UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF PENNSYLVANIA

FEDERAL TRADE COMMISSION,

Plaintiff,

v.

EUREKA SOLUTIONS INTERNATIONAL, INC., et al.,

Defendants.

CIVIL ACTION NO. 97-1280

STIPULATED PERMANENT INJUNCTION APPLYING TO EUREKA SOLUTIONS INTERNATIONAL, INC., OEM COMMUNICATIONS, INC., AND GREGORY S. BENDER

Plaintiff, the Federal Trade Commission ("FTC” or “Commission"), has filed a complaint for a permanent injunction and other relief, including restitution to consumers, pursuant to Section 13(b) of the Federal Trade Commission Act, 15 U.S.C. § 53(b), against Defendants Eureka Solutions International, Inc., OEM Communications, Inc., and Gregory S. Bender.

FINDINGS

By the stipulation of the parties, the Court makes the following findings:

A. The Commission alleges that Defendants have violated Section 5(a) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 45(a) by committing unfair or deceptive acts or practices in the sale of invention promotion services.

B. The Commission has the authority under Section 13(b) of the FTC Act to seek the relief it has requested.

C. The Defendants consent to entry of this final Stipulated Order in the interest of settling this litigation.

D. The Court entered a temporary restraining order in this matter on July 15, 1997, which included an asset freeze and the appointment of a Receiver.

E. This action and the relief ordered herein are in addition to, and not in lieu of, other remedies as may be provided by law to any other party or parties other than the FTC, including both civil and criminal remedies.

F. Defendants agree that this Order shall be construed as solely remedial in nature, and shall not be construed as the payment of a fine, penalty, punitive assessment, or forfeiture.

G. The Court has jurisdiction over the subject matter of this action. Defendants waive all rights to seek judicial review of, or otherwise challenge or contest the validity of, this Order.

H. Entry of this Order is in the public interest.

I. This Order does not constitute evidence, or an admission by any party, of any liability or wrongful conduct.

ORDER

I. DEFINITIONS

A. "Defendants" means Defendants Eureka Solutions International, Inc., OEM Communications, Inc., Gregory S. Bender and their officers, agents, servants, employees, attorneys, and all 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.

B. "Invention promotion services" means any effort to market, patent, research, sell, license, advertise or otherwise promote specific inventions or new product ideas.

II. PROHIBITED BUSINESS ACTIVITIES

IT IS THEREFORE ORDERED that Defendants are hereby enjoined from making, or assisting others in making, any material, false representation or material omission in connection with providing any invention promotion services, including, but not limited to:

A. falsely representing, directly or by implication, the likelihood that Defendants’ invention promotion services will result in financial gain for any customer;

B. falsely representing, directly or by implication, Defendants’ past success in assisting customers in marketing their invention ideas or products;

C. falsely representing, directly or by implication, that Defendants have partially funded pilot programs;

D. falsely representing, directly or by implication, that Defendants assess or evaluate the market potential, patentability, technical feasibility, or merit of ideas submitted by any customer;

E. falsely representing, directly or by implication, that Defendants offer invention promotion services to only a small portion of the ideas presented to them;

F. falsely representing, directly or by implication, that a significant number of Defendants’ fee paying inventor clients make more money from royalties than they pay Defendants in fees;

G. falsely representing, directly or by implication, that Defendants make money from royalties generated by the products they represent;

H. falsely representing, directly or by implication, the extent to which Defendants’ customers need to develop or test market prototypes, or advertise or market finished products, in order to receive protection under the patent laws;

I. falsely representing, directly or by implication, any material fact to a consumer’s decision to purchase invention promotion services;

J. falsely representing, directly or by implication, that the Federal Trade Commission has endorsed, authorized, or approved the sales materials or sales practices of Defendants.

III. AFFIRMATIVE DISCLOSURES

IT IS FURTHER ORDERED that Defendants shall furnish a retainable copy of an Affirmative Disclosure Statement to each prospective client for invention promotion services within 48 hours of receipt of the first written communication from the client disclosing a new product idea. The Affirmative Disclosure Statement shall be in a separate document that sets forth in a clear and conspicuous manner the following information and no other information: (1) the total number of clients with whom Defendants have signed contracts for invention promotion services during the five year period ending with the date of the Affirmative Disclosure Statement; (2) the total number of such clients who have had their ideas for inventions licensed or purchased by an unaffiliated third party; (3) the total number of such clients who have received more from royalties or sales of their ideas for inventions from unaffiliated third parties than they paid to the Defendants, and; (4) the total number of prototypes, market tests, or other pilot programs funded, in whole or in part, by Defendants. The information contained in the Affirmative Disclosure Statement shall be current as of a date no more than 60 days prior to the date the Affirmative Disclosure Statement is furnished to the prospective client, and that date shall appear on the Affirmative Disclosure Statement. Defendants shall exclude from the calculation of the numbers required by this paragraph any client who has any relationship with any Defendant other than that of a good faith purchaser of Defendants’ invention promotion services.

The Defendants shall request that the prospective client (1) acknowledge receipt of the Affirmative Disclosure Statement, in writing, on a duplicate of the Affirmative Disclosure Statement, and (2) return the separate disclosure document to Defendants. The Defendants shall not initiate any contact with the prospective client for three business days after furnishing the Affirmative Disclosure Statement to the prospective client, and shall not solicit or accept any funds from a prospective client before receiving the written acknowledgment of receipt of the Affirmative Disclosure Statement from the prospective client.

IV.CONSUMER REDRESS

IT IS FURTHER ORDERED that, as of the date of entry of this Order, Defendant Gregory S. Bender hereby transfers to the Commission, irrevocably and without the possibility of reversion to himself or to any entity owned or controlled by him, any and all title, ownership, rights, interests, and options, present or future, that he, or any entity owned or controlled by him, have in the following accounts at the institutions indicated:

A. Charles Schwab & Co. Account No. 1486-5508

B. Dreyfus Disciplined Stock Fund Account No. 63883425

C. Dreyfus Money Market AccountAccount No. 63883425

D. Oak Value Fund Account No. 60-3282-8

Defendant Bender shall, execute all documents as are necessary to effect the transfer of the funds in these accounts to the Commission. Said funds shall be transferred by the Commission to a redress fund administered by the Commission and shall be used to provide direct redress to purchasers of services from Defendants Eureka Solutions International, Inc. and OEM Communications, Inc. Payment to such persons represents redress and is intended to be compensatory in nature, and no portion of such payment shall be deemed a payment of any fine, penalty, or punitive assessment. If the Commission determines, in its sole discretion, that redress to purchasers is wholly or partially impracticable, any funds not so used shall be paid to the United States Treasury.

V. RECEIVER

IT IS FURTHER ORDERED that the Receiver appointed under the Temporary Restraining Order with Asset Freeze entered on July 15, 1997, shall file a report with the Court setting forth all receipts and disbursements from the following accounts established by the Receiver at S& T Bank, Monroeville, Pennsylvania: (1) Checking Account No. 1005635405; (2) Checking Account No. 1005635579.

In addition, the Receiver shall file a final application for payment of fees and expenses, and, after payment of approved fees and expenses incurred, shall pay to the Commission the balance of the monies in above referenced Receivership accounts at S & T Bank. The Receivership shall terminate upon such payment to the Commission. Defendants shall indemnify and hold harmless the Receiver for any claim made against the Receiver arising out of the Receiver’s activities pursuant to this Order or previous orders of this Court.

VI.RIGHT TO REOPEN

IT IS FURTHER ORDERED that, within three (3) business days after the date of entry of this Stipulated Order by the Court, Defendants Eureka Solutions International, Inc., OEM Communications, Inc. and Gregory S. Bender shall submit to the Commission a truthful sworn statement in the form shown on Exhibit A of this Stipulated Order that shall reaffirm and attest to the truthfulness, accuracy, and completeness of their financial statements dated November 19, 1997. The Commission’s agreement to this Stipulated Order is expressly premised upon the financial condition of said Defendants as represented in the respective financial statement referenced above, which contain material information upon which the Commission relied in negotiating and agreeing upon this Stipulated Order for Permanent Injunction. If, upon motion by the Commission, this Court finds that Defendants Eureka Solutions International, Inc., OEM Communications, Inc. and Gregory S. Bender failed to file the sworn statement required by this section, or if said Defendants failed to disclose any material asset, or materially misrepresented the value of any asset, or made any other material misrepresentation in or omissions from their financial statements referenced above, the Commission may request that the judgment herein be reopened for the purpose of requiring monetary consumer redress or obtaining other equitable relief. Provided, however, that in all other respects this judgment shall remain in full force and effect, unless otherwise ordered by this Court.

Provided further, that proceedings instituted under this section in that event are in addition to and not in lieu of any other civil or criminal remedies as may be provided by law, including, but not limited to, contempt proceedings, or any other proceedings that the Commission may initiate to enforce this Stipulated Order.

VII. NOTICES TO FTC

IT IS FURTHER ORDERED that, for a period of three (3) years commencing with the date of entry of this Judgment, Defendants shall notify the Cleveland Regional Office of the Federal Trade Commission in writing of:

A. any change in Defendant Bender’s employment status, within thirty days of such change. Such notice shall include the name and address of each business that he is affiliated with or employed by, a statement of the nature of the business, and a statement of Defendant Bender’s duties and responsibilities in connection with the business; and

B. any proposed change in the structure of any business entity owned or controlled by Defendant Bender, such as the creation, incorporation, dissolution, assignment, sale, creation or dissolution of subsidiaries, or any other changes that may affect compliance obligations arising out of this Judgment, within thirty days prior to the effective date of any proposed change.

VIII. FTC REVIEW OF BUSINESS PRACTICES

IT IS FURTHER ORDERED that in order to facilitate the Commission’s monitoring of compliance with the provisions of this Stipulated Order, Defendant Gregory S. Bender shall, for five (5) years after the date of entry of this Stipulated Order:

A. upon seven (7) days notice from the Commission permit duly authorized representatives of the Commission access during normal office hours to any office or facility in which documents or records relating to compliance with the terms of this Order are stored or held, to inspect and copy such documents;

B. refrain from interfering with duly authorized representatives of the Commission who wish to interview Defendant’s employers, agents, and employees (who may have counsel present) relating in any way to any conduct subject to this Stipulated Order;

C. appear on fifteen (15) days notice for deposition with respect to any conduct subject to this Order.

Provided further, that the Commission may otherwise monitor Defendants’ compliance with this order by investigators posing as consumers, potential investors, suppliers, and other entities, to the same extent to which such means would be lawful were the Commission or the Commission’s attorneys not aware of any representation of such Defendant by counsel.

IX.MAINTENANCE OF RECORDS

IT IS FURTHER ORDERED that Defendants shall, for five (5) years after the last date of dissemination of any representation covered by this Stipulated Order, maintain and upon request make available to the Commission for inspection and copying:

A. all advertisements and promotional materials containing the representation;

B. all materials that were relied upon in disseminating the representation;

C. all tests, reports, studies, surveys, demonstrations, or other evidence in their possession or control that contradict, qualify, or call into question, the representation or the basis relied upon for the representation, including complaints and other communications with consumers or with governmental or consumer protection organizations;

D. all materials relied upon to create the Affirmative Disclosure Statement required by Section III of this Stipulated Order; and

E. prospective clients’ signed acknowledgments of receipt of the Affirmative Disclosure Statement required in Section III of this Stipulated Order.

X. NOTICES

IT IS FURTHER ORDERED that all notices required of Defendants Eureka Solutions International, Inc., OEM Communications, Inc., and Gregory S. Bender in this Stipulated Order shall be made to the following address: Regional Director, Federal Trade Commission, Eaton Center, Suite 200, 1111 Superior Avenue, East, Cleveland, Ohio 44114, or such other address as Plaintiff shall specify.

XI.COSTS AND ATTORNEYS’ FEES

IT IS FURTHER ORDERED that Defendants Eureka Solutions International, Inc., OEM Communications, Inc. and Gregory S. Bender hereby agree to bear their own costs and attorney’s fees incurred in connection with this action; provided, however, in the event that the Commission initiates proceedings to enforce the provisions of this Stipulated Order for Permanent Injunction and provided further, the Court determines that any Defendant has violated any term or provision of this Stipulated Order, said Defendant shall pay reasonable costs and attorney’s fees incurred by the Commission in connection with the proceedings to enforce this Stipulated Order.

XII. RETENTION OF JURISDICTION

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for all purposes.

SO ORDERED, this day of , 1997, at .

Gary L. Lancaster

United States District Court Judge

The parties, as indicated below, agree to the entry of this Stipulated Order for Permanent Injunction.

FEDERAL TRADE COMMISSION EUREKA SOLUTIONS INTERNATIONAL, INC.

Brenda W. Doubrava Gregory S. Bender

Attorney for Plaintiff President

RECEIVER OEM COMMUNICATIONS, INC.

Mary Reitmeyer, Esq. Gregory S. Bender

Receiver President

GREGORY S. BENDER, individually

Gregory S. Bender, Pro Se

I, Gregory S. Bender, hereby state that the information contained in the financial statements and related papers provided to the Federal Trade Commission on November 19, 1997 for Eureka Solutions International, Inc., OEM Communications, Inc., and myself were true, accurate and complete at such time. A copy of the aforementioned financial statements and related papers are attached hereto as Appendix A.

I declare under penalty of perjury that the foregoing is true and correct.

Executed on

GREGORY S. BENDER