UNITED STATES DISTRICT COURT FEDERAL TRADE COMMISSION Plaintiff, v. ROSS SANFORD LEISS, dba RLEISS & ASSOCIATES Defendant. Civil Action No. COMPLAINT FOR INJUNCTIVE AND OTHER EQUITABLE RELIEF Plaintiff, the Federal Trade Commission ("FTC" or "Commission") for its Complaint alleges: 1. The Commission brings this action under Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b, and Section 410(b) of the Credit Repair Organizations Act, 15 U.S.C. § 1679h(b), to obtain preliminary and permanent injunctive relief, restitution, rescission, disgorgement and other equitable relief for Defendant's deceptive acts or practices in connection with the sale and offering for sale of credit repair manuals in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and Section 404(a)(2) of the Credit Repair Organizations Act, 15 U.S.C. § 1679b(a)(2). JURISDICTION AND VENUE 2. This Court has jurisdiction of this matter pursuant to 28 U.S.C. §§ 1331, 1337(a), and 1345, and 15 U.S.C. §§ 53(b), 57b, and 1679h(b). 3. Venue in the United States District Court for the Eastern District of Virginia is proper under 28 U.S.C. § 1391 and 15 U.S.C. § 53(b). THE PARTIES 4. Plaintiff, the Federal Trade Commission, is an independent agency of the United States Government created by statute. 15 U.S.C. §§ 41 et seq. The Commission is charged, inter alia, with enforcement of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The Commission also enforces the Credit Repair Organizations Act. 15 U.S.C. §§ 1679h(a). The Commission is authorized to initiate federal district court proceedings, by its own attorneys, to enjoin violations of the FTC Act and the Credit Repair Organizations Act in order to secure such equitable relief, including consumer redress, as may be appropriate in each case. 15 U.S.C. §§ 53(b), 57b, and 1679h(b). 5. Defendant Ross Sanford Leiss ("Leiss") lives at 25 N. Belcher Road, Apt. F-67, Clearwater, Florida. Leiss transacts or has transacted business in this District as RLeiss & Associates ("RLeiss") through a post office box, P.O. Box 3796, Merrifield, Virginia 22116. 6. At all times material to this complaint, acting alone or in concert with others, Leiss dba RLeiss has formulated, directed, controlled or participated in the acts and practices set forth in this complaint. He transacts business in this District. COMMERCE 7. At all times relevant to this complaint, defendant has maintained a course of trade in the offering for sale and selling of credit repair products, in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44. DEFENDANT'S BUSINESS PRACTICES 8. Since at least October, 1998, defendant has advertised, promoted, offered for sale, and sold credit repair manuals to consumers through advertisements, including but not limited to, advertisements on the Internet. 9. In his promotional advertisement, defendant has claimed that by purchasing and using the information in his manual, consumers can improve their credit histories, credit records, or credit ratings by establishing new credit profiles with credit bureaus. The advertisement claims that consumers can obtain new identities and states that his manual will explain how consumers may apply for new Taxpayer Identification Numbers ("TINs"). Defendant has further claimed that his method of establishing a new credit file is legal. 10. Typical and illustrative of defendant's claims about his credit repair business are the following:
In his Web site promotion, the defendant states that his manual covers topics such as the following:
11. The defendant offers a manual for $15.00, or $11.50 if prepaid. 12. Consumers who respond to defendant's advertisements receive a "manual" that advises consumers to establish a new mailing address by renting a private mail box service or to use the address of a close friend or relative. The manual also advises consumers to obtain a new telephone number by subscribing to a private voice mail service. 13. The defendant's manual instructs consumers to apply for an EIN or a TIN from the Internal Revenue Service, or, as an alternative, to obtain a second Social Security Number. The manual further advises consumers to apply for credit cards using only the new address, telephone number and the EIN in place of a Social Security Number. The manual warns consumers to use Employer Identification Numbers (EINs) in place of their Social Security Numbers to avoid "contaminating" the new credit file, including replacing driver's licenses issued with Social Security Numbers. VIOLATION OF THE CREDIT REPAIR ORGANIZATIONS ACT 14. The Credit Repair Organizations Act, 15 U.S.C. §§ 1679a-j (1997), was enacted on September 30, 1996, and has been in full force and effect since April 1, 1997. 15. Section 404(a)(2) of the Credit Repair Organizations Act prohibits all persons from making any statement, or counseling or advising any consumer to make any statement, the intended effect of which is to alter the consumer's identification to prevent the display of the consumer's credit record, history, or rating for the purpose of concealing adverse information that is accurate and non-obsolete to any consumer reporting agency as defined in 15 U.S.C. § 1681(f) or to any person who has extended credit to the consumer or to whom the consumer has applied or is applying for an extension of credit. 15 U.S.C. § 1679b(a)(2). 16. Pursuant to Section 410(b)(1) of the Credit Repair Organizations Act, 15 U.S.C. § 1679h(b)(1), any violation of any requirement or prohibition of the Credit Repair Organizations Act constitutes an unfair and deceptive act or practice in commerce in violation of Section 5(a) of the FTC Act, 15 U.S.C.§ 45(a). COUNT ONE 17. In numerous instances, defendant has counseled or advised consumers to make statements, the intended effect of which has been to alter the consumer's identification to prevent the display of the consumer's credit record, history, or rating for the purpose of concealing adverse information that is accurate and non-obsolete to consumer reporting agencies, as that term is defined in 15 U.S.C. § 1681(f), or to persons who have extended credit to those consumers or to whom those consumers have applied or are applying for extensions of credit. 18. Defendant has thereby violated Section 404(a)(2) of the Credit Repair Organizations Act, 15 U.S.C. § 1679b(a)(2). VIOLATIONS OF THE FEDERAL TRADE COMMISSION ACT COUNT TWO 19. In connection with the advertising, marketing, promotion, offering for sale, or sale of credit repair products, to induce consumers to purchase his product, defendant has, expressly or by implication, represented that through the use of his product, consumers can legally alter their identifications to conceal adverse credit information from consumers' credit records, credit histories, or credit ratings by obtaining EINs, alternate Social Security Numbers, or TINs for consumers to use, instead of their Social Security Numbers, for credit purposes. 20. In truth and in fact, through the use of defendant's products, consumers cannot legally alter their identifications to conceal adverse credit information from consumers' credit records, credit histories, or credit ratings by obtaining EINs, alternate Social Security Numbers, or TINs for consumers to use, instead of their Social Security Numbers, for credit purposes. 21. Therefore, the representation set forth in paragraph 19 is false and misleading and constitutes a deceptive act or practice in or affecting commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). CONSUMER INJURY 22. Consumers throughout the United States, including those in the State of Virginia, have suffered or are likely to suffer substantial monetary loss as a result of defendant's unlawful acts or practices. Absent injunctive relief by this Court, defendant is likely to continue to injure consumers and harm the public interest. THIS COURT'S POWER TO GRANT RELIEF 23. Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, and Section 410(b) of the Credit Repair Organizations Act, 15 U.S.C. § 1679h(b), empower this Court to issue a permanent injunction against defendant's violations of the Credit Repair Organizations Act and the FTC Act and, in the exercise of its equitable jurisdiction, to order such ancillary relief as preliminary injunction, rescission, restitution, disgorgement of profits resulting from defendant's unlawful acts or practices, and other remedial measures. PRAYER FOR RELIEF WHEREFORE, plaintiff requests that this Court, as authorized by Section 410(b) of the Credit Repair Organizations Act, 15 U.S.C. § 1679h(b), Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, and pursuant to its own equitable powers:
Dated:_____________, 1999 Respectfully submitted, Debra Valentine _______________________________ |