| DEBRA A. VALENTINE General Counsel SCOTT R. BIALECKI MONICA E. TAIT Attorneys for Plaintiff UNITED STATES DISTRICT COURT
Plaintiff, the Federal Trade Commission, by its undersigned attorneys, alleges as follows: 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 a permanent injunction 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 unfair or deceptive acts or practices in or affecting commerce. JURISDICTION AND VENUE 2. This Court has subject matter jurisdiction over plaintiff's claims pursuant to 28 U.S.C. §§ 1331(a), 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. Plaintiff, the Federal Trade Commission ("Commission"), is an independent agency of the United States government created by statute (15 U.S.C. § 41 et seq.). The Commission is charged, inter alia, with enforcing Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and is authorized to initiate court proceedings to enjoin violations of said statute and to secure such equitable relief as may be appropriate in each case. 15 U.S.C. § 53(b). 5. Defendant Asher Afriat is an individual who is registered to do business under the fictitious business name of American Labor Services ("ALS"). Individually or in concert with others, he directs, controls, formulates or participates in the acts and practices set forth herein. He resides, transacts, or has transacted business in this district. 6. Defendant Abraham Avi Afriat is an individual who is registered to do business under the fictitious business name of American Labor Services. He has also established a central mail drop in the name of ALS. Individually or in concert with others, he directs, controls, formulates or participates in the acts and practices set forth herein. He resides, transacts, or has transacted business in this district. 7. Defendant Oren Afriat, also known as Yizhak Afriat, is an individual who has conducted business in California under the names ALS and American Labor Services. Individually or in concert with others, he directs, controls, formulates or participates in the acts and practices set forth herein. He resides, transacts, or has transacted business in this district. 8. Defendant Rachel Edery is an individual who has conducted business in California on behalf of ALS or American Labor Services. Individually or in concert with others, she directs, controls, formulates or participates in the acts and practices set forth herein. THE UNITED STATES POSTAL SERVICE 9. United States Postal Service (the "Postal Service") is an independent, self-supporting, federal agency within the executive branch. It is the largest civilian employer in the United States. 10. The Postal Service requires most applicants seeking permanent employment to take a competitive written examination, which depends on the job title. The Postal Service offers Test 470 to all persons seeking permanent employment as city carriers, clerks, flat sorter machine operators, mail handlers, mail processors and mark-up clerks. 11. Test 470 is an aptitude test that is designed to evaluate four abilities: visual perception, memory for codes, sequencing, and following oral instructions. The Postal Service offers Test 470 on an irregular basis, depending on hiring needs in a particular locality. Several years may pass before Test 470 is offered to the public in a given area. A person who receives a scaled score of 70 or higher on Test 470 (out of a possible 100) is eligible for employment. Very few applicants (less than 2 percent) earn scaled scores of 90 or higher on Test 470. DEFENDANTS' BUSINESS PRACTICES 12. Since at least January 1996, defendants Asher Afriat, Abraham Avi Afriat, Oren Afriat, and Rachel Edery (collectively "ALS") have conducted a program to telemarket putative employment services to consumers residing throughout the United States who are seeking jobs with the Postal Service. 13. Defendant ALS places classified advertisements in newspapers located throughout the United States. The advertisements announce that jobs are available with the Postal Service, and invite readers to dial a telephone number (usually, a toll-free number). The following are typical of the advertisements placed by ALS: HELP WANTED: POSTAL JOBS 3 positions available. No experience necessary. For more information call (800) 866-9311 ext. 8169. POSTAL JOBS $18.35/HR Now Hiring, Full benefits, no exp. For application, & exam info. Call 1-800-813-3585 x2412, 8AM-9PM, 7days 14. Several of the telephone numbers listed in the advertisements are assigned to PAC West Telecom and Cable & Wireless accounts in the name of Oren Afriat doing business as ALS and American Labor Services. 15. When consumers dial the telephone numbers listed in the advertisements, the calls are answered by telemarketers with the phrase "ALS" or "American Labor." 16. The telemarketers follow a common sales presentation. The telemarketers initially ask consumers several questions to "prequalify" them for employment with the Postal Service. Next, the telemarketers state that there are full-time, permanent positions available with the Postal Service in the consumer's geographic area. On occasion, the telemarketers will also offer hourly rates or yearly salaries to entice consumers. The telemarketers further note that an exam must be taken and a score of 90 or above attained in order to secure one of these positions. The telemarketers then attempt to sell consumers study materials to help them pass the test and application forms to register for the test. The fee varies, but the telemarketers advise consumers that participation in the program requires a "registration fee" of $39.95 or more. The telemarketers assure consumers that the program comes with a written money back guarantee for this registration fee if consumers do not pass the exam or get hired by the Postal Service for any reason. 17. On some occasions, the telemarketers tell consumers that they do the hiring for or are affiliated with the Postal Service. 18. The telemarketers typically ask consumers to pay the "registration fee" by credit card or by demand draft from a bank account. On occasion, they will accept a money order. When consumers receive their monthly credit card or bank account statements, the charge appears as payable to "A.L.S." in California. 19. Consumers who have purchased the materials have received an envelope by mail from "American Labor Services" with a return address of 18533 Roscoe Blvd., Suite #237, Northridge, CA 91324. The envelope contains a booklet on the federal civil service hiring process, which contains a discussion of other federal employment, but no listing of particular job openings. It also contains two exam preparation booklets. 20. The written guarantee on the cover of one exam preparation booklet states: "GUARANTEED METHODS TO SCORE 90% TO 100% OR YOUR MONEY BACK." 21. Defendants' course of trade is in or affecting commerce within the meaning of Section 4 of the FTC Act, 15 U.S.C. § 44. DEFENDANTS' VIOLATIONS OF THE FTC ACT 22. Defendants represent, expressly or by implication, that their employment program is affiliated with or endorsed by the Postal Service. In fact, Defendants' employment program is neither affiliated with nor endorsed by the Postal Service. 23. Defendants represent, expressly or by implication, that permanent positions with the Postal Service are available in the geographic areas where they place their classified advertisements, and that the Postal Service is offering examinations for said positions. In fact, in many instances, permanent positions with the Postal Service are not available in the geographic areas where defendants place their classified advertisements, and the Postal Service is not offering examinations for said positions. 24. Defendants represent, expressly or by implication, that consumers are required to score 90 or higher on Test 470 in order to qualify for a permanent position with the Postal Service. In fact, consumers are not required to score 90 or higher on Test 470 in order to qualify for a permanent position with the Postal Service. 25. Defendants represent, expressly or by implication, that consumers who purchase and review Defendants' materials are likely to receive scores of 90 or higher on Test 470. In fact, even if the Postal Service is offering Test 470, consumers who purchase and review defendants' materials are unlikely to receive scores of 90 or higher on Test 470. 26. Defendants represent, expressly or by implication, that consumers who purchase and review Defendants' materials are likely to receive permanent positions with the Postal Service within a short period of time. In fact, consumers who purchase and review defendants' materials are unlikely to receive permanent positions with the Postal Service within a short period of time. 27. Therefore, the representations set forth in paragraphs 22-26 are false and misleading and constitute deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). CONSUMER INJURY 28. Consumers have been injured and will continue to be injured by defendants' violations of the FTC Act as set forth above, including but not limited to the payment of money for the employment program sold by defendants. Absent injunctive relief by this Court, consumers will continue to suffer substantial financial injury. THIS COURT'S POWER TO GRANT RELIEF 29. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to grant injunctive and other ancillary relief, including consumer redress, disgorgement and restitution, to prevent and remedy violations of any provision of law enforced by the Commission. PRAYER FOR RELIEF WHEREFORE, plaintiff requests that this Court: (1) Enjoin defendants preliminarily and permanently from violating Section 5(a) of the FTC Act; (2) Award such equitable relief as the Court finds necessary to redress injury to consumers resulting from defendants' violations of Section 5(a) of the FTC Act, including, but not limited to, rescission of contracts or refund of money, disgorgement of unlawfully obtained monies, freezing of assets and the appointment of an equity receiver or trustee; and (3) Award plaintiff the costs of bringing this action as well as such other and additional equitable relief as the Court may determine to be just and proper. Dated: January ______, 1998 Respectfully submitted, DEBRA A. VALENTINE SCOTT R. BIALECKI MONICA E. TAIT Attorneys for Plaintiff |