COMPLAINT FOR INJUNCTION

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
FORT LAUDERDALE DIVISION

FEDERAL TRADE COMMISSION,

Plaintiff

NATIONAL GRANT FOUNDATION, INC., GRANT RESEARCH & PUBLISHING, INC.,
WALLACE MILLMAN,
ANTHONY CONSALVO,
DENNIS J. COLONNA,
ANTHONY LUCCA,
HARRIET KAYE,
BEVERLY JANSEN,
and CAROL CLOUGH,

Defendants.

Case No.

Magistrate Judge

COMPLAINT FOR INJUNCTION
AND OTHER EQUITABLE
RELIEF

Plaintiff, the Federal Trade Commission (“Commission”), by its undersigned attorneys, alleges as follows:

JURISDICTION AND VENUE

1. This is an action under Section 13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b), to secure injunctive and other equitable relief, including rescission, restitution, and disgorgement, against defendants for violations of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits deceptive acts or practices in or affecting commerce.

2. This Court has subject matter jurisdiction over plaintiff’s claims pursuant to 28 U.S.C. §§ 1331, 1337(a), and 1345, and 15 U.S.C. §§ 45(a) and 53(b).

3. Venue in this district is proper under 28 U.S.C.§ 1391(b) and (c), and 15 U.S.C. § 53(b).

THE PARTIES

4. The Commission is an independent agency of the United States government created by the FTC Act, 15 U.S.C. §§ 41-58. Section 13(b) of the FTC Act authorizes the Commission to initiate, by its own attorneys, federal district court proceedings to enjoin violations of Section 5(a) of the FTC Act, and to secure such equitable relief, including consumer redress, as may be appropriate in each case.

5. Defendant National Grant Foundation, Inc. (“NGF”) is a Florida corporation with its principal place of business at 6136 NW 11th Street, Sunrise, Florida 33313. NGF was incorporated in March, 1997, purportedly as a non-profit corporation. Since that time, NGF has used direct mail and telephone calls to solicit consumers to purchase its college scholarship services. NGF transacts or has transacted business in the Southern District of Florida.

6. Defendant Grant Research and Publishing (“GRP”) is a Florida corporation with its principal place of business as 6136 NW 11th Street, Sunrise, Florida 33313. GRP was incorporated in February, 1997, as a for-profit corporation. Since that time, GRP has provided business services and funding for NGF in furtherance of NGF’s college scholarship services. GRP transacts or has transacted business in the Southern District of Florida.

7. Defendant Wallace Millman is comptroller for both defendants NGF and GRP. He is also a signatory on the bank accounts of both NGF and GRP. Individually, or in concert with others, he directs, controls, formulates, or participates in the acts and practices of NGF and GRP, including the acts and practices complained of below. Defendant Millman transacts or has transacted business in the Southern District of Florida.

8. Defendant Anthony Consalvo is a founder, principal, director and owner of both defendants NGF and GRP. He is also a signatory on the bank accounts of both NGF and GRP. Individually, or in concert with others, he directs, controls, formulates, or participates in the acts and practices of NGF and GRP, including the acts and practices complained of below. Defendant Consalvo transacts or has transacted business in the Southern District of Florida.

9. Defendant Dennis Colonna is a founder, principal, director, owner, and registered agent of both defendants NGF and GRP. He is also a signatory on the bank accounts of both NGF and GRP. Individually, or in concert with others, he directs, controls, formulates, or participates in the acts and practices of NGF and GRP, including the acts and practices complained of below. Defendant Colonna transacts or has transacted business in the Southern District of Florida.

10. Defendant Anthony Lucca is a director, principal, and owner of NGF. Individually, or in concert with others, he directs, controls, formulates, or participates in the acts and practices of NGF, including the acts and practices complained of below. Defendant Lucca transacts or has transacted business in the Southern District of Florida.

11. Defendant Harriet Kaye provides or has provided telemarketing services to NGF and GRP. She participates or has participated in the acts and practices of NGF and GRP, including the acts and practices complained of below. Defendant Kaye transacts or has transacted business in the Southern District of Florida.

12. Defendant Beverly Jansen provides or has provided telemarketing services to NGF and GRP. She participates or has participated in the acts and practices of NGF and GRP, including the acts and practices complained of below. Defendant Jansen transacts or has transacted business in the Southern District of Florida.

13. Defendant Carol Clough provides or has provided telemarketing services to NGF and GRP. She participates or has participated in the acts and practices of NGF and GRP, including the acts and practices complained of below. Defendant Clough transacts or has transacted business in the Southern District of Florida.

DEFENDANTS’ COURSE OF CONDUCT

14. Since at least March, 1997, and continuing thereafter, defendants have conducted a program to telemarket college scholarship services to high school and college students throughout the United States.

15. Since March, 1997, NGF and GRP have operated out of the same office suite, have maintained affiliated bank accounts, and have shared the same corporate officers. Defendants NGF and GRP typically transact business with the public using the name of the “non-profit” entity, “National Grant Foundation.”

16. In the course of defendants’ telemarketing program, defendants have acquired lists containing the names of high school and college students, and have mailed more than 1.6 million pieces of mail advertising their college scholarship services to the parents of these high school and college students. The front of the postcard typically contains the statement “URGENT SCHOLARSHIP NOTICE” on the front, followed by an “invitation number”. The back of the postcard typically contains the following statements:

Please be advised that a recent addition to our files indicates your student is eligible for our “COLLEGE SCHOLARSHIP & GRANT PROGRAM”.

Last year a total of $40 billion in financial aid was awarded to families of all income levels.

We will be accepting students on a first come, first serve basis.

Please call our Toll Free # 1-800-743-6861 for information and immediate confirmation.

17. In an attempt to convince the consumer of the legitimacy of NGF’s operation, defendants’ written promotional materials and oral sales pitches typically emphasize that NGF is a “non-profit corporation” that is in business simply to help students get “their fair share” of scholarship money.

18. When consumers call defendants’ toll-free number, defendants’ telemarketers typically tell customers that, in exchange for an up-front fee of $179, the company can provide students with access to grant and scholarship funds maintained by large private companies. NGF typically emphasizes that the grants and scholarships do not have to be repaid.

19. NGF representatives assure consumers that the company finds funding for its customers through scholarship sources carefully matched to the needs and qualifications of the students in question, and that students will receive funds from these scholarship sources. In some cases, consumers are told that the students merely have to sign and send in letters prepared by NGF and then they will receive their scholarship money.

20. NGF’s representatives “guarantee” consumers that students will get at least $1,000 in scholarships or grants or NGF will refund its $179 fee.

21. NGF representatives typically conclude their telephone sales pitches by attempting to convince consumers to provide NGF with the checking account number or credit card number over the phone to “hold their place” in NGF’s scholarship program. NGF representatives explain that scholarship deadlines are passing every day and the sooner consumers pay NGF’s fee, the sooner students will get their “fair share” of scholarship money.

22. If a consumer specifically requests a copy of NGF’s refund policy, defendants send a letter stating that [I]f your student does not receive at least one thousand dollars in scholarships or grants that does not have to be repaid, through the sources that we will provide, within one year (365 days) of becoming a client. [sic] The National Grant foundation will refund your entire processing fee.

23. Once the consumers pay their fees and complete their applications, they receive address lists of “sources” for financial aid for which the consumers must apply on their own, as well as several pre-printed form letters addressed to a number of those sources. NGF directs consumers to send the form letters to the scholarship source to request an application for any scholarship or grant offered by the source.

24. The list of “sources” that NGF provides contains a large number of scholarships awarded by the college or university the student attends, or scholarships awarded by the students’ state or local government -- not private or corporate sources of "free" financial aid. Many of the “sources” that defendants’ telemarketers represent as scholarships or grants are actually contests, loans, or work-study programs. Frequently, the sources listed do not exist, have expired deadlines, or are not suitable for the consumer.

25. Consumers rarely, if ever, receive any scholarships through NGF’s services.

26. The acts and practices of defendants, as alleged herein, are in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act, 15 U.S.C. § 44.

DEFENDANTS’ VIOLATIONS OF THE FTC ACT

27. As set forth below, defendants, individually or in concert with others, have violated Section 5(a) of the FTC Act by misrepresenting material facts in connection with the offer and sale of college scholarship services.

28. Defendants falsely represent, expressly or by implication, that NGF will provide its customers with names of “sources” from which they are likely to receive at least $1,000 in scholarships or grants. In fact, NGF does not provide its customers with the names of “sources” from which they are likely to receive at least $1,000 in scholarships or grants.

29. Defendants’ false and misleading representations of material facts, as set forth above, constitute deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).

CONSUMER INJURY

30. Defendants’ violations of Section 5(a) of the FTC act have injured, and will continue to injure, consumers. As a result of defendants’ deceptive acts or practices consumers have lost all or part of the fees they have paid to defendants. For the reasons set forth above, consumers will continue to suffer financial injury unless defendants’ unlawful practices are enjoined.

THIS COURT’S POWER TO GRANT RELIEF

31. Section 13(b) of the FTC Act empowers this Court to issue injunctive and other relief against violations of the FTC Act, and, in the exercise of its equitable jurisdiction, to award redress to remedy the injury to consumers, to order disgorgement of monies resulting from defendants’ unlawful acts or practices, and to order other ancillary equitable relief.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff requests that this Court:

(1) Enjoin defendants permanently, preliminarily, and temporarily from violating Section 5(a) of the FTC Act;

(2) Award such relief as the Court finds necessary to redress injury to consumers resulting from defendants’ violations of the FTC Act, including, but not limited to, rescission of contracts, refund of monies paid, and disgorgement of unlawfully obtained monies; and

(3) Award plaintiff the costs of bringing this action, as well as such other additional equitable relief as the Court may determine to be just and proper.

Dated:_____________, 1997 Respectfully submitted,

__________________________
DANA J. LESEMANN
JAMES REILLY DOLAN
JULIE ABBATE
Florida Bar #A5500145
Attorneys for Plaintiff
Federal Trade Commission
600 Pennsylvania Ave., N.W.
Room 200
Washington, D.C. 20580
(202) 326-3146 (telephone)
(202) 326-3392 (fax)

THOMAS E. SCOTT
United States Attorney
By: Laurie E. Rucoba
Assistant United States Attorney
Florida Bar #A5500052
299 E. Broward Blvd.
Fort Lauderdale, Florida 33301
(954) 356-7314 (telephone)
(954) 356-7336 (fax)