UNITED
STATES DISTRICT COURT Magistrate Judge Seltzer FEDERAL TRADE COMMISSION, Plaintiff, v. DIANE M. JONAS, PAUL A. JONAS,
JAMES W. RAIM, ROBERT BRIAN ROEMER, No. 95-8429-CIV-ZLOCH STIPULATED FINAL JUDGMENT AND ORDER FOR PERMANENT INJUNCTION AND SETTLEMENT OF CLAIMS FOR MONETARY RELIEF AS TO DEFENDANTS PAUL STEPHAN JANUS AND PROGRESSIVE PRODUCTS, INC. Plaintiff Federal Trade Commission ("Commission") filed a complaint for a permanent injunction and other relief in this matter, pursuant to Sections 13(b) and 19(a) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. 53(b), 57b(a), charging Defendants Paul Stephan Janus, Progressive Products, Inc., and others with violations of Section 5 of the FTC Act, 15 U.S.C. 45, and the FTC's Trade Regulation Rule entitled "Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures" (the "Franchise Rule" or "the Rule"), 16 C.F.R. 436. Defendant Janus, individually and as president of Progressive Products, Inc., and the Commission have agreed to entry of this Stipulated Final Judgment and Order for Permanent Injunction and Settlement of Claims for Monetary Relief by this Court in order to resolve, without trial, all matters in dispute between them in this action. In accord with the stipulation by Defendant Janus and the Commission, the Court makes the following findings of fact and conclusions of law: 1. This Court has jurisdiction of the subject matter of this case and over Defendants Janus and Progressive Products, Inc. 2. The complaint states a claim upon which relief may be granted against the defendants under Sections 5, 13(b), and 19 of the FTC Act, 15 U.S.C. 45, 53(b), and 57b. The complaint seeks both permanent injunctive relief and redress for alleged unfair or deceptive acts or practices. The Commission is authorized under Sections 13(b) and 19 of the FTC Act to seek the relief it requested. 3. This Order does not represent a determination by the Court or an admission by Paul Stephan Janus, individually or as president of Progressive Products, Inc., or Progressive Products, Inc., that they have engaged and are likely to engage in acts and practices that violate Section 5(a) of the FTC Act, 15 U.S.C. 45(a). 4. The activities of Defendants Janus and Progressive Products, Inc., as alleged in the complaint, are or were in or affecting commerce, as defined in 15 U.S.C. 44. 5. Entry of this Order is in the public interest. 6. Defendant Janus, individually and as president of Progressive Products, Inc., has waived all rights to seek judicial review or otherwise challenge the validity of this Stipulated Final Judgment and Order for Permanent Injunction and Settlement of Claims for Monetary Relief. 7. Defendant Janus, individually and as president of Progressive Products, Inc., does not object to entry of a permanent injunction against Market Systems, Ltd., or Natural Health Systems, Inc. 8. Defendant Janus, individually and as president of Progressive Products, Inc., has waived any rights that may arise under the Equal Access to Justice Act, 28 U.S.C. 2412. 9. The Commission's agreement to this Order is expressly premised upon the truthfulness, accuracy, and completeness of the financial statements submitted by Defendant Janus, individually and as president for Progressive Products, Inc., to the Commission, copies of which is attached to this Order. 10. No security is required of any agency of the United States for issuance of an injunction. Fed. R. Civ. P. 65(c). ORDER I. Definitions A. "Defendants" shall refer inclusively to Paul Stephan Janus and Progressive products, Inc. B. "Receivership Defendants" means Business Opportunity Center, Inc., Progressive Products, Inc., Natural Health Systems, Inc., and Market Systems, Ltd. C. "Defendant Paul Stephan Janus" or "Defendant Janus" shall mean both Paul Stephan Janus individually and as president of Progressive Products, Inc. D. "Assets" means any legal or equitable interest in, right to, or claim to, any real or personal property, including but not limited to chattel, goods, instruments, equipment, fixtures, general intangibles, effects, leaseholds, mail or other deliveries, inventory, checks, notes, accounts, credits, receivables, and all cash, wherever located. E. "Document" is synonymous in meaning and equal in scope to the usage of the term in Federal Rule of Civil Procedure 34(a), and includes writings, drawings, graphs, charts, photographs, phonorecords, computer records, and other data compilations from which information can be obtained, translated, if necessary, through detection devices into reasonably usable form. A draft or non-identical copy is a separate document within the meaning of the term "document." F. "Person" means any natural person or any other public or private entity, including any governmental entity, corporation, partnership, unincorporated association, trust, or estate. G. "Receiver" means Gerald B. Wald or his successor as receiver in this action. H. "Alcohol reducing agent" means any product or substance for which an express or implied representation is made that the product or substance will or may reduce or minimize inebriation, blood alcohol levels, or alcohol toxicity, including but not limited to the products or substances known as the "Alcohol Neutralizer," "pueraria," or "Neutrahol." I. "Business venture" means any written or oral business arrangement, however denominated (whether or not covered by FTC's Franchise Rule, 16 C.F.R. Part 436), which consists of the payment of any consideration for: 1. the right or means to offer, sell, or distribute goods or services (whether or not identified by a trademark, service mark, trade name, advertising, or other commercial symbol); and 2. more than nominal assistance to any person or entity in connection with or incident to the establishment, maintenance, or operation of a new business or the entry by an existing business into a new line or type of business. J. "Franchise" and "Franchisee" shall be defined by Section 436.2(a) of the Franchise Rule, 16 C.F.R. 436.2(a), a copy of which is attached to this Order. II. Scope of Order IT IS FURTHER ORDERED that any provision of this Order that is binding upon the Defendants is binding upon them and upon their successors, assigns, officers, agents, servants, employees, attorneys, and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any corporation, partnership, or other entity or device. III. Prohibited Commercial Activities IT IS FURTHER ORDERED that Defendants hereby are enjoined permanently from -- A. Offering for sale, selling, recommending, or assisting any person in offering for sale, selling, or recommending any alcohol reducing agent or business venture involving any health product; B. Making any material misrepresentation in connection with Defendant's offering for sale or selling any product or service, including but not limited to any misrepresentation concerning: 1. the safety or efficacy of the product or service; 2. government review or approval of the product or service; or 3. the results or findings of any tests or studies of the product or service; C. Transferring or disclosing to any person or entity (except to the Commission or to the receiver or by Order of this Court) the names, addresses, telephone numbers, social security numbers, account numbers, or other identifying information of any person who purchased or inquired about any alcohol reducing agent or any business venture involving an alcohol reducing agent; and D. Violating any provision of the Franchise Rule, 16
C.F.R. Part 436. IV. Continuation of Receivership IT IS FURTHER ORDERED that Gerald B. Wald shall continue as permanent Receiver, with the full power of an equity Receiver, for Defendant Progressive Products, Inc., and of all funds, properties, premises and other assets of Progressive Products, Inc., of whatever type and wheresoever situated, whether in the name of Progressive Products, Inc, or any one of the defendants, or any other persons, directly or indirectly owned, beneficially or otherwise, by Progressive Products, Inc. IT IS FURTHER ORDERED: A. That Defendant Janus, and any other person or entity served with a copy of this Order, shall forthwith or within such time permitted by the Receiver in writing, deliver over to said Receiver possession and custody of all funds, assets, property owned beneficially or otherwise, and all other assets wherever situated, of Progressive Products, Inc., provided however, that any financial institution in possession of such assets shall release such assets directly to the Receiver, as directed by the Receiver, upon receiving a copy of this Order. B. That the Receiver, if he has not already done so, is directed to open (an) interest-bearing bank account(s), as the designated depository or depositories for the funds of Progressive Products, Inc. All funds coming into the hands of the Receiver shall be deposited therein, and said funds shall be used by the Receiver to accomplish the purposes of the Receivership as set forth herein, or pursuant to any further order of the Court. C. That the Defendants and their respective officers, agents, servants, attorneys, employees, independent contractors, and all persons or entities directly or indirectly under the control, of any of them, or under common control with them or any of them, and all persons or entities in active concert or participation with them or any of them, are enjoined and restrained from interfering in any way with the functions of the Receiver and they, and each of them are ordered and directed to assist and participate with the Receiver in accomplishing the purposes of the Receivership, including: (a) to see that all assets, contracts, contract rights, and all receivables, and the rights thereto, are turned over to the Receiver; and (b) to see that all persons who owe money to Progressive Products, Inc., are advised that all monies shall be paid to the Receiver. Each of the defendants, whether acting themselves or by or through others, are enjoined from excusing debts to Progressive Products, Inc., from taking, using or diverting the assets of Progressive Products, Inc., or from otherwise impairing or disposing of the assets of Progressive Products, Inc., whether real, personal or mixed, and whether directly or indirectly, or in any other fashion whatsoever. D. That within six months of appointment, and semi-annually thereafter, the Receiver shall serve and file with the Court a report showing, (a) the receipts and expenditures of the Receivership; and (b) all acts and transactions performed in the Receivership. E. That the Receiver shall keep a true and accurate account of any and all receipts and expenditures which he shall make as Receiver. F. That the Receiver, and any counsel whom the Receiver may select, are entitled to reasonable compensation for the performance of duties pursuant to this Order, from the assets now held by or in the possession or control of or which may be received by Progressive Products, Inc., in the amount or amounts commensurate with their duties and obligations in the circumstances, plus actual out-of-pocket expenses incurred by him or them, in the performance and accomplishment of the Receiver's duties, subject to Court approval. V. Redress A. Defendant Janus forever waives, releases, discharges, and disclaims all right, title, and interest in (1) all assets transferred to the Receivership estate; and (2) all assets now in the possession of or subject to the control of the Receiver, including without limitation the balance of account number 01102028 at the Cosmopolitan Bank in Chicago, Illinois. None of the assets described in this subparagraph shall be returned to the defendants, their respective successors, heirs, or assigns. B. Defendant Janus hereby transfers to the Receiver all of his right, title, and interest in all cash and other property now in the possession of the Receiver, and all property of the receivership defendants. C. Defendant Janus forever waives, releases, and discharges all claims that he has in any capacity against the Receivership defendants and all claims he has in any capacity against the Receiver or his agents for conduct undertaken through the date of entry of this Order. D. The Commission agrees to accept Defendant Janus' undertakings required by this Order, including the asset transfer described above in paragraph V(B), in full settlement of its claim for monetary relief against Defendant Janus arising from the transactions that are the subject of the Commission's Complaint, except as otherwise provided in paragraph VI. below. E. All of the Defendants' assets remaining in the Receiver's possession shall be used, after payment of the Receiver's fees and other expenses approved by this Court, for distribution to creditors of Defendant Progressive Products, Inc., if any. The Receiver shall submit to the Court for consideration, on notice to and after consultation with Plaintiff Federal Trade Commission, a plan to distribute the Receivership assets (the "distribution plan"). The distribution plan shall to the extent practicable address, among other things, the claims of (1) consumers who purchased any alcohol reducing agents from any of the named defendants in this matter, whether the consumers received the product or not; or (2) consumers who purchased from any of the named defendants in this matter a business venture involving the sale of an alcohol reducing agent. Provided, that Plaintiff Federal Trade Commission may propose to this Court alternative terms for the distribution plan in the event the Receiver and the Plaintiff do not agree after consultation. F. Any funds that are not distributed to consumers in the form of redress, distributed to trade creditors, or used to pay administrative costs associated with Receivership estate shall be paid over to the United States Treasury as an equitable disgorgement remedy. Provided further, that if the Receivership assets are insufficient to justify a distribution plan for consumer redress, the Federal Trade Commission or the Receiver may request Court approval to pay some or all of the available monies to the United States Treasury as an equitable disgorgement remedy. Provided further, that in the event a consumer redress plan is created pursuant to court order with respect to claims against any other defendant in this case, the other consumer redress plans may be combined or otherwise jointly administered, pursuant to further court order, for purposes of administration and distribution. The Commission or the Receiver may move for such consolidation. Provided further, that none of the assets turned over to the Receiver pursuant to this Order shall be returned to the Defendants. G. Consumers and other creditors shall be required to release and discharge the settling Receivership Defendant Progressive Products, Inc., only from all claims that arise from the business of the Receivership Defendants as a condition of receiving payment from the Receivership estate. H. The Defendants shall have no right to object to any aspect of the distribution plan(s) submitted by the Receiver and/or the Plaintiff Federal Trade Commission pursuant to this Order. The Defendants also shall have no right to object to the disposition of the assets transferred pursuant to paragraph V(B). I. The Defendants and the Receiver shall provide full and complete cooperation to the Commission and its agents in collecting information relevant to the preparation of the distribution plan described in paragraph V(E). J. This Stipulated Final Judgment and Order is not intended as full compensation for the Commission's claims as described in the Commission's complaint. This Order is intended to release only Defendants Janus and Progressive Products, Inc. The Commission expressly reserves the right to seek relief under any cause of action or any other claim of whatever kind or nature it may have or hereafter have against any person or persons other than Defendants Janus and Progressive Products, Inc. arising out of the conduct described in the Commission's complaint. K. The Commission expressly reserves its right to object in this action to assertions by any party of comparative fault principles, apportionment of damages, or claims for contribution and indemnity among Defendants Janus and Progressive Products, Inc., and the non-settling defendants in this action. This Stipulated Final Judgment and Order is not intended to permit any non-settling defendant to assert any claim for contribution, indemnity, or apportionment of damages where any such claim would not otherwise be allowed by applicable law. L. If the Commission is successful in the prosecution of its claims against any other defendant that is not a party to this Agreement, or if any other defendant that is not a party to this Agreement is successful in bringing any claim it may have against Defendants Janus or Progressive Products, Inc., for liability to it for any amount sought by the Commission or for contribution or indemnity for losses attributable to monetary relief paid to the Commission by any defendant not a party to this Agreement, based on any assignment of responsibility to each, then the Commission hereby releases and discharges that portion, fraction, or percentage of its total claims and monetary relief that may be allocated to Defendants Janus and Progressive Products, Inc. M. It is the intention of the Commission and Defendants to extinguish any potential liability on the part of Defendants Janus and Progressive Products, Inc. for contribution or indemnity which might be claimed against them by any non-settling defendant charged with common liability with Defendants Janus and Progressive Products, Inc. to the Commission for such claims. VI. Record Keeping and Monitoring IT IS FURTHER ORDERED that, for a period of five years from the date of entry of this Order, A. Defendant Janus is hereby restrained and enjoined from failing to create and maintain: 1. records containing the name, address, telephone number, and social security number of each person employed by Defendant Janus in any capacity, that person's job title or position, the date upon which the employee commenced work, and the date and reason for the employee's termination, if applicable; 2. records containing the name, address, and telephone number of each person to whom Defendant Janus sells, invoices, or ships any property, goods, or services; 3. records of the cost of goods or property sold by Defendant Janus and the income and expenses incurred in the sale of any property, good, or service; 4. records of every customer complaint or refund request received by Defendant Janus, which records include, a. the customer's name, address, telephone number, and the dollar amount paid by the customer; b. the written complaint, if any, and the date of the complaint or refund request; c. the basis of the complaint or refund request and the nature and result of any investigation conducted as to the validity of any complaint; d. each response to the complaint or refund request and the date of the response; e. any final resolution and the date of resolution; and f. in the event of a denial of a refund request, the reason for the denial, or if cured, the basis for determining that the complaint has been cured; B. Defendant Janus is hereby restrained and enjoined from failing to permit representatives of the Federal Trade Commission, for purposes of determining or securing compliance with this Order: 1. access on demand to any office, facility, computer, or computer system in which documents are stored or held that relate to compliance with the terms of this Order or that are created or maintained in compliance with the terms of this Order, for the purpose of inspecting, copying, printing, or downloading the documents; and 2. access, upon written notice at least one business day in advance, to the officers, directors, and employees of any company or other business entity owned, managed, or controlled by Defendant Janus, in whole or in part, for the purpose of interviewing them regarding compliance with this Order. The interviews shall be held at a location reasonably convenient to the Defendant Janus and to the Commission's representatives. Any person interviewed may have counsel present. Defendant Janus shall provide full access between 8 a.m. and 6 p.m. on any weekday that is not a federal holiday. Defendant Janus shall not restrain or interfere with the Commission for any reason or in any way. Defendant Janus shall allow representatives of the Commission to bring any equipment or supplies necessary to copy documents, to download computer files, or to engage in other activities permitted under this paragraph. C. Defendant Janus shall provide the Commission an affidavit within thirty (30) days after any change to his home or business addresses, employment, or sources of earned income. Such affidavit also shall include a statement of the nature of each new business, employment, or source of earned income; and a description of his duties and responsibilities in connection with each new business, employment, or source of earned income. Defendant Janus shall provide such affidavits as described in paragraphs IX and X below. D. Pursuant to Section 604 of the Fair Credit Reporting Act, 15 U.S.C. 1681b, any consumer reporting agency may furnish the Commission or the Receiver with a consumer report concerning Paul Stephan Janus or his successors or assigns. VII. Commission's Right To Reopen IT IS FURTHER ORDERED that the Commission may request by motion that the Order be reopened for the purpose of modifying the terms of the Order to provide a payment by Defendant Janus in disgorgement to the United States Treasury or for customer refunds if the Commission has evidence that Defendant Janus: A. Signed a financial statement that was submitted to the Commission or to this Court and that was untruthful, inaccurate, or incomplete or that misrepresented the Defendant Janus' assets or liabilities as of the date Defendant Janus signed the statement; or B. Failed to report assets that were fraudulently conveyed from Defendant Janus to another person; or C. Violated the temporary restraining order or any preliminary injunction entered in this action by failing to disclose or deliver any asset of any Receivership Defendant to the Receiver. The Commission's agreement to this Order in reliance
upon the financial statements of Defendant Janus shall
not be deemed a waiver of its right to institute
proceedings under this paragraph, and the Commission
shall not be estopped from instituting proceedings under
this paragraph, because of any notice or knowledge it may
have had at any time prior to the date of entry of this
Order that Defendant Janus committed acts of the kind
described in subparagraph A, B, or C of this paragraph.
In the event of any motion brought under this paragraph,
this Order shall be reopened for the limited purposes set
forth above. This Order shall remain in full force and
effect in all other respects unless otherwise ordered by
this Court. Proceedings instituted under this paragraph
are in addition to, and not in lieu of, any other civil
or criminal remedies that may be provided by law,
including any other proceedings that the Commission may
initiate to enforce this Order. VIII. Notification About This Order IT IS FURTHER ORDERED that Defendant Janus shall provide a copy of this Order to each of his successors, assigns, officers, agents, servants, employees, and attorneys, and to all persons or entities: A. Who have participated prior to entry of this Order with him in the offering or selling of any alcohol reducing agent or any business venture involving an alcohol reducing agent or have purchased from him any alcohol reducing agent or any business venture involving an alcohol reducing agent. Such copies shall be provided within three (3) business days after entry of this Order. Within five (5) business days after entry of this Order, Defendant Janus shall provide an affidavit to the Commission, as described in paragraphs IX and X below, stating whether he has complied with this subparagraph. B. Who after entry of this Order participate with him in the offering for sale or sale of any drug or herbal product. Such copies shall be provided within one (1) business day after the first written or oral communication between Defendant Janus and any such person about the sale or possible sale of any drug or herbal product. Within five (5) business days after such first written or oral communication, Defendant Janus shall provide an affidavit to the Commission, as described in paragraphs IX and X below, stating whether he has complied with this subparagraph and setting forth the name and address of each person or entity to whom a copy of the Order was provided, the date on which the person was provided the copy, the name and address of the person who provided the copy, and the manner of service. IX. Form of Affidavits IT IS FURTHER ORDERED that all affidavits by Defendant Janus that are required under this Order shall be in writing and shall be subscribed by Defendant Janus, as true under penalty of perjury and dated, in substantially the following form: "I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on (date). (Signature)". X. Service IT IS FURTHER ORDERED that any service or notification to -- A. Defendant Janus under this Order shall be complete upon delivery to the last address reported by Defendant Janus to the Commission. B. The Commission under this Order shall be complete upon delivery to the Associate Director, Division of Marketing Practices, Federal Trade Commission, Sixth Street and Pennsylvania Avenue, N.W., Washington, DC 20580. XI. Paragraph Captions IT IS FURTHER ORDERED that the paragraph captions in this Order shall not be considered in interpreting or applying the terms of any paragraph. XII. Severability IT IS FURTHER ORDERED that, if any provision of this Order, or if the application of any provision to any person or circumstance, is held invalid, the remainder of the Order and the application of the provision to any other person or circumstance shall not be affected by the holding. XIII. Retention of Jurisdiction IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for all purposes. SO ORDERED, at Fort Lauderdale, Broward County, Florida, this _____day of _________, 199__. ___________________________ The undersigned consent to entry of this Stipulated Permanent Injunction: ___________________________ ___________________________ ___________________________ |