring or otherwise disclosing the name, address, telephone number, credit card number, bank account number or other identifying information of any person who paid any money to any defendant, at any time, in connection with the offering for sale, sale, distribution, marketing or sponsorship of any advertisement, publication, program or product. Provided, however, that defendants may disclose such identifying information to a law enforcement agency or as required by any law, regulation or court order.

IV
CONSUMER REDRESS AND DISGORGEMENT

IT IS FURTHER ORDERED that the individual defendants shall be jointly and severally liable to the Commission for consumer redress in the sum of Sixty-seven Thousand, Five Hundred Dollars ($67,500), subject to the conditions set forth in Paragraph VIII of this Order. Such payment shall be remitted to the Federal Trade Commission, Eaton Center--Suite 200, 1111 Superior Avenue, Cleveland, Ohio 44114, by certified or cashier's check within five (5) days of the entry of this Order.

V

RECEIVERSHIP DEFENDANT

IT IS FURTHER ORDERED that:

  1. Any funds remaining after the receivership defendant's assets have been liquidated and the receiver appointed by this Court pursuant to the Temporary Restraining Order entered October 5, 1998, and continued by stipulation of the parties has been compensated, shall be transferred to the Commission and subject to the conditions set forth in Section VI of this Order. Such payment shall be remitted to the Federal Trade Commission, Eaton Center--Suite 200, 1111 Superior Avenue, Cleveland, Ohio 44114, by certified or cashier's check;
  2. Within thirty (30) business days upon entry of this Order, the receiver shall destroy, or turn over to plaintiff FTC, all records containing the types of customer information described in Section III of this Order;
  3. Within thirty (30) business days upon entry of this Order, the receiver shall return all other records of the receivership defendant in the receiver's possession relating to the financial operation of the receivership defendant so that the individual defendants may prepare and file all necessary income tax returns;
  4. Within thirty (30) days upon entry of this Order, the individual defendants shall file all necessary papers to legally dissolve defendant T.E.M.M. Marketing, Inc., and shall concurrently mail to the Commission a copy of such papers, accompanied by a sworn statement that they have been filed.

VI
USE OF CONSUMER REDRESS AND DISGORGEMENT FUNDS

IT IS FURTHER ORDERED that:

  1. Except as provided for in Section VIII of this Order, funds transferred to the Commission pursuant to Sections IV and V of this Order shall fully satisfy all monetary claims asserted by the Commission in the Complaint filed herein and shall be used to provide redress to defendants' victims and pay expenses of administering the redress fund;
  2. If the Commission determines, in its sole discretion, that redress to purchasers is wholly or partially impracticable, any funds not so used shall be deposited into the United States Treasury, or shall be used to educate consumers affected by the practices in the Commission's Complaint in this matter. Defendants shall have no right to contest the manner of distribution chosen by the Commission;
  3. Defendants expressly waive any right to litigate the issue of disgorgement;
  4. Defendants acknowledge and agree that all money paid pursuant to this Order is irrevocably paid to the Commission for purposes of settlement between the Commission and the defendants of the Commission's claims in this action.

VII
FINANCIAL STATEMENTS

IT IS FURTHER ORDERED that, within five (5) business days after entry of this Order, defendants shall submit to the Commission a truthful sworn statement, in the form that is Attachment A to this Order, that shall reaffirm and attest to the truth, accuracy, and completeness of the financial statements and documentation described in Section VIII, below. The Commission is authorized to verify all information provided on the financial statements and other documentation with all appropriate third parties, including, but not limited to, financial institutions.

VIII
RIGHT TO REOPEN

IT IS FURTHER ORDERED that the Commission's agreement to this Order is expressly premised upon the truthfulness, accuracy and completeness of financial statements filed by defendants with the Court in this matter and submitted to the FTC, and upon the deposition testimony of the individual defendants regarding those statements, given on December 17, 1998, which contain material information upon which the FTC has relied in negotiating and agreeing to the terms of this Order. If, upon motion by the Commission to the Court, the Court finds that any defendant failed to disclose any material asset, or materially misrepresented the value of any asset, or made any other material misrepresentation in or omission from the financial statements or deposition testimony, the defendant who made such material misrepresentation or omission or was responsible for such misrepresentation or omission shall be liable for consumer redress in an amount equal to the sum of the corporate defendant's gross income as shown on Line 1c of the corporate defendant's Federal Income Tax Returns for the tax years 1995, 1996 and 1997 filed with this Court; provided further, that it shall be the burden of the Commission to prove by a preponderance of the evidence that any of that defendant's representations were knowingly inaccurate or incomplete, or otherwise materially misleading or fraudulent.

IX
ASSET FREEZE LIFTED

IT IS FURTHER ORDERED that the freeze of the individual defendants' assets, as ordered in Section II of the Temporary Restraining Order first entered in this matter on October 5, 1998, and continued by stipulation of the parties, shall be lifted upon (I) entry of this Order and (ii) defendants' payment to the FTC of the amount and in the manner set forth in Section IV of this Order.

X
RECORDKEEPING PROVISIONS

IT IS FURTHER ORDERED that for a period of five (5) years from the date of entry of this Order, each of the individual defendants, in connection with any business entity in which he is a majority owner, or which he otherwise controls, shall create and maintain:

  1. Records sufficient to demonstrate his compliance with the provisions of this Order;
  2. Records containing the name, address, telephone number and social security number of each person employed by any of the individual defendants in any capacity, that person's job title or position, the date upon which the employee commenced work and the date and reason for the employee's termination;
  3. Records containing the name and address of each person to whom any of the individual defendants sells, invoices, or ships any product for which the person pays Fifty Dollars ($50) or more;
  4. Records of every written or oral consumer complaint--including complaints referred from any third party, such as any office of the Better Business Bureau or any State Attorney General, and every refund request received by any of the individual defendants, which records shall include--to the extent the information is available from the written complaint, or the consumer is willing to provide the information:
  5. The person's name, address, telephone number, and the dollar amount paid by the person;
  6. The written complaint or refund request, if any, and the date of the complaint or refund request;
  7. The basis of the complaint, including the name of any salesperson complained against, and the nature and result of any investigation conducted concerning any complaint;
  8. Each response and the date of the response;
  9. Any final resolution and date of resolution;
  10. In the event of a denial of a refund request, the reason for the denial, or if satisfied, the basis for determining that the complaint has been satisfied; and
  11. Copies of all sales scripts, training materials, advertisements, or other marketing materials that relate to any good or service offered for sale or sold by any of the individual defendants or through any agent of any of the defendants.

XI
COMPLIANCE REPORTING BY DEFENDANTS

IT IS FURTHER ORDERED that, in order that compliance with the provisions of this Order may be monitored, for a period of five (5) years commencing with the date of entry of this Order, the individual defendants shall notify the Commission of the following:

  1. Any change of residence, mailing address or telephone number--within ten (10) days of the date of such change;
  2. Any change in employment status--including self-employment--within ten (10) business days of such change; such notice shall include the name and address of each business with which such individual defendant is affiliated or employed, a statement of the nature of the business and a statement of such individual defendant's duties and responsibilities in connection with the business;
  3. Any proposed change in the structure of any business entity owned or controlled by any of the individual defendants, such as creation, incorporation, dissolution, assignment, sale, creation or dissolution of subsidiaries, or any other changes that may affect compliance obligations arising out of this Order--within thirty (30) days prior to the effective date of any proposed change; provided, however, that with respect to any proposed change in structure of such business about which any of the individual defendants learns less than thirty (30) days prior to the date such action is to take place, such individual defendant shall notify the Commission as soon as practicable after learning of such proposed change.

XII
ACKNOWLEDGMENT OF RECEIPT OF ORDER BY DEFENDANTS

IT IS FURTHER ORDERED that, within five (5) business days after the individual defendants receive a copy of this Order as entered by the Court, each individual defendant shall submit to the Commission a truthful sworn statement, in the form that is Attachment B to this Order, acknowledging receipt of this Order.

XIII
FTC's AUTHORITY TO MONITOR COMPLIANCE

IT IS FURTHER ORDERED that the Commission is authorized to monitor each individual defendant's compliance with this Order by all lawful means--including, but not limited to, the following:

  1. The Commission is authorized--without further leave of this Court--to obtain discovery from any person in the manner provided by Chapter V of the Federal Rules of Civil Procedure, Fed. R. Civ. P. 26-37, including the use of compulsory process pursuant to Federal R. Civ. P. 45, for the purpose of monitoring and investigating compliance with any provision of this Order by each of the individual defendants.
  2. The Commission is authorized--without the necessity of prior notice--to use representatives posing as consumers to each of the individual and their employees or any other entity managed or controlled in whole or in part by any of the individual defendants;
  3. Nothing in this Order shall limit the Commission's lawful use of compulsory process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. 49, 57b-1, to investigate whether any of the defendants has violated any provision of this Order or Section 5 of the FTC Act, 15 U.S.C.  45. 

XIV
ORDER DISTRIBUTION

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, the individual defendants shall:

  1. Immediately provide a copy of this Order to, and obtain a signed and dated acknowledgment of receipt of the same, from each officer, director, managing agent, employee, or independent contractor in any company or other business entity directly or indirectly owned, operated or controlled by any of the individual defendants.
  2. Maintain, and upon reasonable notice make available to the FTC's representatives, the original and dated acknowledgments of the receipts required by this Section of this Order.

XV
NOTICES

IT IS FURTHER ORDERED that for purposes of this Order, each individual defendant shall, unless otherwise directed by the Commission's authorized representatives, mail all written notifications to the Commission to:

REGIONAL DIRECTOR
In Re: FTC v. T.E.M.M. Marketing, Inc., et al.
Federal Trade Commission - Cleveland Regional Office
Eaton Center--Suite 200, 1111 Superior Avenue
Cleveland, Ohio  44114

XVI
WAIVER OF CLAIMS

Defendants waive all claims under the Equal Access to Justice Act, 28 U.S.C. 2412, as amended by Pub. L. 104-121, 110 Stat. 847, 863-64 (1996), and all rights to seek appellate review or otherwise challenge or contest the validity of this Order, or the temporary or preliminary orders entered in this proceeding, and further waive and release any claim they may have against the FTC, the receiver, or their employees, agents, or representatives.

XVII
CONTINUED JURISDICTION

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for the purpose of enabling the FTC and defendants to apply to the Court at any time for such further orders or directives as may be necessary or appropriate for the interpretation or modification of this Order, for the enforcement of compliance therewith, or the punishment of violations thereof.

SO ORDERED, this __________ day of _______________________, 19___.
WILLIAM C. LEE
United States District Judge
STIPULATED TO:

FOR PLAINTIFF:
Federal Trade Commission
By: BRINLEY H. WILLIAMS (Ohio Bar No. 0011793)
Federal Trade Commission
Cleveland Regional Office
Eaton Center -- Suite 200
1111 Superior Avenue
Cleveland, Ohio 44114-2507
(216) 263-3414
Date:

FOR DEFENDANTS:
T.E.M.M. Marketing, Inc.
Rodney L. Turner
Brian A. Edwards
Michael D. Merryman

T.E.M.M. Marketing, Inc.

T.E.M.M. Marketing, Inc., a corporation

By:
Date:

Rodney L. Turner
RODNEY L. TURNER, individually and as an officer of T.E.M.M. Marketing, Inc.
Date:

Brian A. Edwards
BRIAN A. EDWARDS, individually and as an officer of T.E.M.M. Marketing, Inc.
Date:

Michael D. Merryman
MICHAEL D. MERRYMAN, individually and as an officer of T.E.M.M. Marketing, Inc.
Date:

MARK A. THOMA, ESQ.
Tremper, Bechert, Leonard & Terrill
Attorney for Defendants
800 South Calhoun Street
Fort Wayne, Indiana 46802
(219) 420-6000
Date: