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General Supply Centers, Inc. and Mark E. Gershick, its owner and president, are permanently barred from collecting on past shipments and will fully repay customer claimants through a court-appointed receiver under a settlement approved by the U.S. District Court in Los Angeles on April 16, 2003. The settlement also permanently bans Gershick from engaging in telemarketing and from selling non-durable office supplies.
The settlement resolves a Federal Trade Commission complaint against Los Angeles-based General Supply Centers filed in December 1999 as part of "Operation Misprint" - a multi-agency effort to crack down on bogus office and maintenance supply telemarketing schemes. These schemes target large and small businesses, as well as schools, government agencies, and nonprofit institutions all over the United States. The complaint alleged that the defendants violated the FTC Act and the FTC's Telemarketing Sales Rule (TSR) by failing to disclose their true identity in telephone solicitations, and misrepresenting, among other things, that they were the consumers' regular supplier of photocopy toner.
At the time the complaint was filed, the court granted the FTC's ex parte requests that the assets of the defendants be frozen, and that a receiver be appointed to take control of the corporation under supervision of the court. This preliminary relief was continued pursuant to a stipulated preliminary injunction entered on December 20, 1999. The receiver provided provisional relief to defendants' customers by returning approximately $165,000 in checks to customers, and by halting efforts to collect on defendants' outstanding accounts receivable. In addition, the receiver undertook a claims procedure which resulted in court approval of approximately $110,000 in claims filed by customers. The settlement provides for full payment of these claims by the receiver, primarily through contributions already made to the receivership estate by the individual defendant and American Motorists Insurance Company, the issuer of a surety bond that the defendants posted pursuant to the State of California Telemarketing Seller's Act.
In addition to the monetary relief for consumers and bans on the individual defendant, the settlement prohibits the defendants from making material misrepresentations in connection with the sale of all goods and services. Finally, the settlement contains various recordkeeping and reporting requirements to assist the FTC in monitoring the defendants' compliance.
The Commission vote to authorize staff to file the stipulated permanent injunction and settlement of claims for monetary relief was 5-0. The FTC's Western Region Office in San Francisco handled the litigation.
(FTC Matter No. X000004)
(Civil Action No. 99-12827 MMM (Rzx))