UNITED STATES DISTRICT COURT FEDERAL TRADE COMMISSION, Plaintiff, v. HART MARKETING ENTERPRISES LTD., INC., a Florida corporation, INTERNET SPACE STATION, INC., a Florida corporation, FOUR SEASONS DISTRIBUTING, INC., a Florida corporation, JAMES WEEMS, ROBERT LEMCKE, aka MARK WALKER, EDWARD PATRICK EVANS, aka PATRICK EVANS aka EDWARD ADAMS, and BRUCE BLAIR, Defendants. -CIV- Case No. COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF Plaintiff, the Federal Trade Commission ("FTC" or "the Commission"), for its complaint alleges: 1. The FTC brings this action under Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b, to secure preliminary and permanent injunctive relief, rescission of contracts, restitution, disgorgement, and other equitable relief for defendants' violations of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the FTC's Trade Regulation Rule entitled "Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures" ("Franchise Rule"), 16 C.F.R. Part 436. JURISDICTION AND VENUE 2. This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331, 1337(a) and 1345, and 15 U.S.C. §§ 53(b) and 57b. 3. Venue in the United States District Court for the Middle District of Florida is proper under 28 U.S.C. §§ 1391(b) and (c), and 15 U.S.C. § 53(b). PLAINTIFF 4. Plaintiff, FTC, is an independent agency of the United States Government created by statute. 15 U.S.C. §§ 41 et seq. The FTC is charged, inter alia, with enforcement 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, as well as enforcement of the Franchise Rule, 16 C.F.R. Part 436. The FTC is authorized to initiate federal district court proceedings to enjoin violations of the FTC Act in order to secure such equitable relief as may be appropriate in each case, and to obtain consumer redress. 15 U.S.C. §§ 53(b) and 57b. DEFENDANTS 5. Defendant HART MARKETING ENTERPRISES LTD., INC., dba Hart Marketing Enterprises and dba Fortune Marketing Int’l, ("HART MARKETING"), is a Florida corporation with its principal place of business at 4100 West Kennedy Blvd., Tampa, Florida. Defendant HART MARKETING promotes and sells public access Internet kiosk business opportunities. HART MARKETING transacts or has transacted business in the Middle District of Florida. 6. Defendant INTERNET SPACE STATION, INC. ("ISS"), is a Florida corporation with its principal place of business at 4100 West Kennedy Blvd., Tampa, Florida or 2212 US HWY 19, Holiday, Florida. Defendant ISS promotes and sells public access Internet kiosk business opportunities. ISS transacts or has transacted business in the Middle District of Florida. 7. Defendant FOUR SEASONS DISTRIBUTING, INC. ("FOUR SEASONS"), is a Florida corporation with its principal place of business at 4100 West Kennedy Blvd., Tampa, Florida or 3970 Tampa Rd., Suite K, Oldsmar, Florida. Defendant FOUR SEASONS promotes and sells air-freshener display-rack business opportunities. FOUR SEASONS transacts or has transacted business in the Middle District of Florida. 8. At all times material to this complaint, the corporate defendants, HART MARKETING, ISS, and FOUR SEASONS have acted as a common enterprise. The corporate defendants share officers, employees, offices, and a common goal to deceive the public into purchasing business opportunities. 9. Defendant JAMES WEEMS is an officer, director, manager, or principal owner of corporate defendants HART MARKETING, and/or ISS. He has portrayed himself as the president of corporate defendants HART MARKETING and FOUR SEASONS. At all times material to this complaint, acting alone or in concert with others, he has formulated, directed, controlled or participated in the deceptive acts and practices set forth in this complaint. He resides and transacts business in the Middle District of Florida. 10. Defendant ROBERT LEMCKE, aka Mark Walker, is an officer, director, manager, or principal owner of corporate defendants HART MARKETING and/or ISS. He has portrayed himself as the national sales manager and marketing director of corporate defendant HART MARKETING. At all times material to this complaint, acting alone or in concert with others, he has formulated, directed, controlled or participated in the deceptive acts and practices set forth in this complaint. He resides and transacts business in the Middle District of Florida. 11. Defendant EDWARD PATRICK EVANS, aka Patrick Evans, aka Edward Adams, is an officer, director, manager, or principal owner of corporate defendants HART MARKETING and/or ISS. He has portrayed himself as the current president and owner of corporate defendant HART MARKETING. At all times material to this complaint, acting alone or in concert with others, he has formulated, directed, controlled or participated in the deceptive acts and practices set forth in this complaint. He resides and transacts business in the Middle District of Florida. 12. Defendant BRUCE BLAIR is an officer, director, manager, or principal owner of corporate defendant FOUR SEASONS. He has portrayed himself as the current president of corporate defendant FOUR SEASONS. At all times material to this complaint, acting alone or in concert with others, he has formulated, directed, controlled or participated in the deceptive acts and practices set forth in this complaint. He resides and transacts business in the Middle District of Florida. COMMERCE 13. At all times material to this complaint, the 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 14. Since at least September 1996, the defendants have engaged in a common course of conduct to promote, offer to sell, and sell to consumers business opportunities for substantial sums. These business opportunities include, but are not limited to, free-standing kiosks that house a computer and a cash money acceptor and are designed to allow customers to access the Internet, for a fee, from public locations such as hotels, airports, coffee houses, and bookstores. They also include, but are not limited to, display racks that contain consumer products, including air-fresheners, and are designed to be placed in retail stores. 15. The defendants attract potential purchasers through newspaper advertisements, an Internet web page, sales presentations at trade shows, telemarketing sales pitches, and/or written marketing materials. Through one or more of these vehicles, the defendants lure potential purchasers into buying a business opportunity by making representations as to the amount of money the potential purchaser can reasonably expect to earn with the business opportunity and the availability and profitability of locations for the kiosks and/or display racks. 16. The defendants further lure potential purchasers into investing in the defendants’ business opportunity by inducing them to call "references" who purportedly are actual purchasers of the defendants’ business opportunity and who tell potential purchasers about profits these "references" have purportedly made by purchasing the defendants’ business opportunities. VIOLATIONS OF SECTION 5 OF THE FTC ACT COUNT ONE 17. In the course of offering and selling their business opportunities, the defendants have represented, expressly or by implication:
18. In truth and in fact:
19. Therefore, the defendants’ representations set forth in Paragraph 17 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 20. In the course of offering and selling their business opportunities, the defendants have represented, expressly or by implication, that certain company-selected references have purchased the defendants’ business venture and will provide reliable descriptions of the references’ experiences with the defendants’ business venture. 21. In truth and in fact, in numerous instances, the company-selected references have not purchased the defendants’ business venture or do not provide reliable descriptions of the references’ experiences with the defendants’ business venture. 22. Therefore, the 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). THE FRANCHISE RULE 23. The business ventures sold by the defendants are franchises, as "franchise" is defined in Section 436.2(a) of the Franchise Rule, 16 C.F.R. § 436.2(a). 24. The Franchise Rule requires a franchisor to provide prospective franchisees with a complete and accurate basic disclosure statement containing 20 categories of information, including information about the history of the franchisor and the names and addresses of other franchisees. 16 C.F.R. §§ 436.1(a)(1)-(20). Disclosure of this information enables a prospective franchisee to assess any potential risks involved in the purchase of the franchise. 25. The Franchise Rule additionally requires that: 1) the franchisor give prospective franchisees a document disclosing the material basis (or the lack of such a basis) for any oral written or visual earnings or profit representations it makes to a prospective franchisee, 16 C.F.R. §§ 436.1(b)-(e); and 2) the franchisor, in immediate conjunction with any generally disseminated earnings claim, disclose the number and percentage of prior purchasers known to have earned as much or more than the amount claimed, and include a warning that the earnings claim is only an estimate. 16 C.F.R. §§ 436.1(e)(3)-(4). 26. Pursuant to Section 18(d)(3) of the FTC Act, 15 U.S.C. § 57a(d)(3), and 16 C.F.R. § 436.1, violations of the Franchise Rule constitute unfair or deceptive acts or practices in or affecting commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). 27. In connection with the promotion of their franchises, the defendants have offered, and in many instances have provided to franchisees, the services of locators that secure sites for the franchisees’ kiosks and/or display racks. 28. In the course of offering for sale and selling business ventures, the defendants have provided, or represented that they will provide, significant assistance to the purchaser in the purchaser’s method of operation. VIOLATIONS OF THE FRANCHISE RULE COUNT THREE 29. In numerous instances, in connection with the offering and promotion of franchises, as "franchise" is defined in the Franchise Rule, 16 C.F.R. § 436.2(a), the defendants have failed to provide prospective franchisees with a basic disclosure document, thereby violating Section 436.1(a) of the Rule, 16 C.F.R. § 436.1(a), and Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). COUNT FOUR 30. In numerous instances, in connection with the offering and promotion of franchises, as "franchise" is defined in the Franchise Rule, 16 C.F.R. § 436.2(a), the defendants have made earnings claims within the meaning of the Franchise Rule, 16 C.F.R. §§ 436.1(b)-(e), but have failed to provide prospective franchisees with the earnings claim document required by the Franchise Rule, thereby violating Sections 436.1(b)-(e) of the Rule, 16 C.F.R. §§ 436.1(b)-(e), and Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). CONSUMER INJURY 31. Consumers in many areas of the United States have suffered substantial monetary loss as a result of the defendants' unlawful acts or practices. Absent injunctive relief by this Court, the defendants are likely to continue to injure consumers and harm the public interest. THIS COURT'S POWER TO GRANT RELIEF 32. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to grant injunctive and other ancillary relief, including redress, disgorgement and restitution, to prevent and remedy any violations of any provision of law enforced by the FTC. 33. Section 19 of the FTC Act, 15 U.S.C. § 57b, authorizes this Court to grant such relief as the Court finds necessary to redress injury to consumers or other persons resulting from the defendants' violations of the Franchise Rule, including the rescission and reformation of contracts, and the refund of money. 34. This Court, in the exercise of its equitable jurisdiction, may award other ancillary relief to remedy injury caused by the defendants' law violations. PRAYER FOR RELIEF WHEREFORE, plaintiff requests that this Court, as authorized by Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, and pursuant to its own equitable powers:
Date:____________ Respectfully Submitted, Debra A. Valentine _______________________________ |