MICHAEL J. BLOOM (MB 7732)
RHONDA J. MCLEAN (RM 9140)
DONALD G. D'AMATO (DD 3008)

Federal Trade Commission
One Bowling Green, Suite 318
New York, New York 10004
(212) 607-2829

Attorneys for Plaintiff

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

FEDERAL TRADE COMMISSION,
Plaintiff,

v.

INTERSTATE RESOURCE CORP., a New York Corporation, JAMES LUDLOW, and JOHN O'BRIEN,
Defendants.

Civil No.

STIPULATED FINAL JUDGMENT AND ORDER

Plaintiff, Federal Trade Commission ("Commission"), has filed a Complaint for a permanent injunction and other equitable relief pursuant to Sections 5(a) and 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 45(a) and 53(b), and Section 108(c) of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1607(c), alleging that defendants Interstate Resource Corp., James Ludlow, and John O'Brien ("defendants") have violated TILA, 15 U.S.C. §§ 1601-1666j, as amended, including, but not limited to, the Home Ownership and Equity Protection Act of 1994 ("HOEPA"), as amended, TILA's implementing Regulation Z, 12 C.F.R. 226, as amended, and/or Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), as amended.

Plaintiff and defendants, by and through their respective counsel, have agreed to entry of this Stipulated Final Judgment and Order ("Order") by this Court, without trial or adjudication of any issue of fact or law. The said parties having requested the Court to enter this Order, it is therefore ORDERED, ADJUDGED, AND DECREED as follows:

FINDINGS

1. This Court has jurisdiction over defendants and the subject matter of this action. Venue in the Southern District of New York is proper.

2. The Complaint states a claim upon which relief may be granted under Sections 101 to 171 of TILA, 15 U.S.C. §§ 1601-1666j, and Sections 5(a) and 13(b) of the FTC Act, 15 U.S.C. §§ 45(a) and 53(b).

3. The Commission has the authority under Sections 5(a) and 13(b) of the FTC Act, 15 U.S.C. §§ 45(a) and 53(b), and Section 108(c) of TILA, 15 U.S.C. § 1607(c), to seek the relief it has requested.

4. The activities of defendants are in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44.

5. Defendants, while neither admitting nor denying any of the allegations of wrongdoing set forth in the Complaint, stipulate and agree to entry of this Order.

6. Plaintiff and defendants waive all rights to seek judicial review or otherwise challenge or contest the validity of this Order, and defendants waive any right that may arise under the Equal Access to Justice Act, 28 U.S.C. § 2412.

7. Entry of this Order is in the public interest.

DEFINITIONS

As used in this Order:

A. The terms "annual percentage rate," "consumer," "consumer credit," "consummation," "credit," "creditor," "dwelling," "finance charge," "mortgage," "open-end credit," "person," "points and fees," "residential mortgage transaction," and "reverse mortgage transaction" are defined as set forth in Sections 103 and 128 of TILA, 15 U.S.C. §§ 1602 and 1638, and Sections 226.2, 226.4, 226.18, 226.22, 226.32, and 226.33 of Regulation Z, 12 C.F.R. §§ 226.2, 226.4, 226.18, 226.22, 226.32, and 226.33.

 

B. The term "HOEPA" means the Home Ownership and Equity Protection Act of 1994 which, inter alia, amended TILA by adding Section 129 of TILA, 15 U.S.C. § 1639, and is implemented by, inter alia, Sections 226.31 and 226.32 of Regulation Z, 12 C.F.R. §§ 226.31 and 226.32.

 

C. The term "HOEPA mortgage loan" means a consumer credit transaction consummated on or after October 1, 1995, that is secured by the consumer's principal dwelling, other than a residential mortgage transaction, a reverse mortgage transaction or an open-end credit plan, in which: (1) the annual percentage rate at consummation of the transaction will exceed by more than 10 percentage points the yield on Treasury securities having comparable periods of maturity to the loan maturity as of the 15th day of the month immediately preceding the month in which the application for the extension of credit is received by the creditor; or (2) the total points and fees payable by the consumer at or before loan closing will exceed the greater of 8% of the total loan amount or $400 (adjusted annually by the Board of Governors of the Federal Reserve System ("FRB") on January 1 by the annual percentage change in the Consumer Price Index that was reported on June 1 of the preceding year), which is covered by HOEPA, pursuant to Section 129 of TILA, 15 U.S.C. § 1639, and Section 226.32 of Regulation Z, 12 C.F.R. § 226.32. As used herein, the "total loan amount" is calculated as described in Section 226.32(a)(1)(ii)-1 of the FRB Official Staff Commentary on Regulation Z, 12 C.F.R. §  226.32(a)(1)(ii)-1, Supp. 1.

D. The term "Regulation Z" means the regulation the FRB promulgated to implement TILA and HOEPA, 12 C.F.R. 226, as amended. The term also includes the FRB Official Staff Commentary on Regulation Z, 12 C.F.R. 226, Supp. 1, as amended.

 

E. The term "TILA" means the Truth in Lending Act, 15 U.S.C. §§ 1601-1666j, as amended.

ORDER

I. Injunction Against HOEPA and Related FTC Act Violations

IT IS THEREFORE ORDERED that defendants, and each of them, their successors, assigns, officers, agents, servants, employees, and all other persons or entities in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any business, entity, corporation, subsidiary, division or other device, in connection with offering or making any HOEPA mortgage loan, are permanently restrained and enjoined from:

A. Failing to disclose, or accurately disclose, the regular payment amount, as required by Section 129(a)(2) of TILA, 15 U.S.C. § 1639(a)(2), and Section 226.32(c)(3) of Regulation Z, 12 C.F.R. § 226.32(c)(3), and Section 5(a) of the FTC Act, 15 U.S.C. § 45(a);

 

B. Failing to make the disclosure described in Section I.A. of this Order or any other notice or disclosure required by Section 129(a) of TILA, 15 U.S.C. § 1639(a), and Section 226.32(c) of Regulation Z, 12 C.F.R. § 226.32(c), clearly and conspicuously in writing at least three days prior to consummation of a HOEPA mortgage loan transaction, as required by Section 129(b)(1) of TILA, 15 U.S.C. § 1639(b)(1), and Section 226.31(b) and (c)(1) of Regulation Z, 12 C.F.R. §  226.31(b) and (c)(1); and Section 5(a) of the FTC Act, 15 U.S.C. § 45(a);

 

C. Selling or otherwise assigning any HOEPA mortgage loan without furnishing to the purchaser or assignee the notice required by Section 131(d)(4) of TILA, 15 U.S.C. § 1641(d)(4), and Section 226.32(e)(3) of Regulation Z, 12 C.F.R. § 226.32(e)(3); and

 

D. Failing to comply with any other provision of HOEPA, TILA, or Regulation Z.

II. Injunction Against FTC Act Violations

IT IS FURTHER ORDERED that defendants, and each of them, their successors, assigns, officers, agents, servants, employees, and all other persons or entities in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any business, entity, corporation, subsidiary, division or other device, in connection with advertising, offering, brokering or extending credit, in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44, are permanently restrained and enjoined from misrepresenting in any manner, directly or by implication, any material fact, including but not limited to any credit cost or term, including but not limited to the annual percentage rate or finance charge.

III. Payment of Consumer Redress

IT IS FURTHER ORDERED that defendants, their successors and assigns, jointly and severally, shall pay redress to consumers in the amount of fifty thousand dollars ($50,000). Defendants shall transfer the sum of twenty-five thousand dollars ($25,000) into an escrow account administered by defendants' counsel, Lamb & Barnosky, LLP, ("Escrow Agent ") on the date that defendants execute this Order. Defendants shall transfer the remaining twenty-five thousand dollars ($25,000) into the escrow account administered by the Escrow Agent ninety (90) days after defendants execute this Order. After the later of five (5) days after the entry of this Order or ninety-five (95) days after defendants execute this Order, the Escrow Agent shall transfer electronically the sum of fifty thousand dollars ($50,000) into an escrow account designated by plaintiff. This sum shall be used to provide redress to consumers who obtained HOEPA mortgage loans between November 1996 and the date of entry of this Order, and to pay any attendant expenses of administration. The Commission shall determine, in its sole discretion, which consumers are eligible for redress as well as the amounts to be paid. Defendants shall assist the Commission, and its agents, in locating and producing all records necessary to conduct any redress made under Section III. of this Order.

A. If the Commission determines, in its sole discretion, that redress to consumers is wholly or partially impracticable, any funds not so used shall be deposited into the United States Treasury. Defendants shall be notified as to how funds are disbursed, but shall have no right to contest the manner of distribution chosen by the Commission.

 

B. Notwithstanding any other provision of this Order, defendants agree that if they fail to meet the payment obligations set forth in Section III. of this Order, defendants shall pay the costs and attorneys fees incurred by the Commission and its agents in any attempts to collect amounts due pursuant to this Order. The facts as alleged in the Complaint filed in this action shall be taken as true in any subsequent litigation filed by the Commission to enforce its rights pursuant to Section III. of this Order, including but not limited to a nondischargeability complaint in any subsequent bankruptcy proceeding.

IV. Letter To Assignees

IT IS FURTHER ORDERED that, on or before fourteen (14) days after the date of entry of this Order, defendants, their successors and assigns, for each HOEPA mortgage loan that was sold or assigned to a third party prior to the date of entry of this Order without furnishing to the purchaser or assignee the notice required by Section 131(d)(4) of TILA, 15 U.S.C. § 1641(d)(4), and Section 226.32(e)(3) of Regulation Z, 12 C.F.R. § 226.32(e)(3), shall provide to each such purchaser or assignee a copy of this Order along with a letter identical to the one that appears in Attachment A to this Order. The letter shall clearly and conspicuously disclose the required information, and shall not contain any other information. To the extent defendants have furnished such purchasers or assignees prior to the date of entry of this Order, the notice required by Section 131(d)(4) of TILA, 15 U.S.C. § 1641(d)(4), and Section 226.32(e)(3) of Regulation Z, 12 C.F.R. § 226.32(e)(3), they need not provide such purchasers or assignees a copy of this Order along with a letter identical to the one that appears in Attachment A to this Order.

V. Commission's Authority To Monitor Compliance

IT IS FURTHER ORDERED that the Commission is authorized to monitor defendants' compliance with this Order by all lawful means, including but not limited to the following means:

A. The Commission is authorized, without further leave of the Court, to obtain discovery from any person in the manner provided by Chapter V of the Federal Rules of Civil Procedure, Fed. R. Civ. P. 26 - 37, including the use of compulsory process pursuant to Fed. R. Civ. P. 45, for the purpose of monitoring and investigating defendants' compliance with any provision of this Order;

 

B. The Commission is authorized to use representatives posing as consumers and suppliers to any defendant, defendants' employees, or any other entity managed or controlled in whole or in part by any defendant, without the necessity of identification or prior notice; and

 

C. Nothing in this Order shall limit the Commission's lawful use of compulsory process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49 and 57b-1, to investigate whether any defendant has violated any provision of this Order or Section 5 of the FTC Act, 15 U.S.C. § 45.

VI. Recordkeeping Requirements

IT IS FURTHER ORDERED that, for a period of three (3) years from the date of entry of this Order, defendants, their successors and assigns, in connection with any business where:

(1) any individual defendant is the majority owner of the business or directly or indirectly manages or controls the business, and where

(2) the business is engaged in offering or extending consumer credit are hereby permanently restrained and enjoined from failing to retain for a period of three (3) years following the date of their creation, unless otherwise specified:

A. Each disclosure statement, notice or other document provided by or on behalf of a defendant to any consumer pursuant to any provision of TILA, HOEPA, or Regulation Z, including but not limited to Sections 226.18, 226.23, and 226.32 of Regulation Z, 12 C.F.R. §§ 226.18, 226.23, and 226.32; each waiver received pursuant to Sections 226.23(e) or 226.31(c)(1)(iii) of Regulation Z, 12 C.F.R. §§ 226.23(e) or 226.31(c)(1)(iii); each worksheet or other calculation tool used to produce TILA or HOEPA disclosures, including but not limited to computer programs and software; and all other records necessary to demonstrate defendants' compliance with TILA, HOEPA, and Regulation Z; provided, however, that nothing in Section VI. of this Order shall be construed to supersede or limit defendants' ongoing obligation to retain evidence of compliance with Regulation Z pursuant to Section 226.25(a) of Regulation Z, 12 C.F.R. § 226.25(a) and Section I.D. of this Order;

 

B. Each disclosure statement, notice or other document provided by or on behalf of a defendant to any person pursuant to any provision of the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601-2617, as amended, or its implementing Regulation X, 24 C.F.R. 3500, as amended, including but not limited to all good faith estimates and settlement statements, regardless of whether they are the final versions thereof;

 

C. Each credit application, report from a consumer reporting agency, property appraisal, and other document obtained concerning any applicant or application;

 

D. Each note, contract, security agreement, mortgage, deed of trust, other document signed by the borrower or prepared in connection with the transaction (whether signed or not), and other documents relating to the servicing of an account, the collection of a delinquent or slow account or foreclosure, as well as each rider, amendment or other document that modifies any of the foregoing;

 

E. Each loan register, ledger or other document that lists (chronologically, alphabetically or otherwise) loans made by any defendant, including such information as borrowers' names, loan numbers, loan types, dates of consummation, and/or loan amounts;

 

F. Each written statement concerning a defendant's policies, procedures or practices in connection with extending credit, including but not limited to compliance with TILA, HOEPA, or Regulation Z;

 

G. Each printed advertisement and promotional item relating to credit, including but not limited to newspaper and magazine advertisements, pamphlets, brochures, flyers, mailers, and signs;

 

H. Each audio and video tape used to advertise or promote credit, and a printed transcript for each such audio and video tape;

 

I. In printed form, each advertisement and promotional item relating to credit posted in any Internet news group, on the World Wide Web, on any electronic bulletin board system, in any online interactive conversational space or chat room, in the classified advertising section of any online service, or in any other location accessible by modem communications, including an indication of the online location where the material was posted;

 

J. Each complaint or refund request received in connection with an extension of credit and the response thereto; and

 

K. Each signed statement secured by any defendant pursuant to Section VII. of this Order.

VII. Distribution of Order

IT IS FURTHER ORDERED that, for a period of three (3) years from the date of entry of this Order, defendants, their successors and assigns, shall:

A. Provide a copy of this Order to, and obtain a signed and dated acknowledgment of receipt of same from, each officer or director, each individual serving in a management capacity, all personnel involved in responding to consumer complaints or inquiries, whether designated as employees, consultants, independent contractors or otherwise, immediately upon employing or retaining any such persons, for any business where:

(1) any individual defendant is the majority owner of the business or directly or indirectly manages or controls the business, and where

(2) the business is engaged in offering or extending consumer credit;

B. Provide copies of HOEPA, Sections 226.31 and 226.32 of the Federal Reserve Board Official Staff Commentary on Regulation Z, 12 C.F.R. §§ 226.31 and 226.32, Supp. 1, as amended, and Attachment B to, and obtain a signed and dated acknowledgment of receipt of same from, all sales personnel, whether designated as employees, consultants, independent contractors or otherwise, immediately upon employing or retaining any such persons, for any business where:

(1) any individual defendant is the majority owner of the business or directly or indirectly manages or controls the business, and where

(2) the business is engaged in offering or extending consumer credit;

C. Maintain for a period of three (3) years after creation, and upon reasonable notice, make available to representatives of the Commission, the original signed and dated acknowledgments of receipt of copies of the documents, as required in Sections VII.A. and VII.B. of this Order.

VIII. Compliance Reporting By Defendants

IT IS FURTHER ORDERED that, to assist the Commission in monitoring defendants' compliance with this Order, defendants, their successors and assigns:

A. For a period of three (3) years from the date of entry of this Order, shall notify the Commission of the following:

1. Any changes in defendant's residence, mailing addresses, or telephone numbers, within ten (10) days of the date of such change;

2. Any changes in defendant's employment status (including self-employment) within ten (10) days of the date of such change. Such notice shall include the name and address of each business that defendant is affiliated with or employed by, a statement of the nature of the business, and a statement of defendant's duties and responsibilities in connection with the business or employment; and

3. Any proposed change in the structure of any business entity owned or controlled by any individual defendant, such as creation, incorporation, dissolution, assignment, sale, merger, creation, dissolution of subsidiaries, proposed filing of a bankruptcy petition, or change in the corporate name or address, or any other change that may affect compliance obligations arising out of this Order, thirty (30) days prior to the effective date of any proposed change; provided, however, that, with respect to any such proposed change about which such defendant learns less than thirty (30) days prior to the date such action is to take place, defendant shall notify the Commission as soon as is practicable after learning of such proposed change;

B. One hundred eighty (180) days after the date of entry of this Order, each defendant shall provide a written report to the Commission, sworn to under penalty of perjury, setting forth in detail the manner and form in which such defendant has complied and is complying with this Order. This report shall include but not be limited to:

1. Defendant's then-current residence address, mailing addresses, and telephone numbers;

2. Defendant's then-current employment, business addresses and telephone numbers, a description of the business activities of each employer, and defendant's title and responsibilities for each employer;

3. A copy of each acknowledgment of receipt obtained by defendant pursuant to Section VII. of this Order; and

4. A statement describing the manner in which defendant has complied and is complying with the provisions of Sections I. through VII. of this Order;

C. Upon written request by a representative of the Commission, shall submit additional written reports (under oath, if requested) and produce documents on fifteen (15) days' notice with respect to any conduct subject to this Order;

 

D. For the purposes of Section VIII. of this Order, "employment" includes the performance of services as an employee, consultant, or independent contractor; and "employer" includes any individual or entity for whom any defendant performs services as an employee, consultant, broker, or independent contractor; and

 

E. For purposes of the compliance reporting required by Section VIII. of this Order, the Commission is authorized to communicate directly with any defendant.

IX. Access to Business Premises

IT IS FURTHER ORDERED that, for a period of three (3) years from the date of entry of this Order, for the purpose of further determining compliance with this Order, defendants, their successors and assigns shall permit representatives of the Commission, within five (5) business days of receipt of written notice from the Commission:

A. Access during normal business hours to any office or facility storing documents of any corporate defendant or any business where:

(1) any individual defendant is the majority owner of the business or directly or indirectly manages or controls the business, and where

 

(2) the business is engaged in offering or extending consumer credit.

In providing such access, defendants shall permit representatives of the Commission to inspect and copy all documents relevant to any matter contained in this Order, and shall permit Commission representatives to remove such documents for a period not to exceed five (5) business days so that the documents may be inspected, inventoried, and copied; and

 

B. To interview the officers, directors, and employees, including all personnel involved in responding to consumer complaints or inquiries, and all sales personnel, whether designated as employees, consultants, independent contractors or otherwise, of any business to which Section IX.A. of this Order applies, concerning matters relating to compliance with this Order. The person interviewed may have counsel present. Provided that, upon application of the Commission and for good cause shown, the Court may enter an ex parte order granting immediate access to a defendant's business premises for the purposes of inspecting and copying all documents relevant to any matter contained in this Order.

X. Mailing of Notice

IT IS FURTHER ORDERED that all notices and reports required by this Order shall be made in writing and sent by first class United States mail to Director, Northeast Regional Office, Federal Trade Commission, One Bowling Green, Suite 318, New York, NY 10004.

XI. Continuing Jurisdiction of Court

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for all purposes, including construction, modification, and enforcement of this Order.

XII. Acknowledgment of Receipt of Order by Defendants

IT IS FURTHER ORDERED that, within five (5) business days after receipt by each defendant of this Order as entered by the Court, each defendant shall submit to the Commission a truthful sworn statement, in the forms shown in Attachment C and D to this Order, that shall acknowledge receipt of this Final Order.

JUDGMENT IS THEREFORE ENTERED under the terms and conditions recited above, each party to bear its own costs and attorney fees incurred in connection with this action.

SO ORDERED, this day of , 1999.

_____________________________
UNITED STATES DISTRICT JUDGE

The parties hereby stipulate and agree to the terms and conditions set forth above and consent to entry of this Stipulated Final Judgment and Order.

DATE:

PLAINTIFF:

FEDERAL TRADE COMMISSION

Michael J. Bloom
Director, Northeast Regional Office
Attorney for Plaintiff

Rhonda J. Mclean
Assistant Director, Northeast Regional Office

Attorney for Plaintiff

Donald G. D'Amato
Attorney for Plaintiff
Federal Trade Commission
Northeast Regional Office
One Bowling Green, Suite 318
New York, NY 10004
(212) 607-2829

DEFENDANTS:

INTERSTATE RESOURCE CORP.

By:

James Ludlow, President

JAMES LUDLOW
James Ludlow, Individually

JOHN O'BRIEN
John O'Brien, Individually

Paul L. Lamb
Lamb & Barnosky, LLP
Attorney For Defendants

Howard W. Newman
Of Counsel Lamb & Barnosky, LLP
Attorney For Defendants

Cathleen D. Allen
Lamb & Barnosky, LLP
Attorney For Defendants
534 Broadhollow Road, CS 9034
Melville, New York 11747-9034
(516) 694-2300

ATTACHMENT A

Re: [Consumer(s) and loan number]

Dear :

In connection with the above loan, it appears we failed to furnish you with certain information required by the federal Home Ownership and Equity Protection Act of 1994, which is part of the Truth in Lending Act and took effect October 1, 1995. As a result of an investigation conducted by the Federal Trade Commission, we are now providing the following notice:

Notice: This is a mortgage subject to special rules under the federal Truth in Lending Act. Purchasers or assignees of this mortgage could be liable for all claims and defenses with respect to the mortgage that the borrower could assert against the creditor.

The described liability exists pursuant to Section 131(d) of the Truth in Lending Act, 15 U.S.C. § 1641(d). Please note that if you sell or otherwise assign this mortgage loan, you must give the above notice of potential liability to the purchaser or assignee.

I enclose a copy of the Order entered by the Court on _______________, 1999, to settle charges filed by the Federal Trade Commission in FTC v. Interstate Resource Corp., et al., Civil No. _________________ (U.S. District Court, Southern District of New York), as well as the accompanying Complaint.

The Federal Trade Commission recommends that you review this loan for possible law violations, and that you retain this letter as part of the loan file.

Sincerely,

James Ludlow, President
Interstate Resource Corp.

Enclosures

ATTACHMENT C

DEBRA A. VALENTINE
General Counsel

MICHAEL J. BLOOM (MB 7732)
RHONDA J. MCLEAN (RM 9140)
DONALD G. D'AMATO (DD3008)

Federal Trade Commission
One Bowling Green, Suite 318
New York, New York 10004
(212) 607-2829

Attorneys for Plaintiff

UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK

DECLARATION OF JAMES LUDLOW

Pursuant to 28 U.S.C. § 1746, James Ludlow declares as follows:

1. My name is James Ludlow. My current residence address is __________________________. I am over the age of eighteen. I have personal knowledge of the facts set forth in this Declaration.

2. I am a defendant in FTC v. Interstate Resource Corp, et al., Civil No. _________________ (U.S. District Court, Southern District of New York).

3. On _______________, 1999, I received a copy of the Stipulated Final Judgment and Order, which was signed by the Honorable [name of U.S. District Judge] and entered by the Court on _______________, 1999. A true and correct copy of the Order I received is appended to this Declaration.

I declare under penalty of perjury that the foregoing is true and correct.

Executed on ________________, 1999.

_________________________
JAMES LUDLOW,
individually and as President of Interstate Resource Corp.

ATTACHMENT D

DEBRA A. VALENTINE
General Counsel

MICHAEL J. BLOOM (MB 7732)
RHONDA J. MCLEAN (RM 9140)
DONALD G. D'AMATO (DD3008)

Federal Trade Commission
One Bowling Green, Suite 318
New York, New York 10004
(212) 607-2829

Attorneys for Plaintiff

UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK

DECLARATION OF JOHN O'BRIEN

Pursuant to 28 U.S.C. § 1746, John O'Brien declares as follows:

1. My name is John O'Brien. My current residence address is __________________________. I am over the age of eighteen. I have personal knowledge of the facts set forth in this Declaration.

2. I am a defendant in FTC v. Interstate Resource Corp, et al., Civil No. _________________ (U.S. District Court, Southern District of New York).

3. On _______________, 1999, I received a copy of the Stipulated Final Judgment and Order, which was signed by the Honorable [name of U.S. District Judge] and entered by the Court on _______________, 1999. A true and correct copy of the Order I received is appended to this Declaration.

I declare under penalty of perjury that the foregoing is true and correct.

Executed on ________________, 1999.

_________________________
JOHN O'BRIEN,
individually and as Vice-President of Interstate Resource Corp.