UNITED STATES DISTRICT COURT FEDERAL TRADE COMMISSION, Plaintiff v. COLLEGE ASSISTANCE SERVICES INC., et al. Defendants. Case No. 96-6996-CIV-HIGHSMITH STIPULATED FINAL JUDGMENT WHEREAS on August 27, 1996, plaintiff Federal Trade Commission ("Commission"), pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b), filed a complaint for injunctive and other equitable relief against defendants College Assistance Services, Inc., Linda Love ("Love"), and Conni Canella, and WHEREAS on September 5, 1996, the Commission filed a first amended complaint naming Randolph Canella and John Giuffrida ("Giuffrida") as additional defendants, and WHEREAS the Commission and defendants College Assistance Services, Inc., Love, and Giuffrida ("defendants") have stipulated to the entry of the following Final Judgment and Order for Permanent Injunction and Other Equitable Relief in settlement of the Commission’s complaint against them, and the Court, being advised in these premises, finds:
IT IS THEREFORE ORDERED, ADJUDGED AND DECREED AS FOLLOWS: I. DEFINITIONS For purposes of this Order, the following definitions shall apply: (A) “Scholarship search services” shall mean any business activity that purports to assist consumers with obtaining scholarships, grants, or any other financial assistance for an educational purpose. (B) “Telemarketing” shall mean any business activity (including, but not limited to, initiating or receiving telephone calls, managing others who initiate or receive telephone calls, operating an enterprise that initiates or receives telephone calls, owning an enterprise that initiates or receives telephone calls, or otherwise participating as an officer, director, employee or independent contractor in an enterprise that initiates or receives telephone calls) that involves attempts to induce consumers to purchase any item, product, good or service, to make a charitable contribution, or to enter a contest for a prize, by means of telephone sales presentations, either exclusively or in conjunction with the use of other forms of marketing. Provided, however, that the term “telemarketing” shall not include transactions that are completed only after a face-to-face contact between the seller or solicitor and the consumers solicited. Provided further, that the term "telemarketing" shall not include transactions made in connection with the business of calibration and repair of medical laboratory equipment. (C) “Assisting others engaged in telemarketing” shall mean knowingly providing any of the following goods or services to any person or entity engaged in telemarketing: (1) performing customer service functions for an entity engaged in telemarketing, including, but not limited to, receiving or responding to consumer complaints; (2) formulating or providing, or arranging for the formulation or provision of, any telephone sales script or any other marketing material for an entity engaged in telemarketing; (3) providing names of, or assisting in the generation of, potential customers for an entity engaged in telemarketing; or (4) performing marketing services of any kind for an entity engaged in telemarketing. (D) "Defendants" or "defendant" shall mean College Assistance Services, Inc., Love, Giuffrida, and each of them, and any combination thereof. II. PERMANENT BAN AGAINST SCHOLARSHIP SEARCH SERVICES IT IS HEREBY ORDERED that defendants Love and Giuffrida, and each of them, are hereby permanently restrained and enjoined from engaging in the promotion, advertising, marketing, offering for sale or sale of scholarship search services. III. BOND REQUIREMENT FOR TELEMARKETING IT IS FURTHER ORDERED that defendants Love and Giuffrida, and each of them, are hereby permanently restrained and enjoined from engaging in telemarketing or assisting others engaged in telemarketing unless the defendant first obtains a performance bond in the principal sum of TWO HUNDRED THOUSAND DOLLARS ($200,000). The terms and conditions of the bond requirement are as follows: (A) Each bond is conditioned upon compliance by the defendant with this Order and with Section 5 of the FTC Act, 15 U.S.C. § 45; (B) Each bond shall remain in full force and effect as long as the defendant continues to engage in any activity requiring him or her to obtain the bond and for at least five (5) years thereafter; (C) Each bond shall cite this Order as the subject matter of the bond. Each bond shall be an insurance agreement providing surety for financial loss that is issued by a surety company (a) admitted to do business in each state in which the defendant does business and (b) that holds a Federal Certificate of Authority As Acceptable Surety On Federal Bond and Reinsuring; (D) Defendants Love and Giuffrida shall not disclose the existence of the performance bond to any consumer, or other purchaser or prospective purchaser of any product or service that is advertised, promoted, offered for sale, sold, or distributed, without also disclosing clearly and prominently, at the same time, “THIS BOND IS REQUIRED BY ORDER OF THE U.S. DISTRICT COURT IN SETTLEMENT OF CHARGES THAT DEFENDANTS ENGAGED IN FALSE AND MISLEADING REPRESENTATIONS IN THE MARKETING OF SCHOLARSHIP SEARCH SERVICES"; (E) Each bond shall be in favor of both the Federal Trade Commission for the benefit of any party injured as a result of any unfair or deceptive acts or practices, or violation of this Order, and any party so injured; (F) Each defendant shall provide a copy of the bond to the Associate Director for Service Industry Practices at the address specified in Section VIII.B of this Order, at least ten (10) days before the commencement of the activity for which the bond is required; (G) The bond requirements of this Order shall be in addition to, and not in lieu of, any bond required by federal, state, or local law, or the order of another court; and (H) Provided, that pursuant to Section I.B of this Order, the bond requirements of this Order shall not apply to telemarketing in connection with the business of calibration and repair of medical laboratory equipment. IV. PROHIBITION AGAINST MISREPRESENTATIONS IT IS FURTHER ORDERED that defendants and their officers, agents, servants, employees, and attorneys, and all other persons or entities directly or indirectly under their control or under common control with them, and all other persons or other entities in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, in connection with the advertising, promotion, offer for sale, or sale of any item, product, good, service, investment or beneficial interest of any kind, are hereby permanently restrained and enjoined from: (A) Falsely representing, directly or by implication, that defendants will provide consumers with names of sources from which they will likely receive a specified amount in scholarship or grant funds; (B) Falsely representing, directly or by implication, that defendants will provide consumers with personal portfolios of scholarship and grant sources that are specifically tailored to the consumer’s qualifications; (C) Falsely representing, directly or by implication, that students are preselected by defendants to receive scholarships or grants; (D) Falsely representing, directly or by implication, that defendants obtain scholarships or grants on behalf of their customers; (E) Falsely representing, directly or by implication, the business relationship of defendants with any corporation or other person or entity that awards scholarships or grants; (F) Falsely representing, directly or by implication, that defendants will readily refund their processing fee to each consumer who purchases defendants’ services and does not obtain a specified amount in scholarships or grants through defendants’ services; (G) Falsely representing, directly or by implication, or failing to disclose, all terms and conditions of any refund policy of defendants; (H) Falsely representing, directly or by implication, or failing to disclose, any fact material to a consumer's decision to purchase any item, product, good, service, or investment or beneficial interest of any kind, including, but not limited to, the services of a scholarship search service; (I) Violating or assisting others to violate any provision of the Telemarketing Sales Rule, 16 C.F.R. Part 310; and (J). Assisting others in making, directly or by implication, any false or misleading representation set forth in subparts (A)-(I), above. V. PROHIBITION AGAINST TRANSFER OF CONSUMER LISTS IT IS FURTHER ORDERED that defendants and their officers, agents, servants, employees, and attorneys, and all other persons or entities directly or indirectly under their control or under common control with them, and all other persons or entities in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, are permanently restrained and enjoined from selling, renting, leasing, transferring, or otherwise disclosing the name, address, telephone number, credit card number, bank account number, E- mail address, or other identifying information of any person who paid any money to any defendant in connection with the sale of scholarship search services at any time prior to entry of this Order. Provided, however, that defendants may disclose such identifying information to a law enforcement agency or as required by any law, regulation, or court order. VI. RECORD KEEPING AND DOCUMENT RETENTION IT IS FURTHER ORDERED that, for a period of five years from the date of entry of this Order, defendants Love and Giuffrida and their officers, agents, servants, employees, and attorneys, and all other persons or entities directly or indirectly under their control or under common control with them, and all other persons or other entities in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, in connection with any business where any defendant is the majority owner of the business or otherwise directly or indirectly manages or controls the business, are hereby restrained and enjoined from failing to create, and from failing to retain for a period of five years following the date of such creation, unless otherwise specified: (A) Books, records and accounts that, in reasonable detail, accurately and fairly reflect the cost of goods or services sold, revenues generated, and the disbursement of such revenues; (B) Records accurately reflecting: the name, address, and telephone number of each person that any of the above-referenced businesses employs in any capacity, including as an independent contractor; that person's job title or position; the date upon which the person commenced work; and the date and reason for the person's termination, if applicable. The businesses subject to this Section shall retain such records for any terminated employee for a period of two years following the date of termination; (C) Records containing the names, addresses, phone numbers, dollar amounts paid, quantity of items or services purchased, and description of items or services purchased, or amounts donated, for all consumers to whom any of the above-referenced businesses has sold, invoiced or shipped any goods or services, or from whom any of the above-referenced businesses accepted money or other items of value; (D) Records that reflect, for every consumer complaint or refund request, whether received directly or indirectly or through any third party:
(E) Copies of all sales scripts, training packets, advertisements, or other marketing materials utilized. VII. ORDER DISTRIBUTION IT IS FURTHER ORDERED that, for a period of five years from the date of entry of this Order, defendants Love and Giuffrida and their officers, agents, servants, employees, and attorneys, and all other persons or entities directly or indirectly under their control or under common control with them, and all other persons or other entities in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, shall: (A) Provide a copy of this Order to, and obtain a signed and dated acknowledgment of receipt of same from: each officer or director, each individual serving in a management capacity, all personnel involved in responding to consumer complaints or inquiries, and all sales personnel, whether designated as employees, consultants, independent contractors or otherwise, immediately upon employing or retaining any such persons, for (1) any business where defendant Love or Giuffrida is the majority owner of the business or otherwise directly or indirectly manages or controls the business and (2) where the business is engaged in telemarketing or assisting others engaged in telemarketing, as defined in Section I.B of this Order; provided, that should any recipient of this Order fail or refuse to provide the defendant with the signed statement required by this Section, the defendant shall prepare a signed and dated statement which indicates (1) that such recipient has been provided with a copy of this Order and (2) that provides the recipient’s residential address and telephone number; (B) Maintain for a period of five years after creation, and upon reasonable notice make available to representatives of the Commission, the original signed and dated acknowledgments of the receipt of copies of this Order, or the signed and dated statements by defendants, as required by Section VII.A above. VIII. MONITORING IT IS FURTHER ORDERED that, in order that compliance with the provisions of this Order may be monitored: (A) Defendants Love and Giuffrida shall notify the Commission in writing, within ten days of the date of entry of this Order, of their current residence addresses, mailing addresses, business and home telephone numbers, and employment status, including the names, telephone numbers, and business addresses of any current employers; (B) For a period of five years from the date of entry of this Order, defendants Love and Giuffrida shall notify the Commission in writing within ten days of any changes in their residences or mailing addresses, telephone numbers, or employment status; For the purposes of this Order, all written notifications to the Commission shall be mailed to:
(C) For the purposes of this Section, "employment" includes the performance of services as an officer, owner, manager, supervisor, employee, consultant, or independent contractor; and "employers" include any individual or entity for whom defendants Love or Giuffrida performs services as an officer, owner, manager, supervisor, employee, consultant or independent contractor. IX. ACCESS IT IS FURTHER ORDERED that, for a period of five years from the date of entry of this Order, for the purpose of further determining compliance with this Order, defendants Love and Giuffrida, and their officers, agents, servants, employees, and attorneys, and all other persons or entities directly or indirectly under their control or under common control with them, and all other persons or other entities in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, shall permit representatives of the Commission, within forty-eight hours of receipt of written notice from the Commission to defendants’ attorney of record, or to defendants if they are no longer represented by an attorney in this matter: (A) Access during normal business hours to any office, or facility storing documents of any business where (1) defendant Love or Giuffrida is the majority owner of the business or otherwise directly or indirectly manages or controls the business, and (2) the business engages in telemarketing or assisting others engaged in telemarketing, as defined in Section I.B of this Order. In providing such access, defendants shall permit representatives of the Commission to inspect and copy all documents relevant to any matter contained in this Order; and (B) To interview or depose the officers, directors, and employees, including all personnel involved in responding to consumer complaints or inquiries, and all sales personnel, whether designated as employees, consultants, independent contractors or otherwise, of any business to which Subsection (A) of this Section applies, concerning matters relating to compliance with the terms of this Order. Provided that the Commission may otherwise monitor defendants' compliance with this Order by all lawful means available, including the use of compulsory process seeking production of documents and the use of investigators posing as consumers or suppliers. X. LIFTING OF ASSET FREEZE IT IS FURTHER ORDERED that the freeze of the assets Love and Giuffrida, as ordered in the Preliminary Injunction entered by the Court on September 18, 1996, is lifted. The defendants shall indemnify and hold harmless the Receiver from all claims for acts or omissions occurring during the receivership, except for those acts or omissions resulting from willful misconduct. XI. RIGHT TO REOPEN IT IS FURTHER ORDERED that: (A) The Commission’s agreement to this Order is expressly premised upon the truthfulness, accuracy, and completeness of defendants’ representations of their financial condition as sworn to in defendant Love’s deposition on September 5, 1996 and in defendant Giuffrida’s deposition on September 6, 1996, and as represented in the financial statements sworn to by defendant Love on August 18, 1997, and defendant Giuffrida on August 18, 1997, which contain material information relied upon by the Commission in negotiating and agreeing to the terms of this Order. Within three business days from the date of entry of this Order, defendants Love and Giuffrida shall submit to the Commission a truthful sworn statement, in the form shown on Appendix A, that shall acknowledge that the defendant has received a copy of this Order as entered by the Court, and shall reaffirm and attest to the truth, accuracy and completeness of the deposition testimony and financial statements previously provided to the Commission. If, upon motion by the Commission, the Court finds that through the above- referenced depositions and financial statements, defendants were untruthful, inaccurate or incomplete, or failed to disclose any material asset, or materially misrepresented the value of any asset, or made any other material misrepresentation or omission, this Order shall be reopened for the purpose of modifying the terms of the Order, including but not limited to the monetary liability of the defendants; provided, that if the Commission moves for a modification of this Order, in all other respects this Order shall remain in full force and effect unless otherwise ordered by the Court and that defendants have no right to contest any of the allegations in the Commission’s complaint in this matter in any proceedings brought pursuant to this Section; and provided further, that any proceedings instituted under this provision would be in addition to and not in lieu of any other civil or criminal remedies as may be provided by law, including any other proceedings the Commission may initiate to enforce this Order. XII. RETENTION OF JURISDICTION IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for purposes of construction, modification and enforcement of this Order. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that there is no just reason for delay of entry of this Order, and, pursuant to Fed. R. Civ. P. 54(b), the Clerk shall enter this Order immediately. STIPULATED AND AGREED TO BY:
___________________________ JOHN GIUFFRIDA
APPENDIX A UNITED STATES DISTRICT COURT FEDERAL TRADE COMMISSION, Plaintiff v. COLLEGE ASSISTANCE SERVICES INC., et al. Defendants. Case No. 96-6996-CIV-HIGHSMITH SWORN STATEMENT OF DEFENDANT I, , personally appeared before the undersigned notary, and, being duly sworn, depose and say:
Print Name___________________________ STATE OF ___________________________ COUNTY OF ___________________________ BEFORE ME this day personally appeared ___________________________, who being first duly sworn, deposes and says that s/he has read and understands the foregoing statement and that he has executed the same for the purposes contained therein. SUBSCRIBED AND SWORN TO before me this ___________________________day of ___________________________,1997 by ___________________________. S/he is personally known to me or has presented (state identification) ___________________________as identification.
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