STATES DISTRICT COURT
FEDERAL TRADE COMMISSION, Plaintiff,
S.J.A. SOCIETY, INC., doing
Civ. No. 2:97cv-472
STIPULATED FINAL JUDGMENT AND
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, the Telemarketing and Consumer Fraud and Abuse Prevention Act ("Telemarketing Act"), 15 U.S.C. § 6101 et seq., and the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., charging defendants S.J.A. Society, Inc., doing business as Apex Marketing Group, Atlantic Service Corp., ASC, and Publishers Service, Thomas P. Johnson, and Thomas Alan Blair with violating Section 5 of the FTC Act, the FTC's Trade Regulation Rule entitled "Telemarketing Sales Rule," 16 C.F.R. Part 310, and the FDCPA.
The parties have agreed to the entry of this Stipulated Final Judgment and Order for Permanent Injunction and Consumer Redress ("Order") by this Court to resolve all matters of dispute between them in this action.
NOW, THEREFORE, Plaintiff Federal Trade Commission and defendants S.J.A. Society, Inc., doing business as Apex Marketing Group, Atlantic Service Corp., ASC, and Publishers Service, Thomas P. Johnson, and Thomas Alan Blair 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 Eastern District of Virginia;
3. The activities of 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 defendants S.J.A. Society, Inc., doing business as Apex Marketing Group, Atlantic Service Corp., ASC, and Publishers Service, Thomas P. Johnson, and Thomas Alan Blair under Sections 5 and 19 of the FTC Act, 15 U.S.C. §§ 45(a) and 57b, the Telemarketing Sales Rule, 16 C.F.R. Part 310, and the FDCPA, 15 U.S.C. § 1692 et seq.;
5. Defendants have waived 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. 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 defendants may have against the Commission, the receiver, or the employees, agents, or representatives of the Commission and the receiver; and
7. This Order does not constitute and shall not be interpreted to constitute an admission by defendants that they have engaged in violations of the FTC Act, the Telemarketing Sales Rule, or the FDCPA, and defendants deny that they have engaged in any such violations, and they consent to entry of this order solely to avoid the time and expense of further litigation.
1. "Defendants" means S.J.A. Society, Inc., doing business as Apex Marketing Group, Atlantic Service Corp., ASC, and Publishers Service ("SJA"), Thomas P. Johnson ("Johnson"), and Thomas Alan Blair ("Blair"), and their agents, employees, officers, and servants, and those persons in active concert or participation with them who receive actual notice of this order by personal service or otherwise.
2. "Consumer" means a purchaser, customer, subscriber, or person.
3. "Material" means likely to affect a consumer's choice of, or conduct regarding, goods or services, as that term is defined in the Telemarketing Sales Rule, 16 C.F.R. § 310.2(k).
PROHIBITED BUSINESS ACTIVITIES
IT IS THEREFORE ORDERED that, in connection with the offering for sale, sale, or servicing of any magazine subscriptions, defendants are hereby permanently restrained and enjoined from misrepresenting, either orally or in writing, expressly or by implication, any material fact, including, but not limited to:
IT IS FURTHER ORDERED that, in connection with the offering for sale, sale, or servicing of any magazine subscription, defendants are hereby permanently restrained and enjoined from failing to disclose in a clear and conspicuous manner before a consumer sends funds to defendants or divulges his or her credit card or bank account information, the total price the consumer must pay for defendants' magazine subscriptions, including:
IT IS FURTHER ORDERED that, in connection with the offering for sale, sale, or servicing of any magazine subscription, defendants are hereby permanently restrained and enjoined from:
IT IS FURTHER ORDERED that defendants are hereby permanently restrained and enjoined from attempting to collect, either directly or through any debt collector, any debt or alleged debt, from any consumer who exercises the right to cancel as provided for in Part IX.G. of this Order.
IT IS FURTHER ORDERED that defendants are hereby permanently restrained and enjoined from failing to comply with the Telemarketing Sales Rule, 16 C.F.R. Part 310, a copy of which is attached hereto as Attachment A, and incorporated herein as if fully set forth verbatim. In the event the Telemarketing Sales Rule is hereafter amended or modified, defendants' compliance with the Telemarketing Sales Rule as so modified shall not be deemed a violation of this Part.
IT IS FURTHER ORDERED that, in connection with any telemarketing, defendants are hereby permanently restrained and enjoined from failing to comply with the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., including when defendants collect or attempt to collect their own debts.
IT IS FURTHER ORDERED that defendants are hereby permanently restrained and enjoined from providing to any person, except agents of the Plaintiff, the receiver, 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 defendants between May 14, 1992 and the date this Order is entered; provided, however, that defendants may provide such information if required to do so by Court Order.
IT IS FURTHER ORDERED that, in the event defendants or defendants' agents tape-record any conversation with a consumer to verify or confirm that a consumer is agreeing to purchase defendants' goods or services, 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 defendants SJA and Johnson shall pay to the Commission as full satisfaction of all monetary claims asserted by Plaintiff in the Complaint the sum of Seven Hundred and Fifty Thousand Dollars ($750,000). In lieu of the foregoing monetary amount, which shall be suspended subject to the conditions set forth in Part X of this Order, and based on the sworn representations in the financial statement of defendant Johnson, as provided for in Part X of this Order, defendants SJA and Johnson shall pay to the FTC $xx,xxx, and shall pay certain sums to the receiver and defendants' counsel, Mays & Valentine L.L.P., pursuant to a separate order of the Court filed under seal. Payment to the FTC by defendants Johnson and SJA shall be made as follows:
IT IS FURTHER ORDERED that the Court's approval of this Order is expressly premised upon the truthfulness, accuracy, and completeness of the financial statements provided to counsel for Plaintiff by defendants Johnson and Blair. If, at any time following entry of this Order, the Commission obtains information indicating that any of defendants' representations on their financial statement concerning their assets, income, liabilities, or net worth were fraudulent, materially misleading, inaccurate, or incomplete, the Commission may, upon motion to the Court, request that the Order herein be reopened for the purpose of requiring additional consumer redress; provided, however, that in all other respects this Order shall remain in full force and effect unless otherwise ordered by this Court; and provided further, that proceedings instituted under this Part 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 Plaintiff may initiate to enforce this Order.
A finding of material misrepresentation or omission as to the financial statement of any defendant will render immediately due and payable the entire amount of the suspended judgment herein entered against said defendant, provided that the Federal Trade Commission will not seek an amount in excess of said judgment.
IT IS FURTHER ORDERED that, after payment of those sums to the receiver and counsel for defendants SJA and Johnson as specified in Part IX of this Order, A.G. Edwards & Sons, Inc., St. Louis, MO, and Central Fidelity National Bank, Richmond, VA shall forthwith transfer to the Plaintiff's escrow account, as directed by counsel for Plaintiff, all remaining assets held on behalf of any defendant. These transfers shall satisfy the obligations of SJA and Johnson as described in Part IX.A. of this Order. Defendants waive and relinquish any claim that they may have to such assets.
IT IS FURTHER ORDERED that defendants SJA and Johnson shall, within sixty (60) calendar days after the date of entry of this Order, send a written notice to each credit bureau or other credit reporting agency to whom SJA, or its officers, agents, servants, or employees submitted derogatory credit information relating to any consumer's failure to pay for any goods or services sold by defendants, where the consumer has not personally signed an agreement to purchase defendants' goods or services. The notice shall inform the credit reporting agency that such derogatory credit information on such consumer should be removed from the consumer's credit record.
IT IS FURTHER ORDERED that, in connection with the telemarketing of goods or services to consumers, defendants SJA and Johnson shall create and maintain procedures to ensure compliance by their employees, telemarketers, and agents with this Order, the Telemarketing Sales Rule, and the FDCPA. Defendants shall immediately terminate any such person who fails to comply with this Order, the Telemarketing Sales Rule, or the FDCPA, to the extent such termination is permitted under state or Federal law.
IT IS FURTHER ORDERED that for a period of five (5) years from the date of entry of this Order, defendants SJA and Johnson shall create and maintain:
IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, for purposes of determining or securing compliance with this Order, any defendant shall:
IT IS FURTHER ORDERED that for a period of five (5) years from the date of entry of this Consent Decree, defendants Johnson and Blair shall promptly inform the Commission by prior written notification at least thirty (30) days in advance, or in the case of involuntary termination of employment, within thirty (30) days of such termination, of:
IT IS FURTHER ORDERED that for a period of one year the defendants and their successors and assigns shall distribute a copy of this Order to all present and future officers, agents, representatives, employees, and independent contractors, and shall secure from each such person a signed statement acknowledging receipt of said Order. Within fifteen (15) days of entry of this Order, defendants shall file with the Federal Trade Commission an affidavit setting forth the fact and manner of their compliance, including the name and title of each person to whom a copy of the Order has been provided, and a copy of their acknowledgment. Thereafter, defendants shall file affidavits every 60 days for a period of one year from the date this Order is entered.
IT IS FURTHER ORDERED that all notifications required of defendants by this Order, or concerning this Order, shall be sent to the following address:
All notifications required of the FTC by this Order, or concerning this Order, shall be sent to the following address:
If defendants notify the FTC of a change in address, all future notifications from the FTC to defendants shall be sent to that address.
IT IS FURTHER ORDERED that defendant Johnson shall be allowed to sell S.J.A. Society, Inc. to any purchaser of the same who agrees in writing to be bound by the terms and conditions of this Order governing the company's operation. Such sale shall be permitted only upon the FTC's approval of the terms of such sale. Such approval shall not be unreasonably withheld.
IT IS FURTHER ORDERED that upon entry of this Order, the receivership over defendant SJA shall terminate, subject to the further provisions of this Order.
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 __________, 1997 in Norfolk, Virginia.
FEDERAL TRADE COMMISSION
TELEMARKETING SALES RULE
Norfolk, Virginia Date: August 1, 1997
FOR VALUE RECEIVED, the undersigned, S.J.A. Society, Inc. and Thomas P. Johnson ("Maker"), promise to pay to the Federal Trade Commission (together with its assigns "Holder") at such place as the Holder may designate in writing, in lawful money of the United States of America, the principal sum of Twenty Thousand Dollars ($20,000.00), together with interest on the outstanding principal balance from time to time at the rate of Five and 15/100 percent (5.15%) per annum.
This Note shall be paid in six (6) equal quarterly installments of principal and accrued interest in the amount of Three Thousand Five Hundred and Five Dollars ($3,505.00) each. The first such payment shall be due and payable on November 1, 1997, and subsequent payments shall be due on the first day of every third month thereafter (February, May, August, and November) until this Note is paid in full. The Maker and any endorser or guarantor hereof shall have the right to prepay this Note at any time in whole or in part without premium or penalty.
The Maker and any endorsers waive the benefit of their homestead exemption, presentment, notice of dishonor and protest; agree that any extension of the time of payment of all or any part of this Note may be made before, at, or after maturity by agreement with the Holder without notice to and without releasing the liability of any other party to this Note.
This Note is secured by those assets of S.J.A. Society, Inc. and Thomas P. Johnson, which are listed on Attachment C. S.J.A. Society, Inc. and Thomas P. Johnson hereby grant Holder a security interest in such assets.
WITNESS the following signatures and seals:
S.J.A. Society, Inc. Thomas P. Johnson
COLLATERAL SECURING PROMISSORY NOTE
According to our records, you may have complained about your magazine subscription or requested that we cancel your subscription, and we denied that request. As part of a settlement with the Federal Trade Commission, we are now giving you an opportunity to cancel your subscription. If you wish to cancel your magazine subscription, please sign this letter in the space provided below, and return the letter in the enclosed postage-paid envelope. As soon as we receive your request, we will cancel your subscription and reduce your outstanding balance to zero.
If we have not received this signed letter from you within thirty (30) days, we will assume you do not wish to cancel your subscription.
I want to cancel my subscription.