U.S. District Judge Finds Couple in Violation of 1996 FTC Order

A U.S. District Judge in Miami on Tuesday found a Florida telemarketing operation and its owners, Michael Chierico and Teri Chierico, in civil contempt for violation of a 1996 Federal Trade Commission consent judgment. In its ruling, the court found that the couple's violation of the judgment caused at least $7.2 million in consumer injury. Under the terms of the order signed by U.S. District Judge K. Michael Moore, the Chiericos will forfeit a $200,000 performance bond and nearly $1 million in additional cash. The Chiericos also are ordered to pay an additional $2 million for consumer redress. In addition, the judge banned them from engaging in telemarketing and direct mail marketing of office supplies.

"The Chiericos doubled their trouble by scoffing at their agreement with the FTC and continuing to bilk consumers," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "The court's order in this case should encourage compliance and deter others who may think they can get away with thumbing their noses at the law."

In papers filed with the court seeking the civil contempt judgment, the FTC alleged that the defendants, who were originally targeted in "Operation CopyCat," a joint federal, state and local government crackdown on allegedly bogus office and cleaning supply telemarketing sales schemes, violated the 1996 order by almost immediately resuming the conduct they had agreed to discontinue, including, for example, misrepresenting the existence of a prior business relationship with consumers, the purpose of the call to consumers, and the price of their merchandise.

According to the 1996 FTC complaint detailing the charges against the Miami-based Chiericos and three corporate defendants, American Business Supplies, Inc., Interstate Office Systems, Inc., and Nationwide Office Products, Inc., the defendants used a variety of deceptive tactics to obtain so-called "orders" for copy machine toner. They allegedly claimed to be updating their records, in a ploy to learn the model numbers for photocopying machines used by businesses. The defendants then allegedly misrepresented that they were the business' regular supplier and pretended that they were offering a special deal on copier toner. They also allegedly obtained reorders through false representations that a balance remained from a previous order or that the victims had agreed to be placed on a regular shipment plan. The defendants then used unfounded threats to ruin credit or take legal action to collect charges for the overpriced merchandise, according to the FTC's allegations.

The order finding the defendants in contempt for violating the 1996 order was signed by Judge K. Michael Moore of the U.S. District Court for the Southern District of Florida, on June 30, 1998. The FTC acknowledges the assistance of the U.S. Attorney's Office for the Southern District of Florida in Miami in bringing this case. A court-appointed receiver will work with the FTC to oversee compliance with the judgment and the payment of consumer redress.

Copies of the 1996 complaint and order, and copies of the 1998 contempt order are available from the FTC's Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD 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 File No. X960074)
(Civil Action No. 96-1754-Civ-Moore)