CATHERINE R. FULLER
Federal Trade Commission
RAYMOND E. MCKOWN (CA Bar # 150975)
Attorneys for Plaintiff
FEDERAL TRADE COMMISSION
FEDERAL TRADE COMMISSION,
TOD A. SILVERS, ADELINO CALVO, JR., ROBERT R. SILVERS, ALICE R. SILVERS,
and INTERSTATE, INC.,
Civ. No. 96-3977 RAP (Mcx)
STIPULATED FINAL JUDGMENT AND ORDER FOR PERMANENT INJUNCTION AND CONSUMER REDRESS
Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), has filed its complaint 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., charging Defendants Tod A. Silvers, Adelino Calvo, Jr., Robert R. Silvers, Alice R. Silvers, and Interstate, Inc., in this action with violations of Section 5 of the FTC Act, 15 U.S.C. § 45, and the FTC's Trade Regulation Rule entitled "Telemarketing Sales Rule, 16 C.F.R. Part 310.
The Commission and Defendants have agreed to the entry of this Stipulated Final Judgment and Order for Permanent Injunction and Consumer Redress ("Order") by this Court in order to resolve all matters of dispute between them in this action.
NOW, THEREFORE, the Commission and Defendants having requested the Court to enter this Order, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED as follows:
A. "Assets" means any legal or equitable interest in, right to, or claim to, any real and personal property, including but not limited to chattel, goods, instruments, equipment, fixtures, general intangibles, effects, leaseholds, mail or other deliveries, inventory, checks, notes, accounts, credits, receivables, and all cash, wherever located;
B. "Document" is synonymous in meaning and equal in scope to the usage of the term in Federal Rule of Civil Procedure 34(a), and includes writings, drawings, graphs, charts, photographs, audio and video recordings, computer records, and other data compilations from which information can be obtained and translated, if necessary, through detection devices into reasonably usable form. A draft or non- identical copy is a separate document within the meaning of the term;
C. Advance fee credit services means occasions upon which a seller or telemarketer requests or receives payment of a fee or consideration in advance of obtaining or arranging a loan or other extension of credit for a person;
D. Customer means any person who is or may be required to pay for goods or services offered through telemarketing;
E. Material means likely to affect a persons choice of, or conduct regarding, goods or services;
F. Person means any individual, group, unincorporated association, limited or general partnership, corporation, or other business entity;
G. Seller means any person who, in connection with a telemarketing transaction, provides, offers to provide, or arranges for others to provide goods or services to the customer in exchange for consideration;
H. Telemarketer means any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer;
I. Telemarketing means a plan, program, or campaign which is conducted to induce the purchase of goods or services by use of one or more telephones and which involves more than one interstate telephone call. The term does not include the solicitation of sales through the mailing of a catalog, provided such solicitation meets the requirements of Section 3.10(u) of the FTC Telemarketing Sales Rule, 16 C.F.R. § 3.10(u).
I. PROHIBITED BUSINESS ACTIVITIES
IT IS THEREFORE ORDERED that Defendants, Tod A. Silvers and Adelino Calvo, Jr., Robert R. Silvers, Alice R. Silvers, and Interstate, Inc., and their officers, agents, servants, employees, attorneys, and all persons or entities directly or indirectly under their control or under common control with them, and all other persons or entities in active concert or participation with them, are hereby permanently restrained and enjoined from:
A. Misrepresenting their abilities to obtain or to arrange loans, credit cards, or other extensions of credit to or for consumers;
B. Misrepresenting that consumers can obtain loans, credit cards, or other extensions of credit regardless of consumers credit histories;
C. Misrepresenting that they are members of, or that their services have been approved by, the Better Business Bureau or any other organization that purports to collect or disseminate information about business entities to consumers;
D. Violating the Telemarketing Sales Rule ("Rule"), 16 C.F.R. Part 310, by including, but not limited to:
E. Providing or selling to any person a list which contains the name, address, telephone number, or credit card or bank account number, of any customer who purchased advance fee credit services from any of the Defendants, unless such disclosure is required by law or court order, except that the Receiver may sell such a list upon receiving adequate assurances that the list will not be used for any illegal purpose; and
F. Misrepresenting any fact material to a consumers decision to purchase Defendants advance fee credit services or products.
IT IS FURTHER ORDERED that:
A. Defendant Tod A. Silvers shall pay to the Commission the sum of One Hundred and Thirty Thousand dollars ($130,000.00) no later than one hundred and eighty (180) days after entry of this Order; and
B. Defendants Robert R. Silvers and Alice R. Silvers shall pay to the Commission the sum of Two Hundred and Forty-Four Thousand dollars ($244,000.00) no later than two (2) years after entry of this Order.
In the event of any default on any obligation to make payment under this Part, interest, computed pursuant to 28 U.S.C. § 1961(a), shall accrue from the date of default to the date of payment.
Defendant Tod A. Silvers shall, immediately upon entry of this Order, if he has not already done so, provide the Commission with a note and deed of trust to secure payment under this Section of this Order, in the form attached as Exhibit A hereto, covering the real property described therein, and shall cause such security interest to be appropriately perfected; or an assignment of substituted security of an appraised value of no less than one hundred and thirty thousand ($130,000) and in a form approved in writing by counsel for the Commission and cause it to be perfected; said security agreement or assignment of security shall be terminated and fully reconveyed by the Commission, and proper notification(s) filed, upon payment of the sum required by this Section of this Order.
Defendants Robert R. Silvers and Alice R. Silvers shall, immediately upon entry of this Order, if they have not already done so, provide the Commission with a note and deed of trust to secure payment under this Section of this Order, in the form attached as Exhibit B hereto, covering the real property described therein, and shall cause such security interest to be appropriately perfected; or an assignment of substituted security of an appraised value of no less than two hundred and forty-four thousand ($244,000) and in a form approved in writing by counsel for the Commission and cause it to be perfected; said security agreement or assignment of security shall be terminated and fully reconveyed by the Commission, and proper notification(s) filed, upon payment of the sum required by this Section of this Order.
IT IS FURTHER ORDERED that the appointment of Frank Sweeney, C.P.A., as Receiver for the Business activities of Defendant Interstate, Inc., in Section IX of this Courts Order for Preliminary Injunction entered on November 7, 1996, is hereby continued as modified by this Section. The Receiver shall, within ninety (90) days of entry of this Order, file an interim report and an interim application for fees and expenses and shall, as soon as practicable, file appropriate tax returns and a request to the tax authorities for a prompt determination of tax liability. After the Receiver is reasonably satisfied that the estates administrative claims are or will be paid in full, and that the estates tax liability, if any, has been paid, the Receiver shall file a final report and application for final fees and expenses, and pay the balance of funds in the estate, if any, to the Commission.
Upon the filing of the Receivers final report and the Courts approval of the same, the Receivership over Defendant Interstate, Inc., shall be terminated and the provisions of said Preliminary Injunction related to the appointment of the Receiver contained in Section IX thereof shall be dissolved.
The funds paid by Defendants Tod A. Silvers, Robert R. Silvers, and Alice R. Silvers pursuant to Section II of this Order, and by the Receiver pursuant to Section III of this Order, shall be deposited into a redress fund, administered by the FTC, to be used for equitable relief including but not limited to consumer redress and any attendant expenses for the administration of any redress fund. If the FTC determines, in its sole discretion, that redress to purchasers is wholly or partially impracticable, any funds not so used shall be paid to the United States Treasury. Defendants Tod A. Silvers, Robert R. Silvers, Alice R. Silvers, and Interstate, Inc., shall be notified as to how the funds are disbursed but shall have no right to contest the manner of distribution chosen by the Commission. The Commission in its sole discretion may use a designated agent to administer consumer redress. The Commission and Defendants Tod A. Silvers, Robert R. Silvers, Alice R. Silvers, and Interstate, Inc., acknowledge and agree that this judgment for equitable monetary relief is solely remedial in nature and is not a fine, penalty, punitive assessment, or forfeiture.
IT IS FURTHER ORDERED that within three (3) business days after the date of entry of this Order, Defendants Tod A. Silvers, Adelino Calvo, Jr., Robert R. Silvers, and Alice R. Silvers shall each submit to the Commission truthful sworn statements, in the form shown on Exhibit C of this Order, that shall reaffirm and attest to the truthfulness, accuracy, and complete ness of the respective financial statements signed by them or their authorized representatives on March 14, 1997, in the case of Defendant Tod A. Silvers, on June 11, 1996, in the case of Defendant Adelino Calvo, Jr., and on April 4, 1997, in the case of Defendants Robert R. Silvers and Alice R. Silvers. The Commission's agreement to this Order is expressly premised upon the financial condition of Defendants as represented in the respective financial statements referenced above, which contain material information upon which the Commission relied in negotiating and agreeing upon this Order. If, upon motion by the Commission, this Court finds that the Individual Defendants failed to file the sworn statements required by this section, or filed state ments that failed to disclose any material asset, or materially misrepresented the value of any asset, or made any other material misrepresentation in or omission from their financial state ments, the Commission may request that the judgment herein be reopened for the purpose of requiring additional monetary consumer redress in an amount approximately equivalent to any resulting understatement of assets, overstatement of liabilities, or understatement of net worth, provided that the total monetary consumer redress ordered against all defendants herein shall not exceed the total amount of the gross receipts (less refunds issued) arising from the activities described in the Amended Complaint, the total of which are agreed to be $5,700,000, or obtaining other equitable relief; provided, however, that in all other respects this judgment shall remain in full force and effect; and provided further, that proceedings instituted under this section are in addition to and not in lieu of any other civil or criminal remedies as may be provided by law, including, but not limited to, contempt proceedings, or any other proceedings the Commission may initiate to enforce this Order.
Each party to this Order hereby agrees to bear its own costs and attorney fees incurred in connection with this action; provided, however, in the event that the Commission initiates proceedings to enforce the provisions of this Order and provided, further the Court determines that Defendants have violated any term or provisions of this Order, the Court may order Defendants to pay the costs and attorney fees incurred by the United States in connection with proceedings to enforce this Order.
Notwithstanding any other provision of this Order, Defendants Tod A. Silvers, Adelino Calvo, Jr., Robert R. Silvers, and Alice R. Silvers agree that, if they fail to meet the payment obligations set forth in paragraph II or that may be imposed pursuant to this paragraph, the court may order such delinquent Defendant to pay the costs and attorneys fees incurred by the Commission and its agents in any attempts to collect amounts due pursuant to this Order.
IT IS FURTHER ORDERED that, in order to facilitate the Commission's monitoring of compliance with the provisions of this permanent injunction, Defendants shall, for five (5) years after the date of entry of this Order:
A. Notify the FTC in writing, within thirty (30) days after service of this Order, of current residences, addresses, and employment statuses, including the name and business addresses of their current employers, if any;
B. Notify the FTC in writing within thirty (30) days of any change in their residential addresses or telephone numbers and provide such new addresses and numbers;
C. Notify the FTC in writing within thirty (30) days of any change in employment status; such notice shall include the names, addresses, and telephone numbers of their new employers, a statement of the nature of the businesses of their employ ers, and statements of duties and responsibilities in connection with the business;
D. Notify the FTC in writing at least thirty (30) days prior to the effective date of any proposed change in the structure of any business entity owned or controlled by either of them, such as creation, incorporation, dissolution, assignment, sale, creation or dissolution of subsidiaries, or any other changes that may affect compliance obligations arising out of this Order;
E. Upon reasonable written notice from the FTC, permit duly authorized representatives of the FTC access during normal business hours to the offices of any company under the control of either of them, wherever located, to inspect and to copy all documents belonging to either of them and all documents of any company owned or controlled by either of them in whole or in part, relating in any way to any conduct subject to this Order;
F. Refrain from interfering with duly authorized representatives of the FTC who wish to interview upon reasonable written notice, the employers, agents, and employees of Defendants (who may have counsel present) relating in any way to any conduct subject to this Order;
G. Upon thirty (30) days written notice by any duly authorized representative of the FTC, submit written reports (under oath, if requested) and produce documents with respect to any conduct subject to this Order;
H. Appear on fifteen (15) days notice for deposition with respect to any conduct subject to this Order;
I. Within ten (10) days of the entry of this decree, provide to all current employees who are engaged in the selling or are offering to sell advance fee credit services a copy of this Order and secure from each such employee a signed, dated statement, in writing, acknowledging receipt of such copy, which statement shall be maintained and made available to the Commission for inspection and copying upon request; and
J. Within ten (10) days of their first day of employment, deliver to all future employees who are engaged in selling or are offering to sell advance fee credit services a copy of this Order and secure from each such employee a signed, dated statement, in writing, acknowledging receipt of such copy, which statement shall be maintained and made available to the Commission for inspection and copying upon request.
K. Within ten (10) days of their first day of employment, deliver to all employers who are engaged in selling or are offering to sell advance fee credit services a copy of this Order and maintain records of such deliveries, which statement shall be maintained and made available to the Commission for inspection and copying upon request.
Provided further, that the FTC may otherwise monitor Defendants compliance with this Order by all lawful means available, including but not limited to the use of investigators posing as consumers, potential investors, suppliers and other entities.
Defendants Tod A. Silvers, Adelino Calvo, Jr., Robert R. Silvers, and Alice R. Silvers agree to cooperate fully with the Commission and its agents in all attempts to collect amounts due pursuant to this Order. Should either of them fail to pay fully and under the terms specified in paragraph II, they agree to provide the Commission with their federal and state tax returns for the preceding two years, and with full financial disclosure, in the form attached as Exhibit C hereto within ten (10) business days of receiving a request from the Commission to do so. Defendants Tod A. Silvers, Adelino Calvo, Jr., Robert R. Silvers, and Alice R. Silvers further authorize the Commission to verify all information provided on the financial disclosure form with all appropriate third parties, including but not limited to financial institutions.
IT IS FURTHER ORDERED that Defendants Interstate, Inc. and Tod A. Silvers, for five (5) years after the last date of dissemination of any representation covered by this Order, maintain and upon request make available to the Commission for inspection and copying:
A. All advertisements and promotional materials containing the representations;
B. All materials that were relied upon in disseminating the representation;
C. All tests, reports, studies, surveys, demonstrations, or other evidence in their possession or control that contradict, qualify, or call into question the representation, or the basis relied upon for the representation, including complaints and other communications with consumers or with governmental or consumer protection organizations;
D. All lists of purchasers of advance fee credit services.
IT IS FURTHER ORDERED that all notices required of the FTC and Defendants Tod A. Silvers and Adelino Calvo, Jr., by this Order shall be made to the following addresses:
A. To Plaintiff Federal Trade Commission:
B. To Defendant Tod A. Silvers:
C. To Defendant Adelino Calvo, Jr.,
D. To Defendants Robert R. Silvers and Alice R. Silvers,
E. To Defendant Interstate, Inc.:
In the case of notices provided to any Defendant, a copy of said notice shall be sent to:
IT IS FURTHER ORDERED that the Defendants shall be permitted to make such transfers as are necessary to comply with Section II of this Order and upon such compliance, the Preliminary Injunction with Asset Freeze entered on November 7, 1996, as subsequently modified, shall thereupon be deemed dissolved as to that party.
IT IS FURTHER ORDERED that, within sixty (60) days after the date of entry of this Order, Defendants shall file a report with the Commission setting forth the manner and form in which they have complied with this Order.
IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for all purposes.
The parties agree and stipulate to entry of the foregoing Order as a Final Judgment in this action.
Dated:__________ FEDERAL TRADE COMMISSION
Attorney for Defendants
Dated:__________ ROBERT R. SILVERS, INDIVIDUALLY
Dated:__________ ALICE R. SILVERS, INDIVIDUALLY
Dated: _________ DANNING, GILL, DIAMOND AND KOLLITZ
IT IS SO ORDERED, this _____ day of _____________, 1997.