Stipulated Final Judgment and Order for Permanent Injunction as to Defendants Raymond Urso and Bridgeport Associates, Inc.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

FEDERAL TRADE COMMISSION,

Plaintiff,

RAYMOND URSO, et al

Defendants.

Case No. 97-2680
CIV-Ungaro-Benages
Magistrate Judge Bandstra

Stipulated Final Judgment and Order for Permanent Injunction as to Defendants Raymond Urso and Bridgeport 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 Raymond Urso and Bridgeport & Associates, Inc. ("Stipulating Defendants") with violations of (1) Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and (2) the FTC’s 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 Bridgeport & Associates, Inc. ("Bridgeport"). 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:

FINDINGS

This Court has jurisdiction over the subject matter of this case and of the parties hereto;
The Commission's complaint states a claim upon which relief may be granted against the Stipulating Defendants under Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the Franchise Rule, 16 C.F.R. Part 436;
The Stipulating Defendants waive any claim they may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action;
The Stipulating Defendants have waived all rights to seek appellate review or otherwise challenge or contest the validity of this Final Order;
The Stipulating Defendants do not admit the allegations set forth in the Commission’s complaint; and
Entry of this Final Order is in the public interest.

DEFINITIONS

For purposes of this Final Order, the following definitions shall apply:

"Stipulating Defendants" means Raymond Urso and Bridgeport & Associates, Inc., and each of them and their affiliated entities, officers, agents, servants, employees, and those persons in active concert or participation with them who receive actual notice of this Final Order by personal service or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device.
"Defendants" means the individuals and corporate entities named in connection with FTC v. Raymond Urso et al., CIV 97-2780, (S.D. Fla. 1997). These are Raymond Urso, Bernard Koenig, Marcia Koenig, Jeffrey Shoobs, David Bennett, Scott Gunn, Susan Perkins, Bridgeport & Associates, Inc., Prestige Advertising, Inc. dba Prestige Fragrances, Inc., National Bureau of Better Business, Inc., and Maria K Associates, Inc.
"Business opportunity" or "Business venture" means any written or oral business arrangement, however denominated, whether or not covered by the Franchise Rule, which consists of the payment of any consideration for: a) the right or means to offer, sell, or distribute goods or services (whether or not identified by a trademark, service mark, trade name, advertising, or other commercial symbol); and b) assistance to any person in connection with or incident to the establishment, maintenance, or operation of a new business or the entry by an existing business into a new line or type of business.
“Franchise,” "Franchisee," and "Franchisor" are defined as in Section 436.2(a) of the Franchise Rule, 16 C.F.R. § 436.2(a), a copy of which is attached to this Final Order.
"Assets" means all real and personal property of any Stipulating Defendant, or held for the benefit of any Stipulating Defendant, including but not limited to "goods," "instruments," "equipment," "fixtures," "general intangibles," "inventory," "checks," or "notes," (as these terms are defined in the Uniform Commercial Code), and all cash, wherever located.
"Telemarketing" is defined in Section 310.2(u) of the Telemarketing Sales Rule, 16 C.F.R. § 310.2(u), a copy of which is attached to this Final Order.

ORDER

CONDUCT PROHIBITIONS

IT IS THEREFORE 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 business of telemarketing, whether directly, indirectly, in concert with others, or through any intermediary, business entity, or device, without first obtaining a performance bond. The principal sum of said bond shall be in the amount of two million dollars ($2,000,000).

A. The performance bond shall be an insurance agreement pledging surety for financial loss issued by a surety company that is admitted to do business in each state in which any bonded defendant does business and that holds a Federal Certificate of Authority As Acceptable Surety On Federal Bond and Reinsuring.

B. The performance bond shall cite this Final Order 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 Federal Trade Commission Act, 15 U.S.C. § 45 or to the provisions of this Final Order. Such performance bond shall be executed in favor of both (1) the Federal Trade Commission for the benefit of any person injured as a result of any false or misleading representation of material fact made by the defendant while engaged in the business of telemarketing, and (2) any consumer so injured;

C. The bond shall be deemed continuous and remain in full force and effect as long as the Stipulating Defendants continue to engage or participate in telemarketing and for at least three years after the Stipulating Defendants have ceased to engage or participate in telemarketing;

D. 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;

E. Stipulating Defendant Raymond Urso shall provide a copy of the bond required by this paragraph to the Associate Director for Marketing Practices at the address specified in Paragraph XVI, at least ten days before commencing the business of telemarketing;

F. The Commission may execute against the performance bond, to the extent provided in Paragraph I,B, above, if it demonstrates to this Court, by a preponderance of the evidence, that after the effective date of this Final Order, the bonded Stipulating Defendants, while engaging or participating in the business of telemarketing, made any false or misleading representation of material fact, expressly or by implication, prohibited by Section 5 of the FTC Act or the provisions of this Final Order.

Provided further that, as set forth in Paragraph III, in no event shall the Stipulating Defendants engage in, participate in or assist in any manner or in any capacity whatsoever in the telemarketing of any business opportunities, franchises, or business ventures, whether directly, indirectly, in concert with others, or through any intermediary, business entity, or device.

II.

IT IS FURTHER ORDERED that the Stipulating Defendants, in connection with telemarketing, are hereby permanently enjoined from making, expressly or by implication, orally or in writing, any false or misleading statement or representation of material fact to any person.

III.

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.

IV.

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:

A. The income, profits, or sales volume a purchaser can achieve through the use of the goods or services;

B. The income, profits, or sales volume achieved by other consumers who have used the goods or services;

C. The cost of the goods or services or the cost to use the goods or services;

D. The length of time that it may or will take to recoup the cost of the goods or services;

E. The Stipulating Defendants' true identities in the course of their business dealings or in publicly filed documents, including but not limited to the use of any fictitious, false, or assumed title or name, other than their own proper names; however, this prohibition does not apply to trade names or "doing business as"/"dba" names.

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 with any other individual named as a defendant in the Commission's action, which includes Bernard Koenig, Marcia Koenig, 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.

VI.

IT IS FURTHER ORDERED that, for a period of seven (7) years from the date of entry of this Final Order, Stipulating Defendant Raymond Urso shall:

A. As to any telemarketing activity, provide a copy of this Final Order to, and obtain a signed and dated acknowledgment of receipt of the same from each officer, director, managing agent, employee, or independent contractor of any Stipulating Defendant, as well as any officer or director in any company or other business entity formed by any Stipulating Defendant, and any officer or director in any company or other business entity in which Raymond Urso is also an officer, director or principal operator; and

B. As to any telemarketing activity, maintain, and upon reasonable notice make available to representatives of the Commission, the original and dated acknowledgments of the receipts of copies of this Final Order required by Paragraph VI.A above.

VII.

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.

RECEIVERSHIP

VIII.

IT IS FURTHER ORDERED that Thomas Schultz, Esq., shall continue as receiver, with the full power of an equity receiver, for Stipulating Defendant Bridgeport 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:

A. Assume full control of the receivership defendant by removing defendants Urso, Bernard Koenig, Marcia Koenig, Jeffrey Shoobs, Scott Gunn and any other officer, independent contractor, employee, or agent of the receivership defendant, from control and management of the affairs of the receivership defendant;

B. Collect, marshal, and take custody, control and possession of all the funds, property (real or personal), accounts, mail and other assets of, or in the possession or under the control of, the receivership defendant, wherever situated. The receiver shall also assume control over the income and profits therefrom, and all sums of money now or hereafter due or owing to the receivership defendants, with full power to collect, receive and take possession of all books, business and financial records, monies on hand in banks and other financial institutions, and all other papers and documents of the receivership defendants, wherever situated;

C. Perform all acts that the receiver deems necessary to conserve, hold, manage, and preserve the value of the assets of the receivership estate, including, but not limited to, suspending business operations, terminating contracts and leases, and liquidating other non-cash assets;

D. Enter into such agreements in connection with administration of the receivership, including, but not limited to: (1) retaining investigators, attorneys or accountants of the receiver's choice, including, without limitation, members and employees of the receiver's firm, to assist, advise, and represent the receiver; and (2) moving and storing of equipment, furniture, records, files or other physical property of the receivership defendant;

E. Institute, defend, prosecute, compromise, adjust, intervene in or become party to such actions or proceedings in state, federal or foreign courts that the receiver deems necessary and advisable to preserve the value of the properties of the receivership defendant or that the receiver deems necessary and advisable to carry out the receiver's mandate under this Order.

IX.

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:

A. Commencing, prosecuting, continuing or enforcing any suit or proceeding against the receivership defendant, or any of its subsidiaries or affiliates, except that such actions may be filed to toll any applicable statute of limitations;

B. Commencing, prosecuting, continuing or entering any suit or proceeding in the name or on behalf of the receivership defendant, or any of its subsidiaries or affiliates;

C. Accelerating the due date of any obligation or claimed obligation, enforcing any lien upon, or taking or attempting to take possession of, or retaining possession of, a property of the receivership defendant, or any of its subsidiaries or affiliates or any property claimed by any of it or attempting to foreclose, forfeit, alter or terminate any of the receivership defendant’s interests in property, including, without limitation, the establishment, granting, or perfection of any security interest, whether such acts are part of a judicial proceeding or otherwise;

D. Using self-help or executing or issuing, or causing the execution or issuance of any court attachment, subpoena, replevin, execution or other process for the purpose of impounding or taking possession of or interfering with, or creating or enforcing a lien upon any property, wheresoever located, owned by or in the possession of the receivership defendant, or any of its subsidiaries or affiliates, or the receiver appointed pursuant to this Final Order or any agent appointed by said receiver; and

E. Doing any act or thing whatsoever to interfere with the receiver taking control, possession or management of the property subject to this receivership, or to in any way interfere with the receiver, or to harass or interfere with the duties of the receiver; or to interfere in any manner with the exclusive jurisdiction of this Court over the property and assets of the receivership defendant, or its subsidiaries or affiliates.

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.

XI.

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.

JUDGMENT

XII.

IT IS FURTHER ORDERED that the Judgment in the amount of two million dollars ($2,000,000) is entered jointly and severally against the Stipulating Defendants and Stipulating Defendant Raymond Urso’s estate, in the event of his death; provided, however, that upon payment by Stipulating Defendant Raymond Urso of thirty thousand dollars ($30,000), the Commission will consider this Judgment satisfied as to Raymond Urso only; provided further that all funds contained in any accounts of Stipulating Defendant Bridgeport shall be turned over to the receiver; provided further that this Judgment shall be subject to the reopening conditions set forth in Paragraph XIII.

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.

XIII.

IT IS FURTHER ORDERED that the Court's approval of the Judgment against the Stipulating Defendants contained in Paragraph XII 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 statements 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 XII ($2,000,000) 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.

RECORD KEEPING

XIV.

IT IS FURTHER ORDERED that, in order to facilitate the Commission's monitoring of compliance with the provisions of this Final Order, Stipulating Defendant Raymond Urso shall, for five (5) years after the date of entry of this Final Order:

A. Notify the Commission in writing, within thirty days after entry of this Final Order and each and every year thereafter, of his current residence address and employment status, including the name and business address of his current employer(s), if any;

B. Notify the Commission in writing within thirty days of any change in his residential address(es). Such notification shall include his new address(es) and telephone number(s);

C. Notify the Commission in writing within thirty days of any change in his employment status. Such notice shall include the name(s), address(es), and telephone number(s) of his new employer(s), a statement of the nature of the business(es), and a statement of his duties and responsibilities in connection with the business(es);

D. Notify the Commission in writing contemporaneously with the effective date of any proposed change in the structure of any business entity owned or controlled by him, such as creation, incorporation, dissolution, assignment, sale or creation of subsidiaries, or any other changes that may affect compliance obligations arising out of this Final Order;

E. As to any telemarketing activity, upon request by the Commission, furnish thereto within ten (10) calendar days copies of any and all sales or promotional materials used by any business entity owned or controlled by him, in whole or in part, including but not limited to advertisements, brochures, charts, films, audio or video tapes, sales scripts and training materials, manuals, contract and promissory note forms and related papers. In the event of any material change in the foregoing information or materials within the seven-year period, Stipulating Defendant Raymond Urso shall notify the Commission in writing within ten (10) calendar days of the change; and

F. As to any telemarketing activity, refrain from interfering with duly authorized representatives of the Commission who wish to interview his employers, agents and employees relating in any way to any conduct subject to this Final Order.

Provided, that the Commission may otherwise monitor Stipulating Defendant Raymond Urso'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.

XV.

IT IS FURTHER ORDERED that Stipulating Defendant Raymond Urso 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 has complied with this Final Order.

XVI.

IT IS FURTHER ORDERED that all notices required of Stipulating Defendant Raymond Urso by this Final Order shall be made to the following address:

Associate Director
Division of Marketing Practices
Federal Trade Commission
Room 238
6th Street & Pennsylvania Avenue, N.W.
Washington, D.C. 20580

XVII.

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.

XVIII.

IT IS FURTHER ORDERED that, notwithstanding any other provision of this Final Order, Stipulating Defendant Raymond Urso agrees that if he or she fails to meet the payment obligations set forth in Paragraph XII, he 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 Defendant Raymond Urso further agrees to the nondischargeability of the Judgment as stated in this Final Order and will not oppose any effort by the Commission to have the debt declared nondischargeable in any subsequent bankruptcy proceeding.

XIX.

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 Defendant Raymond Urso shall submit to the Commission a truthful sworn statement that shall acknowledge receipt of this Final Order.

XX.

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.

__________________________________
Ursula Ungaro-Benages
United States District Judge

REVIEWED, STIPULATED AND AGREED TO BY:

_________________________________Dated:______________
Raymond Urso, Defendant

_________________________________Dated:______________
Stephen Goldstein on behalf of Defendants
Raymond Urso
Bridgeport & Associates, Inc.

_________________________________Dated:______________
Richard Quaresima (A5500332)
Mona S. Spivack (A5500333)
Federal Trade Commission