Court Holds Defendants and their Employees Liable for Civil Contempt for Violating a 2001 Court Order

A U.S. district court judge has held Roy B. Goodman and his company, Ameritel Payphone Distributors, Inc., in civil contempt for violating the court’s February 2001 permanent injunction. The injunction, obtained in a Federal Trade Commission action, prohibited Goodman and Ameritel from misrepresenting any fact material to a consumer’s purchasing decision in connection with the sale of business opportunity ventures. In a ruling from the U.S. District Court for the Southern District of Florida, Judge Alan Gold has ordered the respondents (defendants Ameritel and Goodman, and non-defendant employees Nathan Matalon, Kimberly Matalon, Lenora Kaus, and Ameritel’s successor, Public Telephone Corporation (PTC)) jointly to pay $6.4 million.

In March 2000, the FTC filed a complaint against Goodman and Ameritel as part of “Project Biz-illion$,” a federal-state crackdown on phony business opportunities. The complaint alleged that Goodman and Ameritel were making deceptive earnings claims and violating the Franchise Rule in connection with the sale of payphone business opportunities.

In February 2001, the court approved a consent judgment against Goodman and Ameritel prohibiting them from misrepresenting any fact material to a consumer’s purchasing decision in connection with the sale of business opportunity ventures, and misrepresenting the amount of money that could be earned by purchasers. The order also required them to pay $40,000 in consumer redress, with an avalanche clause requiring them to pay $8 million if it was found they made omissions or misrepresentations about their financial condition.

In November 2001, Goodman purportedly sold Ameritel to Kimberly Matalon. In December 2002, Goodman, along with Kaus and the Matalons, opened PTC, which the FTC
alleged was nothing more than Ameritel with a new name. In its motion for civil contempt, the FTC alleged that although Goodman sold Ameritel to Matalon, Goodman and others continued to operate Ameritel using the same script and engaging in the same practices alleged in the Commission’s original complaint. The FTC alleged that the respondents violated the permanent injunction by making misrepresentations to consumers regarding likely profits of a payphone business venture, renaming themselves PTC without informing the FTC of the change, and continuing to deceive customers under the new name.

In its order finding defendants Roy Goodman, Nathan Matalon, Kimberly Matalon, Lenore Kaus, Ameritel Payphone Distributors, Public Telephone Corporation, Jakina Consulting Corp., and American Payphone Distributors in contempt, the court found that the respondents had violated provisions of the 2001 order as alleged by the FTC. The contempt order was entered in the U.S. District Court, Southern District of Florida, on April 9, 2004.

The court has ordered Goodman to disgorge $231,877; Nathan Matalon to disgorge $424,229; Lenora Kaus to disgorge $206,093; and Kimberly Matalon to disgorge $60,922, within 30 days. The order specifically provides that “failure to comply with this order for disgorgement may be punished by contempt.”

Copies of the order imposing final civil contempt remedies are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1 877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(Civil Action No. 00-514-CIV-GOLD/SIMONTON)