UNITED STATES DISTRICT COURT
FEDERAL TRADE COMMISSION, and
UNIVERSAL MARKETING SERVICES, INC., a corporation, et al. Defendants.
Civil Action No.
STIPULATED JUDGMENT AND
WHEREAS, plaintiff the Federal Trade Commission ("FTC" or "Commission"), has filed its complaint for permanent injunction and other relief pursuant to sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b and the Telemarketing and Consumer Fraud and Abuse Prevention Act ("Telemarketing Act"), 15 U.S.C. § 6101 et seq., and plaintiff the State of Oklahoma acting through the Office of the Attorney General for the State of Oklahoma has joined in the complaint pursuant to the Telemarketing Act, 15 U.S.C. § 6101 et seq, alleging that defendants United Marketing Group, Ltd. ("UMG") and Louie Paulozza ("Paulozza") (collectively, the "Toronto Defendants"), violated Section 5 of the FTC Act, and the FTC's Trade Regulation Rule entitled "Telemarketing Sales Rule" ("TSR"), 16 C.F.R. §§ 310.1-310.8.
WHEREAS, in the interest of compromise and cooperation and to avoid the costs associated with future administrative and judicial proceedings with respect to the above matter, and while the Toronto Defendants neither admit nor deny any wrongdoing, the FTC, the State of Oklahoma, and the Toronto Defendants (collectively, "the Settling Parties") have agreed to the entry of this Stipulated Final Judgment and Order for Permanent Injunction ("Order") by this Court to resolve all matters in dispute between them in this action.
NOW, THEREFORE, the Settling Parties having requested the Court to enter this Order,
IT IS HEREBY ORDERED, ADJUDGED AND DECREED as follows:
1. This Court has jurisdiction of the subject matter of this case and of the parties consenting hereto;
2. Venue is proper as to all parties in the Western District of Oklahoma;
3. The activities of the Toronto Defendants are in or affecting commerce, as defined in the FTC Act, 15 U.S.C. § 44;
4. The complaint states a claim upon which relief may be granted against the Toronto Defendants under Sections 5 and 19 of the FTC Act, 15 U.S.C. §§ 45(a) and 57b, and the TSR, 16 C.F.R. Part 310;
5. The Toronto Defendants waive all rights that may arise under the Equal Access to Justice Act, 28 U.S.C. § 2412, amended by Pub. L. 104-121, 110 Stat. 847, 863-64 (1996);
6. The Toronto Defendants waive all rights to seek appellate review or otherwise challenge or contest the validity of this Order, and further waive and release any claim the Toronto Defendants may have against the FTC, the Oklahoma Attorney General's Office, or their employees, and agents; and
7. This Order does not constitute and shall not be interpreted to constitute an admission by the Toronto Defendants that they have engaged in violations of the FTC Act or the TSR.
1. "Assisting others" means providing any of the following goods or services to any person or business entity: (a) performing customer service functions, including but not limited to receiving or responding to consumer complaints; (b) formulating or providing, or arranging for the formulation or provision of, any telephone sales script or any other written marketing material; (c) providing names of, or assisting in the generation of, potential customers; (d) performing marketing services of any kind; or (e) acting as an officer or director of the business entity.
2. "Consumer" means a purchaser, customer, subscriber, or natural person.
3. "Telemarketing" means any business activity (including, but not limited to, initiating or receiving telephone calls, managing others who initiate or receive telephone calls, operating an enterprise that initiates or receives telephone calls, owning an enterprise that initiates or receives telephone calls, or otherwise participating as an officer, director, employee or independent contractor in an enterprise that initiates or receives telephone calls) that involves attempts to induce consumers to purchase any item, good, service, partnership interest, trust interest or other beneficial interest, to make a charitable contribution, or to enter a contest for a prize, by means of telephone sales presentations, either exclusively or in conjunction with the use of other forms of marketing. Provided that the term "telemarketing" shall not include transactions that are not completed until after a face-to-face contact between the seller or solicitor and the consumers solicited. Provided further, however, that for purposes of Paragraph II.A. of this Order, enjoining violations of the TSR, the definition set forth in 16 C.F.R. 310.2 shall apply.
IT IS THEREFORE ORDERED that the Toronto Defendants, inclusively or in any combination thereof, are permanently restrained and enjoined from engaging in, or assisting others in, the promotion, advertising, marketing, offering for sale, or sale of any credit card registration or credit card protection services.
PROHIBITED BUSINESS PRACTICES
IT IS FURTHER ORDERED that the Toronto Defendants, their officers, agents, servants, employees, attorneys, and those persons or entities in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, in regard to any business activity in which they engage, are hereby permanently restrained and enjoined from:
IT IS FURTHER ORDERED that the Toronto Defendants are hereby permanently restrained and enjoined from providing to any person, except agents of the Plaintiffs or other law enforcement authorities, the name, address, telephone number, or credit card or bank account number of any consumer who provided such information to or did business with either defendant relating to the subject matter of this Order; provided, however, that the Toronto Defendants may provide such information if required to do so by Court Order.
IT IS FURTHER ORDERED that, in the event the Toronto Defendants or their agents tape-record any conversation with a consumer to verify or confirm that a consumer is agreeing to purchase any of the Toronto Defendants' services, the Toronto Defendants are permanently restrained and enjoined from accepting or processing such purchases unless the tape-recording meets the following criteria:
This Part of this Order shall not affect any obligation to comply with any federal, state, or local law regarding the tape-recording of telephone conversations.
IT IS FURTHER ORDERED that a judgment in the amount of FORTY-FIVE THOUSAND U.S. DOLLARS ($45,000 U.S.D.) is hereby entered against the Toronto Defendants, and their successors and assigns.
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 the Toronto Defendants' financial condition as represented in each of the Toronto Defendants' financial statements previously submitted to the Commission, which contain material information relied upon by the Commission in negotiating and agreeing to the terms of this Order (collectively, the "Financial Statements"): (1) Net Worth Statement of Louis Paulozza (attached to the facsimile dated April 3, 2000, from MacKenzie Canter, III); and (2) Supplemental Affidavit of Louis Paulozza, dated April 14, 2000 (attached to the facsimile dated April 14, 2000, from MacKenzie Canter, III). Defendant Paulozza shall, within five (5) business days after receipt by the Toronto Defendants of this Order as entered by the Court, submit to the Commission a truthful sworn statement, in the form shown on Attachment A, that shall attest to the truthfulness, accuracy, and completeness of the Financial Statements. If the Commission has reason to believe that any of the above-referenced Financial Statements failed to disclose any material amount, materially misrepresented the value of any item, or made any other material misrepresentation or omission, the Commission may request that this Order be reopened for the sole purpose of allowing the Commission to modify the monetary liability of the Toronto Defendants. If the Court finds that either Toronto Defendant failed to disclose any material amount, materially misrepresented the value of any item, or made any other material misrepresentation or omission in the above-referenced Financial Statements, the Court shall enter judgment for consumer redress against the Toronto Defendants, in favor of the Commission, in the amount of ONE MILLION THREE HUNDRED THOUSAND U.S. DOLLARS ($1,300,000 U.S.D.), less the amount the Toronto Defendants have already paid to the Commission under Paragraph V of this Order; provided, however, that in all other respects this Order shall remain in full force and effect unless otherwise ordered by the Court and that the Toronto Defendants have no right to contest any of the allegations in the Commission's Complaint in this matter in any proceedings brought pursuant to this Paragraph.
COMPLIANCE AND RECORD KEEPING PROVISIONS
IT IS FURTHER ORDERED that, in connection with the promotion, offering for sale, or sale of any good or service to consumers through telemarketing, the Toronto Defendants shall create and maintain procedures to ensure compliance by their employees and agents (including telemarketers and other independent contractors) with this Order.VIII.
IT IS FURTHER ORDERED that, for a period of three (3) years from the date of entry of this Order, the Toronto Defendants, in connection with any business engaged in telemarketing, or in assisting others in such business, are hereby restrained and enjoined from failing to create, and from failing to retain for a period of three (3) years following the date of such creation, unless otherwise specified:
IT IS FURTHER ORDERED that, in order that compliance with the provisions of this Order may be monitored:
IT IS FURTHER ORDERED that, for a period of three (3) years from the date of entry of this Order, for the purpose of further determining compliance with this Order, defendants shall permit representatives of the Commission, within fifteen (15) business days of receipt of written notice from the Commission:
Provided that, upon application of the Commission and for good cause shown, the Court may enter an ex parte order granting immediate access to defendants' business premises for the purposes of inspecting and copying all documents relevant to any matter contained in this Order.
IT IS FURTHER ORDERED that, for a period of three (3) years from the date of entry of this Order, the Toronto Defendants shall:
IT IS FURTHER ORDERED that within five (5) business days after receipt by the Toronto Defendants of this Order as entered by the Court, the Toronto Defendants shall submit to the Commission a truthful sworn statement, in the form shown on Attachment A, that shall acknowledge receipt of this Order.
ENTRY OF ORDER
The Settling Parties, through their respective counsel, hereby consent to entry of the foregoing Order which shall constitute a final judgment and order in this matter. The Settling Parties further stipulate and agree that the entry of the foregoing Order shall constitute a full, complete and final settlement of this action. The Settling Parties further stipulate that this Order embodies all of the agreements among them and that they have not relied upon any representations or statements not included herein.
IT IS FURTHER ORDERED that the FTC and the State of Oklahoma release UMG and Paulozza, and each of them, from further liability arising from the allegations in the complaint for permanent injunction and other relief, except for the obligations arising out of this Order, and that there is no just reason for delay of entry of this Order and, pursuant to Federal Rule of Civil Procedure 54(b), the clerk shall enter this Order immediately upon Court approval.
IT IS FURTHER ORDERED that this Court will retain jurisdiction of this matter for the purpose of enabling any of the parties to this Order 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 __________, 2000.
UNITED STATES DISTRICT JUDGE
The parties, by their respective counsel, hereby consent to the terms and conditions of the Consent Decree as set forth above and consent to the entry thereof. The Toronto Defendants waive any rights that may arise under the Equal Access to Justice Act, 28 U.S.C. § 2412, amended by Pub. L. 104-121, 110 Stat. 847, 863-64 (1996).
UNITED STATES DISTRICT COURT
FEDERAL TRADE COMMISSION,
UNIVERSAL MARKETING SERVICES, INC., a corporation, et al. Defendants.
Civil Action No.
Louie Paulozza, being duly sworn, hereby states and affirms as follows:
I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on ___________, at ___________________.
Subscribed and sworn to before me
My Commission Expires: