FEDERAL TRADE COMMISSION, Plaintiff,

v.

NEW MILLENNIUM CONCEPTS, INC. d/b/a RHINOPOINT and
KARL V. KAY, individually, and as an officer of the corporation, Defendants.

Case No. 01C 3797

STIPULATED FINAL JUDGMENT AND
ORDER FOR PERMANENT INJUNCTION

Plaintiff Federal Trade Commission ("Commission" or "FTC") having filed its Complaint for a permanent injunction and other relief in this matter, pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b), respectively, and the parties having conferred through counsel, and having agreed to settle this action without adjudication or admission of any issue of fact or law and without Defendants admitting liability for any of the violations alleged in the Complaint or for any wrongdoing whatsoever, therefore, on the joint motion of the parties, it is hereby ORDERED, ADJUDGED, and DECREED as follows:

1. This Court has jurisdiction of the subject matter of this case and of the parties consenting hereto.

2. Venue is proper as to all parties in the Northern District of Illinois under 28 U.S.C. §§ 1391(b) and (c), and 15 U.S.C. § 53(b).

3. The activities of Defendants are in or affecting commerce, as defined in the FTC Act, 15 U.S.C. § 44.

4. The Complaint states a claim upon which relief may be granted against Defendants under Section 5 of the Federal Trade Commission Act (the "FTC Act"), 15 U.S.C. § 45(a).

5. Defendants waive all rights to seek judicial review or otherwise challenge or contest the validity of this Order. They also waive any claim that they may have held under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action to the date of this Order. Each settling party shall bear its own costs and attorneys' fees.

6. This Order does not constitute, and shall not be interpreted to constitute, an admission by any Defendant that such Defendant has engaged in violations of the FTC Act or any other law, nor does it constitute evidence against, or an admission by, any Defendant with respect to any issue of law or fact herein or any alleged in the Complaint.

7. This Order resolves all matters arising from the allegations in the Complaint.

8. All Attachments to this Order are part of this Order and are incorporated herein, whether or not specifically referred to.

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

1. "Defendants" shall mean New Millennium Concepts, Inc. d/b/a rhinoPoint and Karl V. Kay, individually, and as an officer of the corporation.

2. "Document" is synonymous in meaning and equal in scope to the usage of the term in Federal Rule of Civil Procedure 34(a), and includes writings, drawings, graphs, charts, photographs, audio and video recordings, computer records, and other data compilations from which information can be obtained and translated, if necessary, through detection devices into reasonably usable form. A draft or non-identical copy is a separate document within the meaning of the term.

3. "Material" means likely to affect a person's choice of, or conduct regarding, goods or services.

4. "Person" means any individual, group, unincorporated association, limited or general partnership, corporation, or other business entity.

5. "World Wide Web" means a system used on the Internet for cross-referencing and retrieving information. A "Web site" is a set of electronic documents, usually a home page and subordinate pages, readily viewable on computer by anyone with access to the Web, standard software, and knowledge of the Web site's location or address.

6. "Internet" means a worldwide system of linked computer networks that use a common protocol (TCP/IP) to deliver and receive information. The "Internet" includes but is not limited to the following forms of electronic communication: electronic mail and e-mail mailing lists, the World Wide Web, Web sites, newsgroups, Internet Relay Chat, and file transfers protocols thereon, and remote computer access from anywhere in the world thereto.

I.

PROHIBITED BUSINESS ACTIVITIES

IT IS THEREFORE ORDERED that in connection with the advertising, promotion, offering for sale, or sale of products or services in commerce, Defendants, and their officers, agents, servants, employees, and attorneys, 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, are hereby restrained and enjoined from:

A. Making or assisting others in making, directly or by implication, orally or in writing, any misrepresentation of material fact, including, but not limited to:

 

(1) the fact that consumers who sign up as members and complete monthly marketing surveys will be reimbursed for Internet access charges;

 

(2) the availability or basis of any reimbursement, refund or rebate promotion or program; and

 

(3) the terms, restrictions, costs or conditions in the promoting or offering of any product or service, including, but not limited to, the promoting or offering of products on the Internet; and

 

B. Collecting, using, selling, renting, leasing, transferring, or otherwise disclosing the name, address, telephone number, credit card number, bank account number, e-mail address, or other information of any person obtained by misrepresentations.

II.

PROTECTION OF CONSUMERS' PERSONAL INFORMATION

IT IS FURTHER ORDERED that Defendants, and their officers, agents, servants, employees, and attorneys, 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, are 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 personally identifiable information of any person who supplied any such information to any defendant in this action, at any time prior to entry of this Order, in connection with or in response to messages, Web pages, or Web sites attributed to www.rhinopoint.com. Provided, however, that Defendants may disclose such information to a law enforcement agency or as required by any law, regulation, court order, or judicial proceeding. Provided further, that no later than thirty (30) days after entry of this Order, Defendants shall delete or destroy all such information and provide written confirmation to the FTC, sworn under penalty of perjury, that such consumer information has been deleted or destroyed unless prohibited from doing so by law, regulation, court order, or judicial proceeding.

III.

RIGHT TO REOPEN: ACCURACY OF FINANCIAL STATEMENTS

IT IS FURTHER ORDERED that within five (5) business days after the date of entry of this Stipulated Order, Defendant Karl V. Kay shall submit to the Commission a truthful sworn statement (in the form shown on Appendix A to this Stipulated Order) that shall reaffirm and attest to the truthfulness, accuracy, and completeness of the financial statement of Karl V. Kay, dated May 30, 2001. The Commission's agreement to this Stipulated Order is expressly premised upon the financial condition of Defendants, as represented in Karl V. Kay's financial statement, which contains material information upon which the Commission relied in negotiating and agreeing upon this Stipulated Order.

If, upon motion of the Commission, the Court finds that Karl V. Kay failed to file the sworn statement required by this Section, or that Defendant Karl V. Kay failed to disclose any material asset, materially misrepresented the value of any asset, or made any other material misrepresentation in or omission from the financial statement, the Court shall enter judgment against him, in favor of the Commission, in the amount of $481,172.05 (the total amount of consumer injury in this matter), and the entire amount of the judgment shall become immediately due and payable, less any amount already paid.

Provided, however, that in all other respects, this judgment shall remain in full force and effect, unless otherwise ordered by the Court; and provided further, that proceedings instituted under this section are in addition to, and not in lieu of, any other civil or criminal remedies that may be provided by law, including but not limited to contempt proceedings, or any other proceedings that the Commission or the United States might initiate to enforce this Stipulated Order.

IV.

ACKNOWLEDGMENT OF RECEIPT OF ORDER BY DEFENDANT

IT IS FURTHER ORDERED that, within five (5) business days after receipt by Defendant Karl V. Kay of this Order as entered by the Court, Defendant Karl V. Kay shall submit to the FTC a truthful sworn statement, in the form shown on Appendix B, that shall acknowledge receipt of this Final Order.

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Stipulated Order, Defendants shall:

A. Provide a copy of this Stipulated 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, and all sales personnel, whether designated as employees, consultants, independent contractors or otherwise, immediately upon employing or retaining any such persons, for any business where Defendant Karl V. Kay is the majority owner of the business or directly or indirectly manages or controls the business where the business engages in, or assists others engaged in, the collection, dissemination or sale of customer information, individually or in the aggregate; and

 

B. 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 the receipt of copies of this Stipulated Order, as required in Subsection (A) of this Section.

MONITORING BY DEFENDANTS

IT IS FURTHER ORDERED that, in connection with any business in which Defendant Karl V. Kay is the majority owner of the business or directly or indirectly manages or controls the business, where the business engages in, or assists others engaged in, the collection, dissemination or sale of customer information, individually or in the aggregate, Defendants are hereby permanently restrained and enjoined from:

A. Failing to take reasonable steps sufficient to monitor and ensure that all employees and independent contractors engaged in sales or other customer service functions comply with Sections I and II of this Stipulated Order;

 

B. Failing to investigate promptly and fully any consumer complaint received by any business to which this Section applies; and

 

C. Failing to take corrective action with respect to any sales person whom Defendants determine are not complying with this Stipulated Order, which may include training, disciplining, and/or terminating such sales person.

RECORD KEEPING

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Stipulated Order, Defendants, in connection with any business where Defendant Karl V. Kay is the majority owner of the business or directly or indirectly manages or controls the business where the business engages in, or assists others engaged in, the collection, dissemination or sale of customer information, individually or in the aggregate, are hereby restrained and enjoined from failing to create, and from failing to retain for a period of three (3) years following the date of such creation, unless otherwise specified:

A. Books, records and accounts that, in reasonable detail, accurately and fairly reflect the cost of goods or services sold, revenues generated, and the disbursement of such revenues;

 

B. Records accurately reflecting: the name, address, and telephone number of each person employed in any capacity by such business, including as an independent contractor; that person's job title or position; the date upon which the person commenced work; and the date and reason for the person's termination, if applicable. Any business subject to this Section shall retain such records for any terminated employee for a period of two (2) years following the date of termination;

 

C. Records containing the names, addresses, telephone numbers, dollar amounts paid, quantity of items or services purchased, and description of items or services purchased, for all consumers to whom such business has sold, invoiced, or shipped any goods or services;

 

D. Records that reflect, for every consumer complaint or refund request, whether received directly or indirectly or through any third party:

 

(1) the consumer's name, address, telephone number and the dollar amount paid by the consumer;

 

(2) the written complaint or refund request, if any, and the date of the complaint or refund request;

 

(3) the basis of the complaint, including the name of any sales person complained against, and the nature and result of any investigation conducted concerning any complaint;

 

(4) each response and the date of the response;

 

(5) any final resolution and the date of the resolution; and

 

(6) in the event of a denial of a refund request, the reason for the denial; and

 

E. Copies of all sales scripts, training materials, advertisements, or other marketing materials utilized; provided that copies of all sales scripts, training materials, advertisements, or other marketing materials utilized shall be retained for (3) years after the last date of dissemination of any such materials.

IT IS FURTHER ORDERED that, in order that compliance with the provisions of this Stipulated Order may be monitored:

A. For a period of five (5) years from the date of entry of this Stipulated Order, Defendants shall notify the Commission of the following:

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

(2) Any changes in any Defendant's employment status (including self-employment) within ten (10) days of such change. Such notice shall include the name and address of each business that such 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 Defendant, such as creation, incorporation, dissolution, assignment, sale, merger, creation or dissolution of subsidiaries, proposed filing of a bankruptcy petition, or change in the corporate name or address, or any other change that could affect compliance obligations arising out of this Stipulated Order, thirty (30) days prior to the effective date of any proposed change; provided, however, that, with respect to any proposed change in the business about which 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 Stipulated 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 that Defendant has complied and is complying with this Stipulated Order. This report shall include but not be limited to:

 

(1) Defendant Karl V. Kay's current residence address and telephone number;

 

(2) Defendant Karl V. Kay's current employment, business addresses and telephone numbers, a description of the business activities of each such employer, and Defendant's titles and responsibilities for each employer;

 

(3) A copy of each acknowledgment of receipt of this Stipulated Order obtained by Defendant pursuant to Section V.; and

 

(4) A statement describing the manner in which Defendant has complied and is complying with Sections I and II of this Stipulated Order;

 

C. Upon written request by a representative of the Commission, Defendants 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 Stipulated Order;

 

D. For the purposes of this Stipulated Order, Defendants shall, unless otherwise directed by the Commission's authorized representatives, mail all written notifications to the Commission to:

 

Federal Trade Commission, Director
Midwest Region
55 East Monroe Street, Suite 1860
Chicago, Illinois 60603
Re: FTC v. New Millennium Concepts, Inc.;

E. For the purposes of this Section, "employment" includes the performance of services as an employee, consultant, or independent contractor; and "employers" include any individual or entity for whom Defendant Karl V. Kay performs services as an employee, consultant, or independent contractor; and

 

F. For purposes of the compliance reporting required by this Section, the Commission is authorized to communicate directly with Defendant Karl V. Kay.

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

A. The Commission is authorized, without further leave of 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 Stipulated Order;

 

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

 

C. Nothing in this Stipulated 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 & 57b-1, to investigate whether Defendants have violated any provision of this Stipulated Order or Section 5 of the FTC Act, 15 U.S.C. § 45.

ACCESS TO BUSINESS PREMISES

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Stipulated Order, for the purpose of further determining compliance with this Stipulated Order, Defendants shall permit representatives of the Commission, within three (3) 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 business where Defendant Karl V. Kay is the majority owner of the business or directly or indirectly manages or controls the business where the business engages in, or assists others engaged in, the collection or sale of customer information. In providing such access, Defendants shall permit representatives of the Commission to inspect and copy all documents relevant to any matter contained in this Stipulated Order; and shall permit Commission representatives to remove documents relevant to any matter contained in this Stipulated Order 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 terms of this Stipulated Order. The persons 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 Defendants' business premises for the purposes of inspecting and copying all documents relevant to any matter contained in this Stipulated Order.

XI.

RETENTION OF JURISDICTION

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for all purposes.

The parties agree and stipulate to entry of the foregoing Stipulated Order, which shall constitute a final judgment in this action.

FEDERAL TRADE COMMISSION

Dated:

JOHN C. HALLERUD
STEVEN M. WERNIKOFF
Attorneys for Federal Trade Commission

NEW MILLENNIUM CONCEPTS, INC.

Dated:

By: KARL V. KAY, President

KARL V. KAY, individually

Dated:

KARL V. KAY

IT IS SO ORDERED.

Dated:

United States District Judge

FEDERAL TRADE COMMISSION, Plaintiff,

v.

NEW MILLENNIUM CONCEPTS, INC. d/b/a RHINOPOINT and
KARL V. KAY, individually, and as an officer of the corporation, Defendants.

Case No. 01C 3797

I, Karl V. Kay, hereby state that the information contained in the Financial Statement of Defendant Karl V. Kay dated May 30, 2001, that was provided to the Federal Trade Commission was true, accurate, and complete at such time.

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

Executed on: _________, 2001

Karl V. Kay

APPENDIX B

FEDERAL TRADE COMMISSION, Plaintiff,

v.

NEW MILLENNIUM CONCEPTS, INC. d/b/a RHINOPOINT and
KARL V. KAY, individually, and as an officer of the corporation, Defendants.

Case No. 01C 3797

AFFIDAVIT OF KARL V. KAY

I, Karl V. Kay, being duly sworn, hereby states and affirms as follows:

1. My name is Karl V. Kay. My current residence address is  _______________________________. I am a citizen of the United States and am over the age of eighteen. I have personal knowledge of the facts set forth in this Affidavit.

2. I am a defendant in FTC v. New Millennium Concepts, Inc., et al., Case No. 01C 3797 (N.D. Ill. 2001).

3. On __________________, I received a copy of the Stipulated Final Judgment and Order for Permanent Injunction and Consumer Redress which was signed by the Honorable ____________________, and entered by the Court on __________________. A true and correct copy of the Order I received is appended to this Affidavit.

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

Executed on ____________, 2001 at __________________ .

__________________________________
Karl V. Kay

State of Illinois
County of Cook

Subscribed and sworn to before me this _____ day of ________________, .

_____________________________
Notary Public

My Commission Expires: