UNITED STATES DISTRICT COURT FEDERAL TRADE COMMISSION, Plaintiff, v. THE DEAN THOMAS CORPORATION, INC., a corporation, and THE GAME CLUB, INC., a corporation, and PROFESSIONAL PUBLISHERS, INC., a corporation, and THOMAS PUBLISHING COMPANY, INC., a corporation, and PREFERRED PUBLISHING COMPANY, INC., a corporation, and DEAN R. THOMAS, and RANDY B. LONIS, and RAYMOND CELIE, individually and as officers of said corporations, and MICHAEL BRANT, individually, Defendants. CIVIL NO. 1:97CV 0129 JUDGE WILLIAM C. LEE U.S. MAGISTRATE JUDGE AMENDED COMPLAINT Plaintiff, the Federal Trade Commission (“Commission”), for its complaint alleges as follows: 1. The Commission brings this action under Section 13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b), to obtain preliminary and permanent injunctive relief against the defendants to prevent them from engaging in deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and to obtain other equitable relief, including rescission, restitution and disgorgement, as is necessary to redress injury to consumers and the public interest resulting from defendants’ violations of the FTC Act. JURISDICTION AND VENUE 2. Subject matter jurisdiction is conferred upon this Court by 15 U.S.C. §§ 45(a) and 53(b)and 28 U.S.C. §§ 1331, 1337(a), and 1345. 3. Venue in the United States District Court for the Northern District of Indiana is proper under 15 U.S.C. § 53(b), as amended by the FTC Act Amendments of 1994, Pub. L. No. 103- 312, 108 Stat. 1691, and 28 U.S.C. § 1391(b) and (c). PLAINTIFF 4. Plaintiff, the Federal Trade Commission, is an independent agency of the United States Government created by statute. 15 U.S.C. § 41 et seq. The Commission enforces 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. The Commission may initiate federal district court proceedings to enjoin violations of the FTC Act and to secure such other equitable relief as may be appropriate in each case, including redress and disgorgement. 15 U.S.C. § 53(b). DEFENDANTS 5. Defendant The Dean Thomas Corporation is an Indiana corporation with its principal place of business at 4622 East State Boulevard, Fort Wayne, Indiana 46815. The Dean Thomas Corporation also does business as:
and possibly under other d/b/a’s. The Dean Thomas Corporation transacts business in this District. 6. Defendant The Game Club, Inc., is an Indiana corporation with its principal place of business at 6733 Hillsboro Lane, Fort Wayne, Indiana 46835. The Game Club, Inc. may be doing business under other names, including the same d/b/a’s The Dean Thomas Corporation uses, as set forth in paragraph 5. The Game Club, Inc., transacts business in this district. 7. Defendant Professional Publishers, Inc., is an Indiana corporation with its principal place of business at 4622 East State Boulevard, Fort Wayne, Indiana 46815. Professional Publishers, Inc., does business as Professional Publishing, Inc., and may do business under other names, including the same d/b/a’s The Dean Thomas Corporation uses, as set forth in paragraph 5. Professional Publishers, Inc., transacts business in this district. 8. Thomas Publishing Company, Inc., is an Indiana corporation with its principal place of business at 4622 East State Boulevard, Fort Wayne, Indiana 46815. Thomas Publishing Company, Inc., does business as Quality Publications, and may do business under other names, including the same d/b/a’s The Dean Thomas Corporation uses, as set forth in paragraph 5. Thomas Publishing Company, Inc., transacts business in this district. 9. Defendant Preferred Publishing Company, Inc. is an Indiana corporation with its principal place of business at 3401 Lake Avenue, Fort Wayne, Indiana, 46805. Preferred Publishing Company, Inc. also does business as Crime Prevention Magazine, Community Alcohol & Drug Prevention Booklet, and Fire Prevention Program, and possibly under other d/b/a’s. Preferred Publishing Company, Inc. transacts business in this District. 10. Defendant Dean R. Thomas is the director, president and secretary of The Dean Thomas Corporation, The Game Club, Inc., Professional Publishers, Inc., and Thomas Publishing Company, Inc. At all times material to this complaint, individually or in concert with others, he has formulated, directed, controlled or participated in the acts and practices of the corporate defendants, including the acts and practices set forth in this complaint. He transacts business in this District. 11. Defendant Randy B. Lonis operates and manages one or more of the defendant corporations. At all times relevant to this complaint, individually or in concert with others, he has formulated, directed, controlled or participated in the acts and practices of the corporate defendants, including the acts and practices set forth in this complaint. He transacts business in this District. 12. Defendant Raymond Celie operates and manages one or more of the defendant corporations. At all times relevant to this complaint, individually or in concert with others, he has formulated, directed, controlled or participated in the acts and practices of the corporate defendants, including the acts and practices set forth in this complaint. He transacts business in this District. 13. Defendant Michael Brant is an employee of Preferred Publishing Company, Inc. At all times material to this complaint, individually or in concert with others, he has formulated, directed, controlled or participated in the acts and practices of corporate defendant Preferred Publishing Company, Inc., including the acts and practices set forth in this complaint. He transacts business in this District. COMMERCE 14. At all times relevant to this complaint, defendants have maintained a substantial course of trade in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act, 15 U.S.C. § 44. DEFENDANTS' BUSINESS ACTIVITIES 15. Since at least 1987, defendants have engaged in a program of misrepresentation targeted at public-spirited businesses in many states. Defendants solicit businesses, including many small businesses, to advertise in publications defendants claim to publish and distribute. Defendants represent advertising in their publications, which have titles such as Area Drug Abuse, Child Safety Guide and Fire Prevention Review, as a meaningful opportunity for businesses to support important causes in their community, such as fighting crime and preventing drug abuse. As further inducement for businesses to purchase advertising, defendants tell businesses that publications containing their advertising will be widely distributed in their local communities or that publications containing their advertising will be distributed to local organizations and specially targeted audiences within their communities. 16. Contrary to defendants’ representations, publications containing the businesses’ advertisements are not widely distributed in the businesses’ community nor provided to local organizations or specially targeted audiences. 17. In addition to misrepresenting the distribution of the publications, defendants often obtain payment by misrepresenting to the business that it has already ordered the advertisement. This misrepresentation is conveyed in several ways; in numerous instances: (1) defendants telephone a business and misrepresent to the business that an advertisement it agreed to place in defendants’ publication is printed and needs to be paid for, even though the business has never agreed to an advertisement; (2) defendants obtain the name of a person at the business, and misrepresent that the person has previously authorized the advertisement; (3) defendants send a collector to the business who misrepresents that the business has approved an advertisement and that it must be paid for; (4) defendants convey the misrepresentation that an advertisement has been ordered by sending an envelope Cash on Delivery (C.O.D.) to the business. Many businesses pay the COD and, upon opening the envelope, discover an invoice for an advertisement in one of defendants’ publications that they never authorized. Many businesses are convinced by the above misrepresentations that they have pre- approved the advertisement and pay the defendants. 18. If a business refuses to pay for unordered advertising, defendants frequently threaten to turn the business’s bill over to a collection agency for collection action, or threaten to take legal action to collect payment. Many businesses are convinced by these threats and, believing that their credit records may be adversely affected, pay the bill. 19. Defendants’ representations have caused individual businesses to pay hundreds and even thousands of dollars for advertising in defendants’ publications. COUNT ONE 20. In numerous instances, in connection with the offering for sale and sale of advertisements, defendants have represented, expressly or by implication, that:
21. In truth and in fact, in numerous instances:
22. Therefore, defendants’ representations set forth in paragraph 20 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). COUNT TWO 23. In numerous instances, in connection with the offering for sale and sale of advertisements, defendants have represented, expressly or by implication, that the business or a named person acting on behalf of the business previously authorized placement of the advertising in defendants’ publications. 24. In truth and in fact, in numerous instances, the business or a named person acting on behalf of the business did not previously authorize placement of the advertising in defendants’ publications. 25. Therefore, defendants’ representation set forth in paragraph 23 is false and misleading and constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). COUNT THREE 26. In numerous instances in connection with the offering for sale and sale of advertisements, defendants have represented, expressly or by implication, that defendants incurred the cost of printing the publication in reliance on the business’s authorization of and promise to pay for the advertisement. 27. In truth and in fact, in numerous instances, defendants have not incurred the cost of printing the publication in reliance on the business’s authorization of and promise to pay for the advertisement. 28. Therefore, defendants’ representations set forth in paragraph 26 are false or misleading and constitute deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). COUNT FOUR 29. In numerous instances in connection with the offering for sale and sale of advertisements, defendants have sent businesses C.O.D. packages containing bills for such advertisements and have threatened to take action to collect payment of such bills, thus representing, expressly or by implication, that businesses have ordered the advertisements billed to them by defendants. 30. In truth and in fact, in numerous instances, businesses have not ordered the advertisements billed to them by defendants. 31. Therefore, defendants’ representations set forth in paragraph 29 are false or 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 32. Defendants’ violations of Section 5 of the FTC Act, as set forth above, have caused and continue to cause substantial injury to consumers, namely the businesses defrauded by defendants’ activities. Absent injunctive relief by this Court, defendants are likely to continue to injure consumers. THIS COURT'S POWER TO GRANT RELIEF 33. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to issue a permanent injunction against defendants’ violations of the FTC Act and, in the exercise of its equitable jurisdiction, grant such other relief as the Court may deem appropriate to halt and redress violations of the FTC Act, including restitution and disgorgement of unjust enrichment. PRAYER FOR RELIEF WHEREFORE, the Commission respectfully requests that this Court, as authorized by Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), and pursuant to its own equitable powers:
DATE: Respectfully submitted, DEBRA A. VALENTINE Federal Trade Commission BRINLEY H. WILLIAMS, Ohio Bar No. 0011793 DANA C. BARRAGATE, Ohio Bar No. 0065748 GERALD C. ZEMAN, Ohio Bar No. 0055386 MICHAEL MILGROM, Ohio Bar No. 0012959 Attorneys for Plaintiff Federal Trade Commission |