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Two former managers of a Fort Wayne, Indiana-based publishing company have agreed to settle FTC allegations that they misrepresented how and where their publications are distributed and attempted to collect money for unordered advertising from others. Defendants Randy B. Lonis and Raymond Celie, under separate but identical settlements, would be prohibited from making false or misleading representations in connection with the sale of any advertisement, publication or program in the future. Further, the proposed settlements would require Celie and Lonis to each post a bond in the amount of $500,000 before entering the business of selling advertisements.

Last April, the FTC and 50 state Attorneys General, Secretaries of State and other state charities regulators announced, "OPERATION FALSE ALARM," an unprecedented attack against "badge-related" fundraising fraud. The joint federal/state law enforcement and public education campaign targeted the deceptive activities of certain for-profit fundraisers who misrepresent ties with police departments, fire fighters and other community organizations. As part of "Operation False Alarm," the FTC filed charges against Dean Thomas and his companies, alleging that the defendants convinced small businesses in more than 18 states to pay for "advertising" in their publications by falsely claiming that their booklets enjoy a widespread distribution in the businesses' local communities. Businesses who refused the advertising appeal were subsequently barraged with false invoices and other collection efforts for the unordered advertising. These efforts ran the gamut from harassing collection calls and repeated mail invoices, to personal visits by intimidating "collectors" and unauthorized COD packages. The complaint alleged that the defendants misrepresented that advertising proceeds would support a local, civic purpose. The FTC also alleged that the defendants misrepresented that businesses had previously authorized advertising for which they were obligated to pay, and that businesses had ordered the advertisements billed to them and must pay the invoices or face collection action.

The FTC's complaint also named the following individuals: Dean R. Thomas, the director, president and secretary of The Dean Thomas Corporation, The Game Club, Inc., Professional Publishers, Inc., and Thomas Publishing Company, Inc.; and Randy B. Lonis and Ray Celie, who operated and managed one or more of the defendant corporations.

Under the settlements announced today, Celie and Lonis would be prohibited from making false or misleading representations in connection with the sale, distribution, marketing or sponsorship of any advertisement, publication, program or product, and would be prohibited from misrepresenting their affiliation with any national, state or local organization. In addition, Lonis and Celie would be prohibited from selling, renting or otherwise disclosing any identifying information about any customer who purchased advertisements from them. Further, the defendants would each be required to post a performance bond in the amount of $500,000 before entering the business of selling advertisements. The proposed settlements also contain recordkeeping requirements designed to assist the FTC in monitoring the defendants' compliance.

The Commission vote to file the settlements was 4-0. The FTC filed the stipulated final judgments with Lonis and Celie in the U.S. District Court for the Northern District of Indiana, Fort Wayne Division, on Sept. 16. The settlements are subject to approval by the judge.

Charges still are pending against the remaining defendants.

NOTE: The judgments are for settlement purposes only and do not constitute an admission by the defendants of a law violation. The settlements have the force of law when signed by the judge.

Copies of the settlements, the news release announcing Operation False Alarm, as well a number of consumer education publications about charitable fundraising solicitations are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web site at: http://www.ftc.gov

(Civil Action No. 1:97CV 0129) (FTC Matter No: x970045)