Amended Complaint Adds Two More Defendants To Be Covered By Settlements; Principal Defendant and His Companies Admit To Law Violations
The Dean Thomas Corporation, along with its president, Dean R. Thomas, and other affiliated companies, have agreed to settle Federal Trade Commission charges stemming from their role in "OPERATION FALSE ALARM," an unprecedented attack against "badge-related" fundraising fraud. The joint federal/state law enforcement and public education campaign highlighted deceptive fundraising on behalf of law enforcement officers, fire fighters and other community organizations and gave consumers key information about the fundraisers who solicit them.
The FTC's April 1997 complaint alleged that the defendants convinced small businesses to pay for "advertising" in their publications by falsely claiming that the businesses had previously ordered the advertisement and that their booklets enjoy a widespread distribution in the businesses' local communities. Many businesses were subsequently barraged with false invoices and other collection efforts for unordered advertising. These efforts ran the gamut from harassing collection calls to personal visits by intimidating "collectors" and unauthorized COD packages containing a bill for the unordered ads. The complaint alleged that the defendants misrepresented that advertising proceeds would support a local, civic purpose, and that the publication would enjoy widespread local distribution. In this case, the FTC had asked the court for -- and the court granted -- a temporary restraining order and an asset freeze, as well as the appointment of receiver to take charge of the companies.
Named as defendants in the FTC's complaint are Fort Wayne, Indiana-based The Dean Thomas Corporation, The Game Club, Inc., Professional Publishers, Inc., and Thomas Publishing Company, Inc., all of which did business under a host of other names; and the following individuals: Dean R. Thomas, the director, president and secretary of The Dean Thomas Corporation, The Game Club, Inc., Professional Publishers, Inc., and Thomas Publishing Company, Inc.; and Randy B. Lonis and Ray Celie, who operated and managed one or more of the defendant corporations. (Lonis and Celie have previously settled the FTC's charges.)
In announcing the settlements of these allegations, the FTC has amended its April 1997 complaint to add two more defendants -- Preferred Publishing Company, Inc., and Michael Brant. In October 1997, the court issued an order to show cause why Dean R. Thomas and his employee, Michael Brant, should not be held in contempt of the Preliminary Injunction for their activities in the operations of Preferred Publishing, which Thomas incorporated after the entry of the Preliminary Injunction. Preferred Publishing is now included as a defendant bound by the terms of the settlement with the Dean Thomas Companies. Brant has agreed to the terms of an individual settlement.
The settlement permanently prohibits individual defendant Dean R. Thomas from engaging or participating -- either directly or with others -- in the advertising, offering for sale, sale or distribution of any advertising or publication. The settlement also prohibits Thomas from using any aliases, pen names or otherwise misrepresenting his true identity in the course of business dealings or in publicly filed documents.
The settlement contains an admission by Dean R. Thomas that he has formulated, directed, controlled or participated in the acts and practices of the corporate defendants, including the acts and practices set forth in the FTC's complaint. Additionally, the settlement contains admissions that each of the corporate defendants engaged in the false representations alleged in the complaint.
All of the defendants are prohibited from making false or misleading representations in connection with the sale, distribution, marketing or sponsorship of any advertisement, publication, program or product, and are prohibited from misrepresenting their affiliation with any national, state or local organization. In addition, they are prohibited from selling, renting or otherwise disclosing any identifying information about any customer who purchased advertisements from them. The settlement also contains recordkeeping requirements designed to assist the FTC in monitoring the defendants' compliance.
Defendant Michael Brant is permanently prohibited from making false or misleading representations in connection with the sale, distribution, marketing or sponsorship of any advertisement, publication, program or product, and is prohibited from misrepresenting his affiliation with any national, state or local organization. He is prohibited from using aliases, or otherwise misrepresenting his true identity, and is prohibited from selling, renting or otherwise disclosing any identifying information about any customer who purchased advertisements from him.
The FTC filed the amended complaint and the two settlements in the U.S. District Court for the Northern District of Indiana, Fort Wayne Division, on January 13, 1998. The settlements were subject to the court's approval and the judge signed the settlements on January 19. The Commission vote to file the amended complaint and the settlements was 3-0, with Commissioner's Mozelle W. Thompson and Orson Swindle not participating.
NOTE: The Brant judgment is for settlement purposes only and does not constitute an admission by the defendant of a law violation. The settlements have the force of law when signed by the judge.
Copies of the settlements and the amended complaint, the news release announcing "Operation False Alarm," as well as a number of consumer education publications about charitable fundraising solicitations are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-3128; TTY for the hearing impaired 1-866-653-4261. Consent agreements subject to public comment also are available by calling 202-326-3627. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(Civil Action No. 1:97CV 0129)
(FTC Matter No: x970045)
Office of Public Affairs
Cleveland Regional Office
1111 Superior Avenue, Eaton Center, Suite 200
Cleveland, Ohio 44114