In the Matter of
Hold Billing Services, Ltd., et al., File No. X980069

Commissioner Swindle dissents from certain relief contained in settlement orders negotiated between the Commission and defendants Veterans of America Association, Ltd. and its principals, Keith Calil and Milford H. Balaban (together the "VOAA defendants"). Specifically, Commissioner Swindle objects to a requirement that the defendants post a $100,000 bond before engaging in the paid solicitation of charitable contributions or payments for goods and services for the benefit of any non-profit organization or any for-profit organization using a name that implies it is a non-profit or charitable organization. He also objects to the portion of the settlement orders prohibiting misrepresentations in the course of such solicitations. Commissioner Swindle contends that these provisions are not reasonably related to the violations alleged in the complaint and constitute an overly restrictive burden on "non-misleading, fully protected speech." We respectfully disagree with his dissent.

We first address Commissioner Swindle's concerns about "symmetry" between the complaint and the settlement. When the Commission votes to authorize the filing of a complaint, it is representing that it finds "reason to believe" that the violations alleged therein occurred or are occurring. Occasionally, as the litigation proceeds, evidence of additional violations, or evidence confirming violations only suspected by the Commission at the outset, comes to light. The Commission cannot ignore such violations simply because the evidence of them came to light after, rather than before, the case was filed. Indeed, the Commission's responsibility to protect consumers mandates that the Commission obtain relief to address these additional violations. While perfect symmetry is to be preferred, this preference does not override the need to secure necessary relief. In practice, the Commission will typically amend its complaint to include a newly discovered or confirmed violation in those instances where the new violation is unrelated to the violations alleged in the original complaint, even though such an amendment is not typically required by courts. In the instant case, however, the violations addressed in Paragraphs III and IV of the orders are part and parcel of one of the deceptive practices placed at issue in the complaint, namely, deceiving consumers into filling out what appear to be sweepstakes entry forms in support of a veterans' charitable organization which the VOAA defendants, in turn, treated as binding contracts to purchase services. Complaint    32-34. The Veterans of America Association, despite what one might assume from its name, is a for-profit company engaged in the sale of voice mail services. Complaint    9,17.

We now turn to Commissioner Swindle's concern that the $100,000 bond requirement unduly burdens defendants' First Amendment speech rights. As noted above, the VOAA defendants utilized the guise of a charitable organization in order to both add an air of legitimacy to their deception and to cash in on consumers' goodwill towards, and desire to help, veterans. In order to protect consumers from such conduct in the future, the orders require that prior to engaging in any paid charitable fund-raising,(1) the VOAA defendants must post a $100,000 bond. This fencing-in relief strikes an appropriate balance between protecting consumers and burdening defendants' speech rights. Moreover, the provisions of Paragraphs III and IV of the orders are the same as those used by the Commission in prior charities fraud cases. In short, based upon the evidence in this case, we firmly believe that the bond requirement is appropriate.

1. The Order provides that the bonding requirement will not be triggered by volunteer charitable fund raising.