IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF PENNSYLVANIA

FEDERAL TRADE COMMISSION, Plaintiff,

v.

GEORGE L. CAPELL, Defendant.

Case No.

CONSENT DECREE AND ORDER FOR INJUNCTIVE AND OTHER RELIEF

WHEREAS plaintiff, the Federal Trade Commission, has commenced this action by filing the Complaint herein; defendant has waived service of the Summons and Complaint; the parties have been represented by the attorneys whose names appear hereafter; and the parties have agreed to settlement of this action upon the following terms and conditions, without adjudication of any issue of fact or law and without defendant George L. Capell ("Capell") admitting liability for any of the matters alleged in the Complaint;

THEREFORE, on the joint motion of plaintiff and defendant, it is hereby ORDERED, ADJUDGED, and DECREED as follows:

1. This Court has jurisdiction of the subject matter and of the parties.

2. The Complaint states a claim upon which relief may be granted against the defendant under Sections 5(a)(1), 13(b) and 16(a) of the Federal Trade Commission Act, 15 U.S.C. 45(a)(1), 53(b) and 56(a).

3. Defendant George L. Capell waives any right to contest any of the allegations in the Complaint filed in this matter in any subsequent litigation filed by the Commission to enforce its rights pursuant to this Consent Decree.

DEFINITION

For the purposes of this Consent Decree, the term "Mail Order Rule" means the Federal Trade Commission's Trade Regulation Rule Concerning Mail or Telephone Order Merchandise, 16 C.F.R. Part 435, or as the Rule may hereafter be amended.

INJUNCTION

1. Defendant George L. Capell, his successors and assigns, and his officers, agents, servants, employees and attorneys, and all persons in active concert or participation with him who receive actual notice of this Consent Decree by personal service or otherwise, are hereby enjoined from ever violating, directly or through any corporation, subsidiary, division or other device, any provision of the Mail Order Rule, including but not limited to:

a. Soliciting orders for the sale of telephone or mail order merchandise when they have no reasonable basis to expect that they will be able to ship some or all of such merchandise within the time stated in the solicitation or, if no time is stated clearly and conspicuously in the solicitation, within thirty (30) days after receipt of a properly completed order, as required by 16 C.F.R.   435.1(a)(1);
 
b. Providing to the buyer a revised shipping date when they have no reasonable basis for making such representation, as required by 16 C.F.R. Part 435.1(a)(2);
 
c. Failing to offer to the buyer, clearly and conspicuously and without prior demand, an option either to consent to a delay in shipping or to cancel the order and receive a prompt refund, as required by 16 C.F.R.  435.1(b)(1);
 
d. Failing to offer to the buyer a prepaid means of exercising the buyer's options as described in 16 C.F.R.  435.1(b)(1), as required by 16 C.F.R.  435.1(b)(3); and
 
e. Having failed to offer the option to consent to a delay or to cancel the order and receive a prompt refund, as required by 16 C.F.R.  435.1(b)(1), and also having failed to ship the merchandise within the applicable time, failing to deem the order canceled and to make a prompt refund, as required by 16 C.F.R.  435.1(c)(5).

2. In the event the Mail Order Rule is hereafter amended or modified, defendant's compliance with that Rule as so amended or modified shall not be deemed a violation of this injunction. A copy of the Mail Order Rule is attached hereto as "Appendix A" and incorporated herein as if fully set forth verbatim.

3. Defendant, his successors and assigns, and his officers, agents, servants, and employees, and all persons in active concert or participation with him who receive actual notice of this Consent Decree by personal service or otherwise, whether acting directly or through any business entity, corporation, subsidiary, division, or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale or distribution, in or affecting commerce, of any product or service, are hereby permanently restrained and enjoined from:

a. Misrepresenting the shipping time of any cash rebate offered in connection with the purchase of such product;
 
b. Failing to provide any cash rebate that is offered by defendants within the time specified, or, if no time is specified, within thirty days of receipt of a completed request for a rebate; and
 
c. Failing, at or before the time of shipment of any product, to provide any forms or other materials that are required in order to apply for any rebate offered by defendants or by any vendor of products sold or offered by defendants.

BOND REQUIREMENT

4. IT IS FURTHER ORDERED that defendant George L. Capell, whether acting directly or through any business entity, corporation, subsidiary, division, or other device, is hereby restrained and enjoined from engaging or participating in the advertising, offering for sale, sale, or distribution of any goods, in connection with mail or telephone order sales, as defined in Section 435.2(a) of the Mail Order Rule, 16 C.F.R.  435.2(a), unless and until Defendant George L. Capell first obtains a performance bond. The performance bond shall be in the principal sum of four hundred thousand dollars ($400,000). Provided:

a. The performance bond shall be an insurance agreement pledging security for financial loss, and shall be issued by a surety company that holds a Federal Certificate of Authority As Acceptable Surety On Federal Bond and Reinsuring. The surety company issuing the performance bond must be admitted to do business in each state where Defendant Capell does business. The performance bond shall cite this Consent Decree as the subject matter of the bond and shall provide surety thereunder against financial loss resulting from whole or partial failure of performance due, in whole or in part, to any violation of section 5 of the FTC Act, 15 U.S.C.  45; the Mail Order Rule, 16 C.F.R. Part 435, or this Consent Decree. Such performance bond shall be executed in favor of both (1) the FTC for the benefit of any consumer injured as a result of any violation of section 5 of the FTC Act, 15 U.S.C. 45; the Mail Order Rule, 16 C.F.R. Part 435, or this Consent Decree, and (2) any consumer so injured;
 
b. The bond shall be deemed continuous and remain in full force and effect at all times during which Defendant George L. Capell, whether acting directly or through any business entity, corporation, subsidiary, division, or other device, engages or participates in the advertising, offering for sale, sale, or distribution of any goods in connection with mail or telephone order sales subject to the Mail Order Rule, 16 C.F.R. Part 435, and for at least eighteen months after Defendant George L. Capell has ceased to engage or participate in any manner in such business; provided, however, that the obligation to obtain a bond shall terminate ten years from the entry of this Consent Decree, or ten years from the most recent date that the FTC files a complaint (with or without an accompanying consent decree) in federal court executing against the bond, or alleging any violation of this Consent Decree;
 
c. The bond required by this paragraph is in addition to, and not in lieu of, any other bond required by federal, state, or local law;
 
d. Defendant George L. Capell shall provide a copy of the bond required by this paragraph to the Regional Director, Western Region -- San Francisco, at the address specified in Paragraph 5 below, so that it is received at least three business days before commencing the advertising, offering for sale, sale, or distribution of any goods in connection with mail or telephone order sales subject to the Mail Order Rule, 16 C.F.R. Part 435;
 
e. The FTC may execute against the performance bond if it demonstrates to this Court by a preponderance of the evidence that, after the effective date of this Consent Decree, Defendant George L. Capell, or any business in which Defendant George L. Capell engages or participates, has violated section 5 of the FTC Act, 15 U.S.C.  45; the Mail Order Rule, 16 C.F.R. Part 435; or this Consent Decree;
 
f. Defendant George L. Capell shall not disclose the existence of any performance bond required by this paragraph to any consumer, or other purchaser or prospective purchaser of any product or service that is advertised, promoted, offered for sale, sold or distributed in connection with mail or telephone order sales subject to the Mail Order Rule, 16 C.F.R. Part 435, without also disclosing clearly and prominently at the same time:
 
AS REQUIRED BY ORDER OF THE UNITED STATES DISTRICT COURT IN SETTLEMENT OF CHARGES OF FALSE AND MISLEADING REPRESENTATIONS IN THE PROMOTION AND SALE OF PERSONAL COMPUTER PRODUCTS;
 
and
 
g. Proceedings instituted under this paragraph are in addition to, and not in lieu of, any other civil or criminal remedies as may be provided by law, including any other proceedings the FTC may initiate to enforce this Judgment.

COMPLIANCE

5. Sixty (60) days after entry of this Consent Decree, defendant, his successors and assigns, shall provide a written report to the Federal Trade Commission, sworn to under penalty of perjury, setting forth in detail the manner and form in which he has complied and is complying with this Consent Decree. This report shall include but not be limited to:

a. A specimen copy of each delay option notice used for purposes of complying with any provision of the Mail Order Rule, and a statement setting forth in detail the procedures in place for providing such notices;
 
b. A specimen copy of each advertisement containing a shipping representation;
 
c. A statement setting forth in detail defendant's procedures for providing prompt refunds pursuant to the Mail Order Rule; and
 
d. A statement setting forth in detail the basis for claiming that defendant will be able to ship merchandise:
 
i. within the time stated in any advertisement;
 
ii. within thirty (30) days, where no time is stated clearly and conspicuously in any advertisement.

Defendant shall mail this written notification to the Regional Director, Western Region, Federal Trade Commission, 901 Market Street, San Francisco, CA 94103.

6. Defendant George L. Capell, and his successors and assigns, shall, in connection with any business (a) of which Defendant Capell is the majority owner or which he directly or indirectly manages or controls, and (b) which engages in the advertising, offering for sale, sale, or distribution of any goods, by means of mail or telephone order sales, as defined in Section 435.2(a) of the Mail Order Rule, 16 C.F.R.  435.2(a), within thirty (30) days of the entry of this Consent Decree, provide a copy of this Consent Decree and the Federal Trade Commission's Mail Order Rule Business Guide to each of said business's officers, and to each of its sales representatives, employees, agents, servants and attorneys whose duties include the exercise of managerial or supervisory responsibility regarding mail or telephone order sales, and secure from each such person a signed statement acknowledging receipt of a copy of this Consent Decree, and shall, within ten (10) days of complying with this paragraph, file an affidavit with the Regional Director, Western Region, Federal Trade Commission, 901 Market Street, San Francisco, CA 94103, setting forth the fact and manner of its compliance, including the name and title of each person to whom a copy of the Consent Decree has been provided.

7. For a period of three (3) years from the date of entry of this Consent Decree, defendant, his successors and assigns, shall provide a copy of this Consent Decree and the Federal Trade Commission's Mail Order Rule Business Guide to each officer, and to each sales representative, employee, agent, servant and attorney whose duties include the exercise of managerial or supervisory responsibility regarding mail or telephone order sales, within fifteen (15) days after such person commences his or her duties, and shall obtain from each such person a signed statement acknowledging receipt of this Consent Decree.

8. For a period of five (5) years from the date of entry of this Consent Decree, defendant, his successors and assigns, shall maintain and make available to the Federal Trade Commission, within thirty (30) days of the date of receipt of a written request, business records demonstrating compliance with the terms and provisions of this Consent Decree.

9. Defendant Capell shall, within five (5) days after the date of entry of this Consent Decree, notify the Commission in writing of his current residence address, mailing address, telephone numbers, and employment status, including the name and address of his current employer, and for a period of five (5) years from the date of entry of this Consent Decree, Defendant Capell shall notify the Commission of the following:

a. Any changes in his residence, mailing address and telephone numbers, within ten (10) days of the date of such change;
 
b. Any changes in his employment status (including self-employment) within ten (10) days of the date of such change. Such notice shall include the name and address of each business with which Defendant Capell is affiliated or by which he is employed, a statement of the nature of the business, and a statement describing Defendant Capell's duties and responsibilities in connection with the business or employment, and
 
c. Any proposed change in the structure of any business entity owned or controlled by Defendant Capell, including, but not limited to, creation, merger, incorporation, dissolution, assignment, sale which results in the emergence of a successor corporation, the creation or dissolution of a subsidiary or parent, or any other change which may affect Defendant Capell's obligations under this judgment.

10. 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 other proceedings the plaintiff may initiate to enforce this Consent Decree, or other civil or criminal remedies.

11. This Court shall retain jurisdiction of this matter for the purposes of enabling any of the parties to this Consent Decree 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 Consent Decree, for the enforcement of compliance therewith, or for the punishment of violations thereof.

JUDGMENT IS THEREFORE ENTERED in favor of plaintiff and against defendant, pursuant to all the terms and conditions recited above.

Dated this day of , 200 .

______________________________________
UNITED STATES DISTRICT COURT 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. Defendant waives any rights that may arise under the Equal Access to Justice Act, 28 U.S.C. 2412, concerning the investigation and prosecution of this action.

FOR THE FEDERAL TRADE COMMISSION:

_________________________________
JEFFREY KLURFELD
Regional Director
San Francisco Regional Office
Federal Trade Commission

_________________________________
DAVID M. NEWMAN
Attorney
San Francisco Regional Office
Federal Trade Commission
901 Market Street, Suite 570
San Francisco, CA 94103

FOR DEFENDANT GEORGE L. CAPELL:

___________________________________
GEORGE L. CAPELL

___________________________________
PATRICIA CASPERSON
Stradley Ronon Stevens & Young
2600 One Commerce Square
Philadelphia, PA 19103-7098
Attorney for the Defendant