UNITED STATES DISTRICT COURT
FEDERAL TRADE COMMISSION,
RAYMOND URSO, et al
Plaintiff, Case No. 97-2680
Stipulated Final Judgment and Order for Permanent Injunction as to Defendants Bernard Koenig, Marcia Koenig, and Maria K Associates, Inc.
On August 19, 1997, plaintiff, the Federal Trade Commission ("FTC" or "Commission"), filed its complaint for a permanent injunction and other relief in this matter, pursuant to Sections 13(b) and 19(a) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b(a), charging Bernard Koenig, Marcia Koenig, and Maria K Associates, Inc. ("Stipulating Defendants") with violations of (1) Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and (2) the FTCs Trade Regulation Rule entitled "Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures" ("Franchise Rule"), 16 C.F.R. Part 436. On August 19, 1997, this Court issued an ex parte Temporary Restraining Order pursuant to Rule 65 of the Federal Rules of Civil Procedure, Fed. R. Civ. P. 65, that, inter alia, froze the Stipulating Defendants' assets and appointed Thomas Schultz, Esq., as the receiver for corporate defendant Maria K Associates, Inc. ("Maria K"). On September 15, this Court entered a stipulated preliminary injunction against the Stipulating Defendants.
The Commission, by and through its counsel, and the Stipulating Defendants, by and through their counsel, have agreed and stipulated to the entry of this Stipulated Final Judgment and Order for Permanent Injunction ("Final Order") by this Court. Therefore, the Stipulating Defendants and the Commission having requested the Court to enter this Final Order, the Court makes the following findings of fact and orders the following:
For purposes of this Final Order, the following definitions shall apply:
IT IS THEREFORE ORDERED that the Stipulating Defendants, in connection with telemarketing, are hereby permanently restrained and enjoined from making, expressly or by implication, orally or in writing, any false or misleading statement or representation of material fact to any person.
IT IS FURTHER ORDERED that the Stipulating Defendants are hereby permanently restrained and enjoined from engaging, participating or assisting in any manner or in any capacity whatsoever in the promoting, marketing, offering for sale, or selling of any business opportunities, franchises, or business ventures, whether directly, indirectly, in concert with others, or through any intermediary, business entity, or device.
IT IS FURTHER ORDERED that, in connection with the promotion, marketing, offering for sale, or sale of any goods or services, the Stipulating Defendants are hereby permanently restrained and enjoined from making, or assisting others in making, either orally or in writing, expressly or by implication, any false or misleading statements or representations of material fact to any person, including but not limited to representations about the following:
IT IS FURTHER ORDERED that the Stipulating Defendants are further permanently restrained and enjoined from operating corporate defendants Bridgeport & Associates, Inc. (Bridgeport), Prestige Advertising, Inc. dba Prestige Fragrances (Prestige), Maria K Associates, Inc. (Maria K), and the National Bureau of Better Business, Inc. (NBBB). The Stipulating Defendants are further permanently restrained and enjoined from engaging in any business activities, except with each other, with any other individual named as a defendant in the Commission's action, which includes Raymond Urso, Jeffrey Shoobs, Scott Gunn, David Bennett, and Susan Perkins, as well as any former or current individuals employed by these defendants, including but not limited to Ed Jacobs, Mike Barth, Mike Noble, and Giovanni Mastromonaco.
IT IS FURTHER ORDERED that, for a period of seven (7) years from the date of entry of this Order, Stipulating Defendants Bernard and Marcia Koenig shall, as to any telemarketing activity:
IT IS FURTHER ORDERED that the Stipulating Defendants are further 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 of the defendants, at any time prior to the entry of this Final Order, in connection with the selling of display-rack business opportunities. Provided, however, that the Stipulating Defendants may disclose such identifying information to a law enforcement agency or as required by any law, regulation, or court order.
IT IS FURTHER ORDERED that Thomas Schultz, Esq., shall continue as receiver, with the full power of an equity receiver, for Stipulating Defendant Maria K and its affiliates and subsidiaries (hereinafter referred to as "the receivership defendant"), and of all the funds, properties, premises, accounts and other assets directly or indirectly owned, beneficially or otherwise, by the receivership defendant, with directions and authority to accomplish the following:
IT IS FURTHER ORDERED that, except by leave of this Court, during the pendency of the receivership ordered herein, the Stipulating Defendants and all customers, principals, investors, creditors, stockholders, lessors, and other persons seeking to establish or enforce any claim, right or interest against or on behalf of the receivership defendant, or any of its subsidiaries or affiliates, and all others acting for or on behalf of such persons, including attorneys, trustees, agents, sheriffs, constables, marshals, and other officers and their deputies, and their respective attorneys, servants, agents and employees be and are hereby stayed from:
IT IS FURTHER ORDERED that, in light of the appointment of a receiver herein, the Stipulating Defendants or the creditors of the receivership defendant are hereby prohibited from filing a petition for relief under the United States Bankruptcy Code, 11 U.S.C. § 101 et seq., as to the receivership defendant without prior permission from this Court.
IT IS FURTHER ORDERED that the receiver and all personnel hired by the receiver are entitled to reasonable compensation for the performance of duties pursuant to this Final Order and for the cost of actual out-of-pocket expenses incurred by them, from the assets now held by or in the possession or control of or which may be received by the receivership defendant. The receiver shall not increase the hourly rates used as the bases for such fee applications without prior approval of the Court.
IT IS FURTHER ORDERED that the Judgment in the amount of one million dollars ($1,000,000) is entered jointly and severally against the Stipulating Defendants and their heirs, assigns, and beneficiaries; provided, however, that upon payment by Stipulating Defendants Bernard Koenig and Marcia Koenig of $29,218 (Twenty-Nine Thousand Two-Hundred Eighteen), the Commission will consider this Judgment satisfied as to Bernard Koenig and Marcia Koenig only; provided further that all funds contained in any accounts of Stipulating Defendant Maria K shall be turned over to the receiver; provided further that this Judgment shall be subject to the reopening conditions set forth in Paragraph XII.
Payment made by the Stipulating Defendants pursuant to this Paragraph shall be used to provide consumer redress and/or disgorgement and for paying any attendant expenses of administering the receivership estate or distribution of funds. If the Commission determines, in its sole discretion, that consumer redress is wholly or partially impracticable, any funds not so used shall be deposited into the United States Treasury. No portion of the payment as herein provided shall be deemed a payment of any fine, penalty, forfeiture, or punitive assessment.
IT IS FURTHER ORDERED that the Court's approval of the Judgment against the Stipulating Defendants contained in Paragraph XI is expressly premised upon the truthfulness, accuracy, and completeness of the financial statements which have been submitted to the Commission. If, upon motion by the Commission, this Court finds that the Stipulating Defendants' financial statement either failed to disclose any material asset or source of income or materially misrepresented the value of any asset or source of income, or contained any other material misrepresentation or omission, the entire amount of the Judgment set forth in Paragraph XI ($1,000,000) will be rendered immediately due and payable by the Stipulating Defendants.
Provided, however, that in all other respects this Final Order shall remain in full force and effect unless otherwise ordered by this Court; and provided further, that 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 Commission and/or the receiver may initiate to enforce this Final Order. Solely for the purposes of reopening or enforcing this Final Order under this Paragraph, the Stipulating Defendants waive any right to contest any of the allegations in the Complaint filed in this matter.
IT IS FURTHER ORDERED that, in order to facilitate the Commission's monitoring of compliance with the provisions of this Final Order, Stipulating Defendants Bernard Koenig and Marcia Koenig shall, for seven (7) years after the date of entry of this Final Order:
Provided, that the Commission may otherwise monitor Stipulating Defendants Bernard Koenig's and Marcia Koenig's compliance with this Final Order by all lawful means available, including the taking of depositions, the issuance of subpoenas or other requests for production of documents, and the use of investigators posing as consumers or suppliers.
IT IS FURTHER ORDERED that Stipulating Defendants Bernard Koenig and Marcia Koenig shall, within sixty (60) days after entry of this Final Order, file with the Commission a preliminary report and on the one hundred-fiftieth (150th) day following entry of this Final Order file a supplemental report, in writing, setting forth in detail the manner and form in which he or she has complied with this Final Order.
IT IS FURTHER ORDERED that all notices required of Stipulating Defendants Bernard Koenig and Marcia Koenig by this Final Order shall be made to the following address:
IT IS FURTHER ORDERED that each party to this Final Order shall bear its own costs and attorney fees incurred in connection with this action; provided, however, in the event the Commission initiates proceedings to enforce the provisions of this Final Order and provided further the Court determines that some or all of the Stipulating Defendants have violated any term or provision of this Final Order, the Stipulating Defendants determined to have violated this Final Order shall pay the costs and attorney fees incurred by the Commission in connection with proceedings to enforce this Final Order.
IT IS FURTHER ORDERED that, notwithstanding any other provision of this Final Order, Stipulating Defendants Bernard Koenig and Marcia Koenig agree that if he or she fails to meet the payment obligations set forth in Paragraph XI, he or she shall pay the costs and attorney fees incurred by the Commission and its agents in any attempts to collect amounts due pursuant to this Final Order. Stipulating Defendants Bernard Koenig and Marcia Koenig further agree that the facts as alleged in the Complaint shall be taken as true in any subsequent litigation filed by the Commission to enforce its rights pursuant to this Final Order, including but not limited to a nondischargeability complaint in any subsequent bankruptcy proceeding.
IT IS FURTHER ORDERED that, within five (5) business days after receipt by the Stipulating Defendants of this Final Order as entered by the Court, Stipulating Defendants Bernard Koenig and Marcia Koenig shall submit to the Commission a truthful sworn statement that shall acknowledge receipt of this Final Order.
IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for the purpose of enabling any of the parties to this Final 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 Final Order, for the enforcement of compliance therewith or the punishment of violations thereof.
SO ORDERED, this _____day of _________, 1998, at __________.m.
REVIEWED, STIPULATED AND AGREED TO BY: