UNITED STATES DISTRICT COURT THE FEDERAL TRADE COMMISSION, Plaintiff, v. STEVE NEIZIANYA, a.k.a. STEPHEN NEZIANYA, a.k.a. STEVE NEZLE, an individual, doing business as STANDARD BUSINESS SERVICES and E.M.C. FINANCIAL SERVICES, Defendant. CIVIL ACTION NO. COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF Plaintiff, the Federal Trade Commission ("FTC" or "Commission") for its Complaint alleges: 1. The Commission brings this action under Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b, and Section 410(b) of the Credit Repair Organizations Act, 15 U.S.C. § 1679h(b), to obtain preliminary and permanent injunctive relief, restitution, rescission, disgorgement and other equitable relief for Defendant's deceptive acts or practices in connection with the sale and offering for sale of credit repair products in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and Section 404(a)(2) of the Credit Repair Organizations Act, 15 U.S.C. § 1679b(a)(2). JURISDICTION AND VENUE 2. This Court has jurisdiction of this matter pursuant to 28 U.S.C. §§ 1331, 1337(a), 1345, and 15 U.S.C. §§ 53(b), 57b, and 1679h(b). 3. Venue in this District is proper under 28 U.S.C. § 1391 and 15 U.S.C. § 53(b). THE PARTIES 4. Plaintiff, the Federal Trade Commission, is an independent agency of the United States Government created by statute. 15 U.S.C. §§ 41 et seq. The Commission is charged, inter alia, with enforcement of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The Commission also enforces the Credit Repair Organizations Act. 15 U.S.C. §§ 1679h(a). The Commission is authorized to initiate federal district court proceedings, by its own attorneys, to enjoin violations of the FTC Act and the Credit Repair Organizations Act in order to secure such equitable relief, including consumer redress, as may be appropriate in each case. 15 U.S.C. §§ 53(b), 57b, and 1679h(b). 5. Defendant Steve Neizianya, also known as Stephen Nezianya, also known as Steve Nezle, is an individual doing business as Standard Business Services and E.M.C. Financial, with his office and principal place of business located at 15505 Wright Brothers Drive, Suites 2 and 16, Addison, Texas. Defendant resides and transacts or has transacted business in this District. At all times material to this complaint, acting alone or in concert with others, he has formulated, directed, controlled or participated in the acts and practices of Standard Business Services and E.M.C. Financial, including the acts and practices set forth in this complaint. COMMERCE 6. At all times relevant to this complaint, defendant has maintained a substantial course of trade in the offering for sale and selling of credit repair products, in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44. DEFENDANT'S BUSINESS PRACTICES 7. Since at least 1997, defendant has advertised, promoted, offered for sale, and sold credit file segregation kits to consumers through the use of the Internet. 8. Defendant has claimed that he can improve consumers' credit histories, credit records, or credit ratings by assisting them in establishing new credit profiles with credit reporting agencies by using an Employer Identification Number ("EIN") or Taxpayer Identification Number ("TIN") in place of their Social Security Number for banking and credit purposes. Defendant has further claimed that use of the EIN and TIN in this manner is legal. 9. Typical and illustrative of defendant's claims about his credit file segregation products include the following:
10. Consumers who respond to defendant's advertisements by paying $29.95, plus $2.45 for shipping and handling, receive a packet of materials that advise consumers on how to obtain an EIN or a TIN from the Internal Revenue Service. Using the new number, the consumer is directed to open a bank account, to obtain a small loan from the bank using the account as collateral, and to use the loan proceeds to repeat the process with another bank. The consumer is told to repeat the process several times, which will result in the consumer obtaining an "AAA" credit rating allowing him or her to obtain various types of credit cards. VIOLATIONS OF THE CREDIT REPAIR ORGANIZATIONS ACT 11. The Credit Repair Organizations Act, 15 U.S.C. §§ 1679a-j (1997), was enacted on September 30, 1996, and has been in full force and effect since April 1, 1997. 12. Section 404(a)(2) of the Credit Repair Organizations Act prohibits all persons from making any statement, or counseling or advising any consumer to make any statement, the intended effect of which is to alter the consumer's identification to prevent the display of the consumer's credit record, history, or rating for the purpose of concealing adverse information that is accurate and non-obsolete to any consumer reporting agency as defined in 15 U.S.C. § 1681(f) or to any person who has extended credit to the consumer or to whom the consumer has applied or is applying for an extension of credit. 15 U.S.C. § 1679b(a)(2). 13. Pursuant to Section 410(b)(1) of the Credit Repair Organizations Act, 15 U.S.C. § 1679h(b)(1), any violation of any requirement or prohibition of the Credit Repair Organizations Act constitutes an unfair and deceptive act or practice in commerce in violation of Section 5(a) of the FTC Act, 15 U.S.C.§ 45(a). COUNT ONE 14. In numerous instances, defendant has counseled or advised consumers to make statements, the intended effect of which has been to alter the consumer's identification to prevent the display of the consumer's credit record, history, or rating for the purpose of concealing adverse information that is accurate and not obsolete to consumer reporting agencies, as that term is defined in 15 U.S.C. § 1681(f), or to persons who have extended credit to those consumers or to whom those consumers have applied or are applying for extensions of credit. 15. Defendant has thereby violated Section 404(a)(2) of the Credit Repair Organizations Act, 15 U.S.C. § 1679b(a)(2). VIOLATIONS OF THE FEDERAL TRADE COMMISSION ACT COUNT TWO 16. In connection with the advertising, marketing, promotion, offering for sale, or sale of credit repair products, to induce consumers to purchase his products defendant has, expressly or by implication, represented that through the use of his products, consumers can legally alter their identifications to conceal adverse credit information from consumers' credit records, credit histories, or credit ratings by obtaining EINs or TINs to use, instead of their Social Security Numbers, for credit purposes. 17. In truth and in fact, through the use of defendant's products, consumers cannot legally alter their identifications to conceal adverse credit information from their credit records, credit histories, or credit ratings by obtaining EINs or TINs to use, instead of their Social Security Numbers, for credit purposes. 18. Therefore, the representation set forth in paragraph 16 is false and misleading and constitutes a deceptive act or practice in or affecting commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). CONSUMER INJURY 19. Consumers throughout the United States have suffered or are likely to suffer substantial monetary loss as a result of defendant's unlawful acts or practices. Absent injunctive relief by this Court, defendant is likely to continue to injure consumers and harm the public interest. THIS COURT'S POWER TO GRANT RELIEF 20. Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, and Section 410(b) of the Credit Repair Organizations Act, 15 U.S.C. § 1679h(b), empower this Court to issue a permanent injunction against defendant's violations of the Credit Repair Organizations Act and the FTC Act and, in the exercise of its equitable jurisdiction, to order such ancillary relief as preliminary injunction, rescission, restitution, disgorgement of profits resulting from defendant's unlawful acts or practices, and other remedial measures. PRAYER FOR RELIEF WHEREFORE, plaintiff requests that this Court, as authorized by Section 410(b) of the Credit Repair Organizations Act, 15 U.S.C. § 1679h(b), Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, and pursuant to its own equitable powers:
Dated:_____________, 1999 Respectfully Submitted, DEBRA A. VALENTINE THOMAS B. CARTER W. DAVID GRIGGS, . Texas Bar No. 08491100 JOHN R. HOAGLAND Federal Trade Commission |