Â鶹´«Ã½

CHARLES A. HARWOOD
Regional Director

ELEANOR DURHAM
NADINE S. SAMTER
Â鶹´«Ã½ Trade Commission
915 Second Avenue, Suite 2896
Seattle, WA 98174
(206) 220-4476
(206) 220-4479
ATTORNEYS FOR PLAINTIFF

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEVADA

FEDERAL TRADE COMMISSION,
Plaintiff,

v.

WOOFTER INVESTMENT CORPORATION, et al.,
Defendants.

CV-S-97- 00515-HDM (RLH)

STIPULATED ORDER FOR PERMANENT INJUNCTION AND FINAL JUDGMENT

Plaintiff, the Â鶹´«Ã½ Trade Commission ("FTC" or "Commission"), has filed a complaint for a permanent injunction and other relief pursuant to Sections 13(b) and 19 of the Â鶹´«Ã½ Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b, and the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. § 6101 et seq., naming as defendants Woofter Investment Corporation and Patsy M. Barbour, and alleging violations of the Telemarketing Sales Rule, 16 C.F.R. Part 310 ("the Rule").

Defendants Woofter Investment Corporation and Patsy M. Barbour, and the Commission, by and through their respective counsel, have agreed to entry of this Order by this Court in order to resolve all matters in dispute between them in this action. These defendants have consented to the entry of this Order without trial or adjudication of any issue of law or fact herein, and this Order shall not constitute an admission of liability by defendants nor constitute evidence of liability against defendants in any matter relating to the facts alleged in the Commission’s Complaint. NOW, THEREFORE, these defendants and the Commission having requested the Court to enter this Order, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED as follows:

FINDINGS

A. This Court has jurisdiction of the subject matter of this action and the parties consenting hereto.

 

B. The complaint states a claim upon which relief may be granted against Woofter Investment Corporation and Patsy M. Barbour, under Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, The Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. § 6101 et seq., and the Telemarketing Sales Rule ("the Rule") 16 C.F.R. Part 310.

 

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

 

D. These defendants have waived all rights to seek judicial review or otherwise challenge or contest the validity of this Order.

 

E. This Order does not constitute and shall not be interpreted to constitute either an admission by these defendants or a finding by the Court that Woofter Investment Corporation, or Patsy M. Barbour have engaged in violations of FTC law.

DEFINITIONS

For the purpose of this Order, the following definitions shall apply:

A. “Person” means a natural person, organization or other legal entity, including a corporation, partnership, proprietorship, association, cooperative, government or governmental subdivision or agency, or any other group or combination acting as an entity.

 

B. “Defendants” means Woofter Investment Corporation and Patsy M. Barbour as well as their successors and assigns, directors, officers, agents, servants, employees, salespersons, independent contractors, corporations, subsidiaries, affiliates, and other persons directly or indirectly under their control or in active concert or participation with them who receive actual notice of this Order by personal service, facsimile or otherwise, whether acting directly or through any corporation, subsidiary, division or other device.

 

C. "Telemarketer" means any person who, in connection with telemarketing, initiates telephone calls to, or receives telephone calls from, a consumer.

 

D. "Telemarketing" means a plan, program, or campaign that is conducted to induce the purchase of goods or services by use of one or more telephones.

I. INJUNCTION

IT IS THEREFORE ORDERED that defendants are hereby permanently restrained and enjoined from:

A. Providing credit card processing for any telemarketer in a manner that violates Part 310.3(c) of the Rule.

 

B. Engaging in, participating in, assisting, or facilitating in any manner or in any capacity whatsoever, any foreign or domestic lottery promotion (except as expressly provided for by relevant state or federal law), directly or through any intermediary. This prohibition includes, but is not limited to:

1. promoting, offering for sale, selling, reselling, purchasing on behalf of others, or registering, directly or indirectly, lottery tickets, chances, or interests; or
2. providing customer service or any other service to any telemarketer of lottery tickets, chances or interests.

C. Promoting, offering for sale, selling, or participating, directly or through an agent, in the sale of any product or service in a manner that violates the Telemarketing Sales Rule, including but not limited to:

1. failing to disclose in a clear and conspicuous manner:

a. the total costs to purchase, receive, or use, and the quantity of goods or services that are the subject of the sales offer;

b. all material restrictions, limitations, or conditions to purchase, receive, or use the goods or services that are the subject of the sales offer;

c. if the seller has a policy of not making refunds, cancellations, or exchanges, or repurchases, a statement informing the customer that this is the seller’s policy; or if the seller or telemarketer makes a representation about a refund, cancellation, exchange or repurchase policy, a statement of all material terms and conditions of such policy;

d. in any prize promotion, the odds of being able to receive the prize, and if the odds are not calculable in advance, the factors used in calculating the odds; that no purchase or payment is required to win a prize or to participate in a prize promotion; and the no purchase/no payment method of participating in the prize promotion;

e. all material costs or conditions to receive or redeem a prize that is the subject of a prize promotion;

f. any material aspect of an investment opportunity including, but not limited to, risk, liquidity, earnings potential, or profitability, or

g. a seller’s or telemarketer’s affiliation with, or endorsement by, any government or third-party organization.

2. misrepresenting, directly or by implication any of the following:

a. the total cost to purchase, receive, or use, and the quantity of, any goods or services that are the subject of a sales offer;

b. any material restriction, limitation, or condition to purchase, receive, or use goods or services that are the subject of a sales offer;

c. any material aspect of the performance, efficacy, nature, or central characteristics of goods or services that are the subject of a sales offer;

d. any material aspect of the nature or terms of the seller’s refund, cancellation, exchange, or repurchase policies; and

e. any material aspect of a prize promotion including, but not limited to, the odds of being able to win a prize, the nature or value of a prize, or that a purchase or payment is required to win a prize of participate in a prize promotion.

D. Making a false or misleading statement to induce a person to pay for goods or services.

II. MONETARY RELIEF

IT IS FURTHER ORDERED that defendant Woofter Investment Corporation shall pay into an interest-bearing escrow account designated by plaintiff, under the control of the Commission's designated agent, the sum of one million two hundred sixteen thousand dollars ($1,216,000). Defendants acknowledge that two hundred sixteen thousand dollars ($216,000) of this amount is revenue received from consumers of Pacific Rim Pools International. The payment of this sum shall fully satisfy all monetary claims asserted by the Commission in the complaint filed herein and shall be used to provide redress to consumers who purchased lottery tickets from any telemarketing client of defendants and pay any attendant expenses of administration. If the Commission determines, in its sole discretion, that redress to purchasers is wholly or partially impracticable, any funds not so used shall be deposited into the United States Treasury or be used by the Commission to educate consumers affected by the defendants’ practices. No portion of the payment as herein provided shall be deemed a payment of any fine, penalty, or punitive assessment. 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.

III. RIGHT TO REOPEN

IT IS FURTHER ORDERED that, by agreeing to this Order, defendants affirm and attest to the truthfulness, accuracy, and completeness of the financial statements that were provided to the FTC on [September xx, 1998] (designated the "Financial Statements"). The Commission's agreement to this Order is expressly premised upon the truthfulness, accuracy, and completeness of defendants’ financial condition as represented in the Financial Statements referenced above, which contain material information upon which the Commission relied in negotiating and agreeing to the terms of this Order, including the monetary redress provided for by this Order. If, upon motion by the Commission, this Court finds that defendants failed to disclose any material asset, or materially misrepresented the value of any asset, or made any other material misrepresentation in or omission from the Financial Statements, the Court may reopen the judgment for the purpose of requiring additional monetary consumer redress in an amount equivalent to any resulting understatement of assets, overstatement of liabilities or understatement of net worth, provided, however, that in all other respects, this Order shall remain in full force and effect unless otherwise ordered by this Court; and provided further that proceedings instituted under this Paragraph are in addition to, and not in lieu of, any other civil or criminal remedies as may be provided by law, including any other proceedings the Commission may initiate to enforce this Order.

IV. RELEASE OF ASSET FREEZE

IT IS FURTHER ORDERED that the freeze of the defendant Woofter’s assets as ordered in Paragraph II of the Stipulated Preliminary Injunction entered in this matter on June 9, 1997, to the extent not previously released by any separate Order of this Court or agreement by the parties, shall be lifted upon (i) the entry of this Order; (ii) the defendant Woofter’s payment to the Â鶹´«Ã½ Trade Commission, pursuant to Paragraph II of this Order; and (iii) the defendant Woofter’s payment of all Court-approved fees and expenses of the Receiver.

V. VACATION OF RECEIVERSHIP

IT IS FURTHER ORDERED that the appointment by this Court of Mahan & Ellis, Chartered, 510 South Ninth Street, Las Vegas, NV 89101, as Receiver for defendant Woofter is vacated upon (i) the defendant Woofter’s payment to the Â鶹´«Ã½ Trade Commission, pursuant to Paragraph II of this Order; (ii) the defendant Woofter’s payment of all Court-approved fees and expenses of the Receiver; and (iii) the Receiver having received a discharge from the Court.

VI. MAILING LISTS

IT IS FURTHER ORDERED that defendants are permanently 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 identifying information of any person whose credit card was processed through Woofter’s merchant account at any time prior to entry of this Order. Provided, however, that defendants may disclose such identifying information to a law enforcement agency or as required by any law, regulation, or court order.

VII. NOTICE TO RELATED PERSONS AND ENTITIES

IT IS FURTHER ORDERED that defendants, for a period of three (3) years after the date of entry of this Order shall:

A. Provide a copy of this Order to, and obtain a signed and dated acknowledgment of receipt of the same from each officer or director, each person 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

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

(2) the business is conducted in connection with telemarketing any product or service.

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 Order, as required by Paragraph VII.A of this Order.

VIII. RECORD KEEPING PROVISIONS

IT IS FURTHER ORDERED that for a period of five (5) years from the date of entry of this Order, defendants, in connection with any business in which any defendant is the majority owner of the business or directly or indirectly manages or controls the business, and where the business is conducted in connection with telemarketing any product or service, 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 which, in reasonable detail, accurately, fairly, and completely 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 the reason for the person’s termination, if applicable. The businesses subject to this Paragraph shall retain such records for any terminated person for a period of two (2) years following the date of termination.

 

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

 

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

1. the consumer’s name, address, telephone number, and the 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 salesperson 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.

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

IX. ACCESS TO RECORDS

IT IS FURTHER ORDERED that for purposes of determining or securing compliance with this Order, defendants shall permit, for a period of three (3) years from the date of entry of this Order, and upon reasonable written notice to defendants, representatives of the Commission:

A. Access during normal office hours to any office or facility in which documents relating to compliance with the terms of this Order are stored or held, to inspect and copy such documents; and

 

B. To interview, subject to the reasonable convenience of defendants and without restraint or interference from them, at a location reasonably convenient to both defendants and the Commission, the officers, directors, and employees of any company or other business entity owned, managed, or controlled, in whole or in part, by any defendant, relating to compliance with the terms of this Order.

X. COMPLIANCE REPORTING BY DEFENDANTS

IT IS FURTHER ORDERED that for purposes of monitoring compliance with the provisions of this Order:

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

1. any changes in Patsy M. Barbour’s residence, mailing addresses, and telephone numbers, within ten (10) days of the date of any such change;
2. any changes in Patsy M. Barbour’s employment status or affiliation with any new business that is related to the telemarketing of any product or service, including the new business' name and address, a statement of the nature of the business, and a statement of her duties and responsibilities in connection with the business; and
3. any proposed change in the structure of defendant Woofter Investment Corporation, 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 proposed change in the corporation about which defendants learn less than thirty (30) days prior to the date such action is to take place, they shall notify the Commission as soon as is practicable after learning of such proposed change.

B. Within one hundred-eighty (180) days after the date of entry of this Order, defendants shall file a report, in writing, setting forth in detail the manner and form in which each of them has complied with this Order.

 

C. For purposes of this Order all notices and reports required of defendants shall be made to the following address:

Regional Director
Â鶹´«Ã½ Trade Commission
915 Second Avenue, Suite 2896
Seattle, Washington 98174

XI. ACKNOWLEDGMENT OF RECEIPT OF ORDER

IT IS FURTHER ORDERED that, within five (5) business days after receipt by defendants of this Order as entered by the Court, defendants shall each submit to the Commission a truthful sworn statement, in the form shown on Appendix A, that shall acknowledge receipt of this Permanent Injunction and Final Judgment.

XII. COMPLIANCE MONITORING BY FTC

IT IS FURTHER ORDERED that the Commission is authorized to monitor defendants’ compliance with this Order by all lawful means available, including but not limited to the use of compulsory process and the use of investigators posing as consumers or suppliers.

XIII. RETENTION OF JURISDICTION

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for the purpose of enabling either of the parties to this Order to apply to the Court at any time for such further orders or directives as may be necessary or appropriate for the interpretation or modification of this Order, for the enforcement of compliance therewith or for the punishment of violations thereof.

SO ORDERED, this _____ day of , 1998.

______________________________
United States District Judge

The parties hereby consent to the terms and conditions set forth above and consent to entry of this Order without further notice to the parties. Defendants waive any rights that may arise under the Equal Access to Justice Act, 28 U.S.C. § 2412.

FOR PLAINTIFF

FEDERAL TRADE COMMISSION

______________
Eleanor Durham

______________
Nadine Samter

FOR DEFENDANTS

WOOFTER INVESMENT CORP.,
PATSY M. BARBOUR

__________________________________
Patsy M. Barbour as President of Woofter
Investment Corporation and individually
William McGimsey
601 E. Charleston Blvd.
Las Vegas, NV 89104
Attorney for Defendants