IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA

FEDERAL TRADE COMMISSION,

Plaintiff,

v.

MAG-TOPIA, INC. ("MTI") and ROBERT FLARIDA,

Defendants.

Case No. SACV 97-447AHS (ANx)

STIPULATED FINAL JUDGMENT
AND ORDER FOR PERMANENT
INJUNCTION AND CONSUMER REDRESS
AGAINST ROBERT FLARIDA

STEPHEN CALKINS
General Counsel

ANN I. JONES
RUSSELL S. DEITCH

Federal Trade Commission
11000 Wilshire Blvd., Ste. 13209
Los Angeles, California 90024
(310) 235-4040

TARA M. FLYNN

Federal Trade Commission
6th Street & Pennsylvania Avenue, N.W.
Room H-238
Washington, D.C. 20580
(202) 326-3710

Attorneys for Plaintiff

On May 19, 1997, Plaintiff Federal Trade Commission ("Commission"), filed a complaint for permanent injunction and other relief in this matter, pursuant to Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b) and 57b, and the Telemarketing and Consumer Fraud Abuse Prevention Act, 15 U.S.C. § 6101 et. seq., against Mag-Topia, Inc. ("MTI") and Robert Flarida (collectively the "Defendants"). Plaintiff alleged in its complaint that Defendants violated Section 5 of the FTC Act, 15 U.S.C. § 45(a) and the Telemarketing Sales Rule, 16 C.F.R., Part 310, by engaging in a fraudulent magazine and prize promotion scheme.

The Commission and Defendant Robert Flarida, by and through counsel, have agreed to the entry of this Stipulated Final Judgment and Order for Permanent Injunction ("Final Judgment") by this Court in order to resolve all matters of dispute between them in this action. The Commission and Robert Flarida have consented to entry of this Final Judgment without trial or adjudication of any issue of law or fact herein.

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that:

1. This Court has jurisdiction of the subject matter and of the parties hereto and venue is proper in this Court. The complaint states a claim upon which relief may be granted against Defendant under Sections 13(b) and 19 of the FTC Act, 15 U.S.C. § 53(b), as amended;
2. Entry of this Final Judgment is in the public interest;
3. Robert Flarida has waived all rights to seek appellate review or otherwise challenge or contest the validity of this Final Judgment;
4. This Final Judgment does not constitute and shall not be interpreted to constitute either an admission by Robert Flarida or a finding by the Court that Robert Flarida has engaged in violations of the FTC Act and the Telemarketing Sales Rule;
5. For purposes of this Order, "Defendant" means Robert Flarida, and his successors, assigns, officers, agents, servants, employees, and those persons in active concert or participation with him who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device;
6. For purposes of this Order, "Prize Promotion" means (1) A sweepstakes or other game of chance, or (2) An oral or written express or implied representation that a person has won, has been selected to receive, or may be eligible to receive a prize or purported prize; and
7. For purposes of this Order, "Telemarketing" means a plan, program, or campaign which is conducted to induce the purchase of goods or services by use of one or more telephones and which involves more than one interstate telephone call. The term does not include the solicitation of sales through the mailing of a catalog which: contains a written description or illustration of the goods or services offered for sale; includes the business address of the seller; includes multiple pages of written material or illustrations; and has been issued not less frequently than once a year, when the person making the solicitation does not solicit customers by telephone but only receives calls initiated by customers in response to the catalog and during those calls takes orders only without further solicitation. For purposes of the previous sentence, the term "further solicitation" does not include providing the customer with information about, or attempting to sell, any other item included in the same catalog which prompted the customer’s call or in a substantially similar catalog.

I. BAN

IT IS THEREFORE ORDERED that Defendant Robert Flarida is hereby permanently restrained and enjoined from, directly or through any intermediary, selling any magazine or engaging in any prize promotion, or from holding any ownership interest, share, or stock in, or serving as an officer, director or trustee of, any business entity engaged in whole or in part, in the sale of any magazine or any prize promotion.

II. PROHIBITED BUSINESS PRACTICES

IT IS THEREFORE ORDERED that in connection with advertising, promoting, offering for sale, or selling of any goods or services Defendant Robert Flarida, and his agents, employees, officers, servants, and attorneys, and those persons in active concert or participation with him, who receive actual notice of this Order by personal service or otherwise, are hereby permanently restrained and enjoined from:

A. Falsely representing, directly or through any intermediary, expressly or by implication, any fact material to a consumer’s decision to purchase any good or service; and

B. Violating the Telemarketing Sales Rule, 16 C.F.R. Part 310, or as it may hereinafter be amended.

III. MONETARY RELIEF

IT IS FURTHER ORDERED that Defendant Robert Flarida shall pay to the Federal Trade Commission, as full satisfaction of all monetary claims asserted by the Commission in its complaint, the sum of $22,850.00. This payment is for equitable monetary relief, including but not limited to, consumer redress and/or disgorgement and for paying any attendant expenses of

administering any redress fund. If the Commission, in its sole discretion, determines that redress is wholly or partially impractical, any funds not so used shall be deposited in the United States Treasury. The Commission in its sole discretion may use a designated agent to administer consumer redress.

IV. RELEASE OF ASSETS

IT IS FURTHER ORDERED that by signing this Stipulated Final Judgment and Order Defendant Robert Flarida agrees, upon entry of this Order, to the release, directly to the Federal Trade Commission, of all assets held in the following bank accounts which were frozen pursuant to this Court’s Preliminary Injunction Order in this case: Wells Fargo account number 0455530758; Wells Fargo account number 6036395119; and Wells Fargo account number 6607338480. The identified financial institution is authorized to transfer the balance of the above- listed accounts to the Federal Trade Commission in the form of wire transfers or certified cashier’s check upon notice of the entry of this Stipulated Final Judgment and Order.

V. COSTS OF COLLECTION

IT IS FURTHER ORDERED that notwithstanding any other provision of this Stipulated Final Judgment and Order, Defendant Robert Flarida agrees that, if he fails to meet the payment obligations set forth above, Defendant shall pay the costs and attorneys fees incurred by the Federal Trade Commission and its agents in any attempts to collect amounts due pursuant to the Stipulated Final Judgment and Order. The Defendant further agrees that the facts as alleged in the Complaint filed in this action shall be taken as true in any subsequent litigation filed by the Federal Trade Commission to enforce its rights pursuant to this Stipulated Final Judgment and Order, including but not limited to a nondischargeability complaint in a subsequent bankruptcy proceeding.

VI. CUSTOMER LISTS

IT IS FURTHER ORDERED that Defendant Robert Flarida, is hereby permanently enjoined from providing to any person, except agents of the Commission or other law enforcement authorities, the name, address, telephone number, or credit card or bank account number, of any person who participated in the Defendant’s promotions or was contacted by the Defendant’s employees, agents, or representatives in the course of the Defendant’s promotions.

VII. DEFENDANT’S NOTIFICATION OF EMPLOYEES

IT IS FURTHER ORDERED that Defendant Robert Flarida shall, within thirty (30) days after the date of entry of this Final Judgment and Order, provide a copy of this Order to each of the officers, directors, employees, agents, representatives, and attorneys of MTI, and secure from each of them a signed and dated acknowledgment and receipt thereof. Defendant Robert Flarida shall, within ten (10) days after complying with this Paragraph, serve the FTC with an affidavit, by mailing a copy thereof, setting forth the fact and manner of his compliance, including the name and title of each person to whom a copy of the Order has been provided, and attaching a copy of each signed statement acknowledging receipt thereof.

VIII. NOTICES OF CHANGES

IT IS FURTHER ORDERED that, for a period of five (5) years commencing with the date of entry of this Final Judgment and Order, Robert Flarida, shall:

A. Notify the Commission in writing of any change in his residential address within ten days of such change;

B. Notify the Commission in writing of any change in his employment status within ten days of such change. Such notice shall include the name and address of each business that the Defendant is affiliated with or employed by, a statement of the nature of the business, and a statement of the defendant's duties and responsibilities in connection with the business; and

C. Notify the Commission in writing at least thirty days prior to the effective date of any proposed change in the structure of any business entity owned or controlled by Robert Flarida, such as creation, incorporation, dissolution, assignment, sale, creation or dissolution of subsidiaries, or any other changes that may affect compliance obligations arising out of this Final Judgment and Order.

IX. ACCESS TO RECORDS

IT IS FURTHER ORDERED that Robert Flarida, and any successors or assigns shall, in connection with telemarketing, for a period of five (5) years from the date of entry of this Final Judgment and Order:

A. Make available to representatives of the Commission, upon reasonable notice, books, records, and accounts which, in reasonable detail, accurately and fairly reflect the income, disbursements, transactions, and use of money by any business entity owned or controlled by Defendant Robert Flarida; and

B. Provide representatives of the Commission, upon reasonable notice and without restraint or interference, access during normal business hours to the offices of any business entity owned or controlled by Defendant Robert Flarida to inspect and copy all documents relating in any way to any conduct subject to this Final Judgment and Order and to interview the officers, directors or employees of any such business with regard to compliance with the terms of this Final Judgment and Order.

X. NOTICES

IT IS FURTHER ORDERED that all notices required of Robert Flarida by this Final Judgment shall be made to the following address:

Associate Director
Division of Marketing Practices
Federal Trade Commission
6th St. & Pennsylvania Ave., N.W.
Washington, D.C. 20580

XI. ADDITIONAL PROCEEDINGS

IT IS FURTHER ORDERED that the Court's approval of this Final Judgment is expressly premised upon the truthfulness, accuracy, and completeness of the statement of Defendant Robert Flarida’s assets provided by counsel for Defendant, Alan Pick, by letter dated August 1, 1997 and attached hereto as Attachment A. Attachment A is incorporated herein by reference. By agreeing to this Order, Defendant acknowledges having received and examined counsel’s statement that contains material information upon which the Commission relied in negotiating and agreeing to the terms of this Order. If, upon motion by the Commission, this Court finds that the statement failed to disclose any material asset, or materially misrepresented the value of any asset, or made any other material misrepresentations or omissions of assets, the Commission may request that the Judgment herein be reopened for the purpose of modifying the amount of redress to consumers; provided, however, that in all other respects this Judgment shall remain in full force and effect unless otherwise ordered by this Court.

XII. RELATIONSHIP TO OTHER ACTIONS

IT IS FURTHER ORDERED that this action, and the relief awarded herein, shall be in addition to and not in lieu of such other remedies as may be provided by law, including civil and criminal remedies, and any proceedings the Commission may initiate to enforce this Final Judgment.

XIII. RETENTION OF JURISDICTION

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

SO ORDERED, this day of , 1997.

United States District Judge

The parties, directly or by their respective counsel, have read, understand and hereby consent to the terms and conditions of the Stipulated Final Judgment as set forth above and consent to the entry thereof. Robert Flarida waives any rights that may arise under the Equal Access to Justice Act, 28 U.S.C. § 2412.