UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

FEDERAL TRADE COMMISSION
Plaintiff
v.
INNOVATIVE PRODUCTIONS, a Nevada corporation; and
SHANE D. WALLS, individually and as an officer of the corporation,
Defendants.

Civil Action No.: 3:00-CV-0312-D

STIPULATED JUDGMENT AND ORDER FOR PERMANENT INJUNCTION

Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), commenced this action by filing its Complaint for permanent injunction and other relief pursuant to Sections 5 and 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C.  45, and 53(b), charging that the Defendants engaged in unfair or deceptive acts or practices in violation of Section 5 of the FTC Act, 15 U.S.C.  45, in connection with the sale of envelope stuffing business opportunities. The Commission and these Defendants, as hereinafter defined, hereby stipulate to the entry of this Stipulated Judgment and Order for Permanent Injunction ("Order") to resolve all matters of dispute between them in this action without adjudication of any issue of fact or law and without defendants admitting liability for any of the violations alleged in the complaint.

THEREFORE, it is hereby ORDERED, ADJUDGED AND DECREED as follows:

FINDINGS

1. This Court has jurisdiction over the subject matter and the parties pursuant to 28 U.S.C. 1331 and 1337(a), and 15 U.S.C. 53(b).

2. Venue is proper as to all parties in the Northern District of Texas.

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

4. The Complaint states a claim upon which relief may be granted against the Defendants, under Sections 5(a)(1) and 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. 45(a), and 53(b).

5. Defendants have entered into this Order freely and without coercion. Defendants further acknowledge that they have read the provisions of this Order and are prepared to abide by them.

6. Plaintiff and Defendants, by and through their counsel, have agreed that the entry of this Order resolves all matters of dispute between them arising from the Complaint in this action, up to the date of entry of this Order, without defendant admitting liability for any of the violations alleged in the Complaint.

7. Plaintiff and Defendants waive all rights to seek appellate review or otherwise challenge or contest the validity of this Order. Defendants further waive and release any claim they may have against the Commission, its employees, representatives or agents.

8. Defendants have agreed that this Order does not entitle Defendants to seek or to obtain attorneys' fees as a prevailing party 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 Defendants further waive any rights to attorneys' fees that may arise under said provision of law.

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

DEFINITIONS

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

1. "Asset" means any legal or equitable interest in, or right or claim to, any real and personal property, including without limitation, chattels, goods, instruments, equipment, fixtures, general intangibles, leaseholds, mail or other deliveries, inventory, checks, notes, accounts, credits, contracts, receivables, shares of stock, and all cash, wherever located.
2. "Defendants" means the Corporate Defendant and Individual Defendant. The "Corporate Defendant" is Innovative Productions, a Nevada corporation. The "Individual Defendant" is Shane D. Walls, individually and as an officer of the Corporate Defendant.
3. "Person" means a natural person, organization or other legal entity, including a corporation, partnership, proprietorship, association, or cooperative, or any other group or combination acting as an entity.
4. "Work-At-Home Opportunity" means any program, plan, product or service that enables a participant or purchaser to earn money by working at home.

ORDER

I. PROHIBITED REPRESENTATIONS

IT IS FURTHER ORDERED that, in connection with the advertising, marketing, offering for sale, licensing, contracting, sale or other promotion, in or affecting commerce, of any Work-At-Home Opportunity, the Defendants, their successors, assigns, officers, agents, servants, employees and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, are hereby permanently restrained and enjoined from making, or assisting in the making of, any statement or representation of material fact that is false or misleading, whether directly or by implication, orally or in writing, including, but not limited to, any or all of the following:

A. Any false or misleading representation that:
1. A purchaser will make a substantial amount of money;
2. Defendants will pay purchasers money or other consideration for stuffing envelopes; and
3. Refunds will be provided to purchasers upon request or under certain terms and conditions.
B. Any false or misleading representation about:
1. The income, profit, or sales volume that a purchaser is likely to achieve;
2. The income, profit or sales volume actually achieved by prior purchasers;
3. The length of time that it is likely to take a purchaser to recoup the entire purchase price or investment;
4. The assistance that will be provided purchasers; and
5. The terms and conditions of any assurances, refunds or guarantees of profitability.

II. CONSUMER REDRESS

IT IS FURTHER ORDERED that Defendants Innovative Productions and Shane D. Walls shall redress consumer injury as alleged in the Complaint, as follows:

A. Within thirty (30) days after the entry of this Order, Defendants shall return to consumers any payments received by Defendants in connection with a Work-At-Home Opportunity between February 11, 2000, and the date of this Order; and
B. Within thirty (30) days after receiving a written request therefor from a consumer who made a payment to Defendants in connection with a Work-At-Home Opportunity between February 11, 1997, and February 11, 2000, Defendants shall make a full refund of such payment to the consumer.
C. The Commission's agreement to this Order, requiring that the Individual Defendant be liable for less than the full amount of consumer injury, is expressly premised upon the truthfulness, accuracy and completeness of his financial statement, namely that of Shane D. Walls, dated April 4, 2000, and related documents that were submitted to the Commission. Such financial statement and supporting documents contain material information upon which the Commission relied in negotiating and agreeing to this Order. If, upon motion by the Commission, this Court finds that Defendant has knowingly failed to disclose any material asset, the value of which exceeds $1,000, or materially misstated the value of any asset in the financial statements and related documents described above, the Court shall enter judgment against Defendants in the amount of $194,000.00.
D. In accordance with 31 U.S.C.  7701, the Defendants are hereby required, unless they have done so already, to furnish to the FTC their respective taxpayer identifying numbers (social security numbers or employer identification numbers) which shall be used for purposes of collecting and reporting on any delinquent amount arising out of the Defendants' relationship with the government.
E. The Individual Defendant is further required, unless he has done so already, to provide the FTC with clear, legible and full-size photocopies of all valid driver's licenses he possesses, which will be used for collection, reporting and compliance purposes.
F. Defendants agree that the facts as alleged in the Complaint filed in this action shall be taken as true in any subsequent litigation filed by the Commission to enforce its rights pursuant to Paragraph II C of this Order, including, but not limited to a nondischargeability complaint, if applicable, in any bankruptcy proceeding. Further, for the purposes of any proceedings for contempt under this Order, Defendants agree to not contest or deny the allegations of the Complaint in connection with the defense of any such contempt proceedings.
G. Proceedings instituted under this Paragraph are in addition to, and not in lieu of, any other civil or criminal remedies that may be provided by law, including any other proceedings the Commission may initiate to enforce this Order.

III. TRANSFER OF CUSTOMER LISTS

IT IS FURTHER ORDERED that the Defendants, their successors, assigns, officers, agents, servants, employees and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise are hereby permanently restrained and enjoined from selling, renting, leasing, transferring or otherwise disclosing the name, address, telephone number, credit card number, bank account number, e-mail address, or other identifying information of any person who paid any money to any Defendant at any time prior to entry of this Order, in connection with the advertising, promotion, marketing, offering for sale or sale of any Work-At-Home Opportunity, provided, however, that Defendants may disclose such identifying information to a federal, state, or local law enforcement agency, or as required by any law, regulation (including the limited disclosures required by the Franchise Rule) or court order.

IV. ACKNOWLEDGMENT OF RECEIPT OF ORDER BY DEFENDANTS

IT IS FURTHER ORDERED that within five (5) business days of receipt of this Order as entered by the Court, Defendants shall submit to the Commission a truthful sworn statement, in the form shown on Appendix A, that shall acknowledge receipt of this Order.

V. DISTRIBUTION OF ORDER BY DEFENDANTS

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

A. Provide a copy of this Order to, and obtain a signed and dated acknowledgment of receipt of same from, each officer and director, each individual serving in a management capacity, all personnel involved in responding to consumer complaints or inquiries, and all sales personnel, whether designated as employees, consultants, independent contractors or otherwise, within five (5) business days after receipt of this Order, and thereafter immediately upon employing any such person, for any business that Defendants directly or indirectly manage, control, or have a majority ownership interest in, that is engaged in the sale or distribution of any Work-At-Home Opportunity or assisting others engaged in this activity; and
B. Maintain for a period of three (3) years after creation, and upon reasonable notice make available to representatives of the Commission, the original signed and dated acknowledgments of receipt of copies of this Order, as required in Subsection A of this Paragraph.

VI. COMPLIANCE REPORTING BY DEFENDANTS

IT IS FURTHER ORDERED that, in order that compliance with the provisions of this Order may be monitored:

A. For a period of five (5) years after the date of entry of this Order, the Defendants shall notify the Commission in writing of the following:
1. Any changes in the residence, mailing addresses and telephone numbers of the Individual Defendant, within twenty (20) days of the date of such change;
2. Any changes in the employment status (including self-employment) of the Individual Defendant, within twenty (20) days of such change. Such notice shall include the name and address of each business that the Individual Defendant is affiliated with or employed by, a statement of the nature of the business, and a statement of the Individual Defendant's duties and responsibilities in connection with the business or employment;
3. Any proposed change in the structure of the Corporate Defendant, or any business entity that the Individual Defendant directly or indirectly manages, controls or has a majority ownership interest in, such as creation, incorporation, dissolution (including the dissolution of any subsidiaries), assignment, proposed filing of a bankruptcy petition, or sale or merger resulting in the emergence of a successor corporation, or any other change in that entity, including a change in the corporate name or address, that may affect any compliance obligation arising out of this Order, at least thirty (30) days prior to the effective date of any such change; provided, however, that with respect to any proposed change in the structure of the Corporate Defendant or any business entity that the Individual Defendant directly or indirectly manages, controls or has a majority ownership interest in, about which the Defendant learns less than thirty (30) days prior to the date such action is to take place, the Defendant shall notify the Commission as soon as is practicable after learning of such proposed change;
B. One hundred eighty (180) days after the date of entry of this Order, Defendants shall provide a written report to the Commission, sworn to under penalty of perjury, setting forth in detail the manner and form in which Defendants have complied and are complying with this Order. This report shall include but not be limited to:
1. The Individual Defendant's then current residence address, mailing addresses and telephone numbers;
2. The Individual Defendant's then current employment and business addresses and telephone numbers, a description of the business activities of each such employer or business, and the Individual Defendant's title and responsibilities for each such employer or business;
3. A copy of each acknowledgment of receipt of this Order obtained by the corporate or Individual Defendant pursuant to Paragraph V; and
4. A statement describing the manner in which the corporate or Individual Defendant has complied and is complying with Paragraphs I, II, III and V of this Order;
C. Upon written request by a representative of the Commission, Defendants shall submit additional written reports (under oath, if requested) and produce documents on fifteen (15) days' notice with respect to any conduct that is subject to this Order;
D. For the purposes of this Order, Defendants shall, unless otherwise directed by a representative of the Commission, identify all written notifications to the FTC as provided in reference to FTC v. Innovative Productions, Civil Action No.: 3:00-CV-0312-D (N.D. Tex.), and mail them to:

Regional Director
Federal Trade Commission - Southwest Region
1999 Bryan Street, Suite 2150
Dallas, TX 75201-6803

E. For the purposes of this Paragraph, "employment" includes the performance of services as an employee, consultant, or independent contractor; and "employers" include any individual or entity for whom any Individual Defendant performs services as an employee, consultant, or independent contractor; and
F. For purposes of the compliance reporting required by this Paragraph, the Commission is authorized to communicate directly with Defendants.

VII. RECORD-KEEPING PROVISIONS

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, in connection with any business that any Defendant directly or indirectly manages, controls or has a majority ownership interest in, that is engaged in the sale or distribution of any Work-At-Home Opportunity or assisting others engaged in these activities, Defendants, their successors, assigns, officers, agents, servants, employees and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise are hereby restrained and enjoined from failing to create and maintain for a period of three (3) years following the date of their creation, unless otherwise specified or previously turned over to the FTC:

A Books, records and accounts that, in reasonable detail, accurately and fairly reflect the cost of goods or services sold, revenues generated, and the disbursement of such revenues;
B. Records containing the name, address, telephone number and social security number of each person employed by any Defendant in any capacity, including as an independent contractor, that person's job title or position, the date upon which the person commenced work, and the date and reason for the person's termination, if applicable; provided, however, that the businesses subject to this requirement shall retain such records during the employment of any person, and for a period of two (2) years after the date of their termination;
C. Records containing the name, address, telephone number, quantity of goods or services purchased, and a description of the goods or services purchased, for all consumers to whom the business has sold, invoiced or shipped any Work-At-Home Opportunity;
D. Records that reflect, for every written or oral consumer complaint or refund request received by any of the Defendants, their successors, assigns, officers, agents, servants, employees and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, whether directly or indirectly or through any third party: (1) the customer's name, address, telephone number; (2) the dollar amount paid by the consumer; (3) the written complaint or refund request, if any; (4) the basis of the complaint or refund request, including the name of any salesperson complained about; (5) the nature and result of any investigation conducted concerning the complaint or refund request; (6) each response and the date of the response to the complaint or refund request; and (7) any final resolution of the complaint or refund request, and the date of the resolution; and (8) in the event of a denial of a refund request, the reason for the denial; and
E. Copies of all sales scripts, training materials, advertisements, or other marketing materials utilized, which shall be retained for three (3) years after the last date of their dissemination or use.

VIII. ACCESS TO BUSINESS PREMISES

IT IS FURTHER ORDERED that for a period of five (5) years from the date of entry of this Order, for the purposes of determining or securing compliance with its provisions, the Defendants, their successors, assigns, officers, agents, servants, employees and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise shall grant to representatives of the Commission, within three (3) business days of receipt of written notice from the Commission:

A. Access during normal business hours to any office or facility storing documents of any business that any of the Defendants directly or indirectly manages, controls, or has a majority ownership interest in, that is engaged in the sale or distribution of any Work-At-Home Opportunity or assisting others engaged in such activities. In providing such access, Defendants shall permit representatives of the Commission to inspect and copy all documents relevant to any matter contained in this Order; and shall permit representatives of the Commission to remove such documents for a period not to exceed five (5) business days so that the documents may be inspected, inventoried, and copied; and
B. The opportunity to interview, without restraint or interference, officers, directors, employees, contractors, and agents, including all personnel involved in responding to consumer complaints or inquiries and all sales personnel, whether designated as employees, consultants, independent contractors or otherwise, of any business to which Subsection A of this Paragraph applies, regarding compliance with the provisions of this Order. Any person interviewed may have counsel present.
Provided, however, that upon application of the Commission 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.

IX. AUTHORITY TO MONITOR COMPLIANCE

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

A. The Commission is authorized, without further leave of Court, to obtain discovery from any person (including a Defendant) 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 Fed. R. Civ. P. 45, for the purpose of monitoring and investigating Defendants' compliance with any provision of this Order.
B. The Commission is authorized to use representatives posing as consumers or suppliers to Defendants, Defendants' employees, or any other entity managed or controlled in whole or in part by any Defendant, without the necessity of identification or prior notice; and
C. 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 and 57b-1, to investigate whether Defendants have violated any provision herein or Section 5 of the FTC Act, 15 U.S.C.  45, or any applicable rule or regulation promulgated and enforced by the Commission, including the Franchise Rule, 16 C.F.R.  436.

X. FEES AND COSTS

IT IS FURTHER ORDERED that each party to this Order hereby agrees to bear its own costs and attorneys' fees incurred in connection with this action.

XI. RETENTION OF JURISDICTION

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

XII. COMPLETE SETTLEMENT

The parties hereby consent to entry of the foregoing Order which shall constitute a final judgment and order in this matter. The parties further stipulate and agree that the entry of the foregoing Order shall constitute a full, complete and final settlement of this action.

Dated: ____________

__________________________________________
SIDNEY A. FITZWATER
United States District Judge

The parties hereby consent to the terms and conditions set forth above and consent to the entry of this Order without further notice to the parties.

FOR PLAINTIFF: FOR DEFENDANTS:
Debra A. Valentine
General Counsel
Federal Trade Commission
Washington, D.C. 20580

Thomas B. Carter
Director

________________________
Judith A. Shepherd
Texas Bar No. 18221300
Susan E. Arthur
Texas Bar No. 01365300

Federal Trade Commission
1999 Bryan Street, Suite 2150
Dallas, TX 75201-6803

214-979-9383 (Shepherd)
214-979-9370 (Arthur)
214-953-3079 (Facsimile)

________________________
Innovative Productions
By Shane D. Walls, President

________________________
Shane D. Walls, Individually and
as President of Innovative Productions

HALLET & PERRIN

________________________
Edward P. Perrin, Jr.
Texas Bar No.
Attorneys for Defendants

717 Harwood Street, Suite 1400
Dallas, TX 75201

214-922-4132
214-953-3154 (Facsimile)

APPENDIX A

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

FEDERAL TRADE COMMISSION
Plaintiff
v.
INNOVATIVE PRODUCTIONS, a Nevada corporation; and
SHANE D. WALLS, individually and as an officer of the corporation,
Defendants.

Civil Action No.: 3:00-CV-0312-D

AFFIDAVIT OF DEFENDANT SHANE D. WALLS

Shane D. Walls, being duly sworn, hereby states and affirms as follows:

1. My name is Shane D. Walls. My current residence address is ___________________ ________________________________________. I am a citizen of the United States and am over the age of eighteen. I have personal knowledge of the facts set forth in this Affidavit.

2. I am a defendant in FTC v. Innovative Productions et al. (United States District Court for the Northern District of Texas).

3. On [date], I received a copy of the STIPULATED FINAL JUDGMENT AND ORDER FOR PERMANENT INJUNCTION AND MONETARY RELIEF, which was signed by the Honorable Sidney A. Fitzwater and entered by the Court on [date of entry of Order]. A true and correct copy of the Order I received is appended to this Affidavit.

I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct. Executed on [date], at [city and state].

_________________________________
Shane D. Walls

State of Texas
County of ___________

Subscribed and sworn to before me this ______ day of ________, 2000.

________________________
Notary Public
My Commission Expires:

________________________