UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION

FEDERAL TRADE COMMISSION, and STATE OF ARKANSAS ex rel. WINSTON BRYANT, ATTORNEY GENERAL,
Plaintiffs,

v.

SURECHEK SYSTEMS, INC., d/b/a CONSUMER CREDIT CORP., and CONSUMER CREDIT DEVELOPMENT CORP., a Georgia corporation;

DOUGLAS S. DERICKSON, individually and as an officer of SureCheK Systems, Inc., d/b/a Consumer Credit Corp., and Consumer Credit Development Corp.; and

STEVE LOVERN, individually and as an officer of SureCheK Systems, Inc., d/b/a Consumer Credit Corp., and Consumer Credit Development Corp.,
Defendants.

CIVIL ACTION NO.1:97-CV-2015-JTC

STIPULATED ORDER FOR PRELIMINARY INJUNCTION AS TO DEFENDANTS SURECHEK SYSTEMS, INC. AND DOUGLAS S. DERICKSON

Plaintiffs, the Federal Trade Commission ("Commission"), and the State of Arkansas by and through its Attorney General, having filed their complaint for a permanent injunction and other relief in this matter, pursuant to the Telemarketing Sales Rule, 16 C.F.R. Part 310, and Sections 13(b) and 19(a) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b(a), and the Court having issued an ex parte Temporary Restraining Order, and the Court having considered the pleadings, declarations, exhibits, and memorandum of law filed in support thereof, and now being advised in the premises finds that:

1. This Court has jurisdiction of the subject matter of this case and of all the parties hereto.

2. There is good cause to believe that the Defendants SureCheK Systems, Inc., d/b/a Consumer Credit Corporation and Consumer Credit Development Corporation (hereinafter referred to as "CCC") and Douglas S. Derickson have engaged and are likely to engage in acts and practices that violate the Telemarketing Sales Rule, 16 C.F.R. Part 310, and Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and that the Plaintiffs are therefore likely to prevail on the merits of this action;

3. There is good cause to believe that immediate and irreparable damage to the Court's ability to grant effective final relief for consumers in the form of monetary redress will occur from the sale, transfer, or other disposition or concealment by Defendants of their assets or corporate records if this Preliminary Injunction is not entered.

4. Weighing the equities and considering the Plaintiffs' likelihood of ultimate success on the merits, a Preliminary Injunction with asset freeze and other equitable relief is in the public interest; and

5. No security is required of any agency of the United States for issuance of a restraining order. Fed. R. Civ. P. 65(c).

Definitions

For purposes of this Preliminary Injunction, the following definitions shall apply:

1. "Telemarketing," "telemarketer," "seller," and "material" are defined in Section 310.2 of the Telemarketing Sales Rule, 16 C.F.R. § 310.2, a copy of which is attached to this Order.

2. "Defendants" means corporate Defendant SureCheK Systems, Inc. d/b/a Consumer Credit Corporation and Consumer Credit Development Corporation and individual Defendant Douglas S. Derickson, and each of them, and their successors, assigns, officers, agents, servants, employees, 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, subsidiary, division, or other device.

3. "Plaintiffs" means the Federal Trade Commission and the State of Arkansas by and through its Attorney General.

4. "Assets" means all real and personal property of any Defendant, or held for the benefit of any Defendant, including but not limited to "goods," "instruments," "equipment," "fixtures," "general intangibles," "inventory,", "checks," or "notes," (as these terms are defined in the Uniform Commercial Code), lines of credit and all cash, wherever located.

I.

IT IS THEREFORE ORDERED that, in connection with telemarketing, Defendants are hereby temporarily restrained and enjoined from:

A. Misrepresenting, either orally or in writing, any material fact, including but not limited to the following:

1. That consumers will receive a credit card, such as a Visa or MasterCard, in return for the payment of a one-time fee;

 

2. The total costs to purchase, receive, or use any goods or services that are offered, offered for sale, or sold by the Defendants; and

 

3. The purpose for which the Defendants will use a consumer's bank account information;

B. Requesting or receiving payment of any fee or consideration in advance of obtaining or arranging an extension of credit when they have guaranteed or represented a high likelihood of success in obtaining or arranging an extension of credit;

C. Failing to disclose, in a clear and conspicuous manner, before the consumer sends any funds to Defendants or divulges to Defendants credit card or bank account information, the total costs to purchase, receive, or use, any goods or services that are offered, offered for sale, or sold by Defendants, and all material restrictions, limitations or conditions to receive an extension of credit, including but not limited to the following, that:

1. additional applications for a credit card will be required;

 

2. credit cards will be issued only if the applications of the consumers are approved by the card issuing bank; and

 

3. the consumers must pay additional fees to the card issuing bank if the consumers are approved for the major credit cards;

D. Obtaining, submitting for payment, or assisting others to obtain or submit for payment a check, draft, or other form of negotiable paper drawn on a person's checking, savings, share, or similar account without obtaining that person's express written authorization, in the form of that person's signature on the negotiable instrument; and

E. Providing substantial assistance or support to any seller or telemarketer when the Defendants know or consciously avoid knowing that the seller or telemarketer is engaged in any act or practice in violation of the Telemarketing Sales Rule 16 C.F.R. Part 310.

II.

IT IS FURTHER ORDERED that the Defendants are hereby temporarily restrained and enjoined from:

A. Transferring, converting, encumbering, selling, concealing, dissipating, disbursing, assigning, spending, withdrawing, or otherwise disposing of any funds, property, accounts, contracts, shares of stock, or other assets, wherever located, that are (1) owned or controlled by any Defendant, in whole or in part; or (2) in the actual or constructive possession of any Defendant; or (3) owned, controlled by, or in the actual constructive possession of any corporation, partnership, or other entity directly or indirectly owned, or controlled by, or under common control with, any Defendant, including, but not limited to, any assets held by or for any Defendant at any bank or savings and loan institution, or with any broker-dealer, escrow agent, title company, commodity trading company, precious metal dealer, or other financial institution or depository of any kind, except as otherwise provided in this Order;

B. Opening or causing to be opened any safe deposit boxes titled in the name of any Defendant, or subject to access by any Defendant;

C. Incurring charges on any credit card issued in the name, singly or jointly, of any Defendant;

D. Defendants shall give Plaintiffs thirty (30) days advance notice of any request to directly or indirectly transfer, sell, alienate, liquidate, encumber, pledge, lease, loan, assign, conceal, dissipate, convert, or otherwise dispose of any property or assets owned or controlled by any Defendant;

E. The transfer, sale, alienation, liquidation, encumbrance, pledge, lease, loan, assignment, or other disposition of property or assets owned or controlled by any Defendant, must be approved by Plaintiffs prior to the disposition thereof. Said approval is within the sole discretion of the Plaintiffs. The Plaintiffs shall designate an account into which all cash proceeds from the disposition of Defendants' property or assets shall be deposited.

F.. Defendants shall submit to Plaintiffs on a monthly basis, and at the first of each month beginning August 1, 1997, a financial statement that completely and accurately shows all financial transactions of defendants including, but not limited to copies of all of the following documents:

1. Bank deposit slips, deposit receipts;

 

2. Invoices supporting all business and personal disbursements, payments and expenditures;

 

3. Check registers, copies of checks both written and received by Defendants;

 

4. All income/revenue statements or summaries provided by banks or other third parties.

 

5. Monthly statements for all bank accounts, deposit accounts, or investment accounts;

 

6. Ongoing payroll statements or records; and

 

7. Income and expense ledger sheets with accompanying monthly income and expense statements.

III.

IT IS FURTHER ORDERED that any financial or brokerage institution, business entity, or person that holds, controls, or maintains custody of any account or asset of any of the Defendants, or has held, controlled, or maintained custody of any account or asset of any of the Defendants at any time since January 1, 1996, shall:

A. Prohibit the Defendants from withdrawing, removing, assigning, transferring, pledging, encumbering, disbursing, dissipating, converting, selling, or otherwise disposing of any such asset except as directed by further order of the Court;

B. Deny Defendants access to any safe deposit box that is:

1. Titled in the name of any Defendant, individually or jointly; or

 

2. Otherwise subject to access by any Defendant;

C. Provide counsel for the Plaintiffs, within five (5) business days of receiving a copy of this Order, a sworn statement setting forth:

1. The identification number of each such account or asset titled in the name, individually or jointly, of any of the Defendants, or held on behalf of, or for the benefit of, any of the Defendants;

 

2. The balance of each such account, or a description of the nature and value of such asset as of the close of business on the day on which this Order is served, and, if the account or other asset has been closed or removed, the date closed or removed, the total funds removed in order to close the account, and the name of the person or entity to whom such account or other asset was remitted; and

 

3. The identification of any safe deposit box that is either titled in the name, individually or jointly, of any Defendant, or is otherwise subject to access by any Defendant; and

D. Upon the request by the Plaintiffs, promptly provide the Plaintiffs with copies of all records or other documentation pertaining to such account or asset, including but not limited to originals or copies of account applications, account statements, signature cards, checks, drafts, deposit tickets, transfers to and from the accounts, all other debit and credit instruments or slips, currency transaction reports, 1099 forms, and safe deposit box logs. Any such financial institution, account custodian, or other aforementioned entity may arrange for the Plaintiffs to obtain copies of any such records which the Plaintiffs seek, provided that such institution or custodian may charge a reasonable fee not to exceed fifteen cents per page copied.

IV.

IT IS FURTHER ORDERED that Defendants are hereby preliminarily enjoined from:

A. Failing to create and maintain books, records, accounts, and data that, in reasonable detail, accurately, fairly, and completely reflect their incomes, disbursements, transactions, and use of monies; and

B. Destroying, erasing, mutilating, concealing, altering, transferring, or otherwise disposing of, in any manner, directly or indirectly, any contracts, accounting data, correspondence, advertisements, computer tapes, discs, or other computerized records, books, written or printed records, handwritten notes, telephone logs, telephone scripts, receipt books, ledgers, personal and business canceled checks and check registers, bank statements, appointment books, copies of federal, state or local business or personal income or property tax returns, and other documents or records of any kind which relate to their business practices or business or personal finances from January 1, 1996, to the present time.

V.

IT IS FURTHER ORDERED that each Defendant shall, within ten days after entry of this Order, provide the Plaintiffs with a completed financial statement, on the forms attached to this Order, accurate as of the date of service of this Order upon such Defendant.

VI.

IT IS FURTHER ORDERED that Plaintiffs and their agents may serve copies of this Order upon any financial institution or person or entity that may be in possession of any assets, property, or property rights of Defendants or that may be subject to any provision of this Order.

VII.

IT IS FURTHER ORDERED that, Plaintiffs shall have the right to review and copy any materials relevant to Defendants business and financial activities that have been or may be seized pursuant to a criminal search warrant.

VIII.

IT IS FURTHER ORDERED that Defendants shall immediately provide a copy of this Order to each of their affiliates, successors, assigns, agents, employees, representatives, and independent contractors, and shall, within three (3) business days from the date of entry of this Order, provide Plaintiffs with a sworn statement that the Defendants have complied with this provision of the Order and provide Plaintiffs with the names, addresses and telephone numbers of all persons and business entities who were provided a copy of this Order.

IX.

IT IS FURTHER ORDERED that Defendants and their successors, assigns, agents, servants, employees, and 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, subsidiary, division, trust, investment, or other device, are hereby preliminarily restrained and enjoined from using any aliases, pen names, pseudonyms or other fictitious names, or otherwise misrepresenting their true identities in the course of business dealings or in publicly filed documents.

X.

IT IS FURTHER ORDERED that Defendants and their successors, assigns, agents, servants, employees, and 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, subsidiary, division, trust, investment, or other device, are hereby preliminarily restrained and enjoined from creating, operating or controlling any business entity, including any partnership, limited partnership, joint venture, sole proprietorship, or corporation, without first providing the Plaintiffs with a written statement disclosing (1) the name of the business entity, (2) the address and telephone number of the business entity, (3) the names of the business entity's officers, directors, principals, managers and employees, and (4) a detailed description of the business entity's proposed activities.

XI.

IT IS FURTHER ORDERED that, pursuant to Section 604 of the Fair Credit Reporting Act, 15 U.S.C. § 1681b, any consumer reporting agency may furnish the Plaintiffs with a consumer report concerning any Defendant.

XII.

IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for all purposes.

SO ORDERED, this _____day of July, 1997.

__________________________________
Jack T. Camp
United States District Judge

The parties, by their respective counsel, consent to the terms and conditions of the order as set forth above and hereby consent to the entry thereof without the need of a hearing.

FOR THE DEFENDANTS

FOR THE PLAINTIFFS