FTC, et. al. v. SURECHEK SYSTEMS, INC., et. al.

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION

FEDERAL TRADE COMMISSION, and STATE OF ARKANSAS ex rel. WINSTON BRYANT, ATTORNEY GENERAL, Plaintiffs,

v.

SURECHEK SYSTEMS, INC., d/b/a CONSUMER CREDIT CORP., and CONSUMER CREDIT DEVELOPMENT CORP., a Georgia corporation;

DOUGLAS S. DERICKSON, individually and as an officer of SureCheK Systems, Inc., d/b/a Consumer Credit Corp., and Consumer Credit Development Corp.; and STEVE LOVERN, individually and as an officer of SureCheK Systems, Inc., d/b/a Consumer Credit Corp., and Consumer Credit Development Corp., Defendants.

CIVIL ACTION NO.
1-97-CV-2015 (JTC)

STIPULATED FINAL JUDGMENT AND ORDER FOR PERMANENT INJUNCTION AS TO
DEFENDANT STEVE LOVERN

Plaintiffs, Federal Trade Commission ("FTC" or "Commission"), and the State of Arkansas have filed a complaint pursuant to Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b, and Section 6(b) of the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. § 6105(b), charging the defendants in this action with violations of Section 5 of the FTC Act, 15 U.S.C. § 45, and with violations of the FTC’s Telemarketing Sales Rule, 16 C.F.R. Part 310.

The plaintiffs, by and through their counsel, and defendant, Steve Lovern ("Lovern) have agreed to the entry of this Stipulated Final Judgment and Order for Permanent Injunction ("Final Judgment") by this Court in order to resolve all matters in dispute in this action involving Steve Lovern. The plaintiffs and defendant have consented to entry of this Final Judgment without trial or adjudication of any issue of law or fact herein.

Being fully advised in the premises and acting upon the joint motion of the parties, Lovern, the Commission, and the State of Arkansas, to enter this Final Judgment, IT IS HEREBY ORDERED, ADJUDGED AND DECREED AS FOLLOWS:

FINDINGS

This Court has jurisdiction of the subject matter of this action and of defendant Lovern;
The Complaint states a claim upon which relief may be granted against defendant Lovern under Sections 5, 13(b) and 19(a) of the FTC Act, 15 U.S.C. §§ 45, 53(b) and 57b, and under Section 6(b) of the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. § 6105(b);
Venue in this district is proper under 28 U.S.C. § 1391(b) and (c), and 15 U.S.C. § 53(b);
Entry of this Final Judgment is in the public interest;
The acts and practices of defendant were in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44;
Defendant has waived all claims under the Equal Access to Justice Act, 28 U.S.C. § 2412, and all rights to seek judicial review or otherwise challenge or contest the validity of this Final Judgment; and
Except as provided in Paragraph IV of this Final Judgment, the Final Judgment does not constitute and shall not be interpreted to constitute either an admission by defendant or a finding by the Court of any facts, other than those set forth above, or that defendant has engaged in violations of the FTC Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act, or any other law.

DEFINITIONS

For purposes of this Final Judgment, the following definitions shall apply:

"Telemarketing" shall mean a plan, program, or campaign which is conducted to induce the purchase of goods or services by use of one or more telephones and which involves more than one interstate telephone call.
"Material" means likely to affect a person’s choice of, or conduct regarding, goods or services.
"Final Judgment" means this Stipulated Final Judgment and Order for Permanent Injunction.

ORDER

IT IS THEREFORE ORDERED that defendant Lovern, in connection with the advertising, offering for sale, sale, or distribution of any good or service, is hereby permanently restrained and enjoined from:

A. Making, expressly or by implication, any false or misleading statement or representation that:

Defendant Lovern will provide consumers or arrange for consumers to receive credit cards;

Consumers’ applications for credit cards have been approved; or

Consumers will receive credit cards regardless of their creditworthiness; and

B. Making, expressly or by implication, orally or in writing, any false or misleading statement or representation about, or failing to disclose any material fact relating to, the cost or conditions for receiving any extension of credit.

II.

IT IS FURTHER ORDERED that defendant Lovern is hereby permanently restrained and enjoined from violating any provision of the Telemarketing Sales Rule, 16 C.F.R. Part 310, including but not limited to:

A. Requesting or receiving payment of any fee or consideration from any person in advance of that person obtaining a loan or other extension of credit while guaranteeing or representing a high likelihood of success in obtaining or arranging a loan or other extension of credit for a person, as prohibited by the Telemarketing Sales Rule, 16 C.F.R. § 310.4(a)(4);

B. Misrepresenting the total costs to purchase, receive, or use any goods or services that are the subject of a sales offer, as prohibited by the Telemarketing Sales Rule, 16 C.F.R. § 310.3(a)(2)(i);

C. Failing to disclose in a clear and conspicuous manner, the total costs and all material restrictions, limitations, or conditions to purchase, receive, or use any goods or services that are the subject of a sales offer before the customer pays for the goods or services offered, as prohibited by the Telemarketing Sales Rule, 16 C.F.R. § 310.3(a)(1)(i) and (ii);

D. Making a false or misleading statement to induce any person to pay for goods or services, as prohibited by the Telemarketing Sales Rule, 16 C.F.R. § 310.3(a)(4); and

E. Providing substantial assistance or support to any seller or telemarketer while knowing or consciously avoiding knowing that the seller or telemarketer is engaged in any act or practice that violates Sections 310.3(a) or (c), or 310.4 of the Telemarketing Sales Rule, 16 C.F.R. § § 310.3(a) and (c), and 310.4.

III.

IT IS FURTHER ORDERED that defendant Lovern is hereby permanently restrained and enjoined from providing to any person, except agents of the Commission or other law enforcement authorities, the name, address, telephone number, Social Security number or credit card or bank account number of any person who engaged in a telemarketing transaction with any of the defendants named in this action.

IV.

IT IS FURTHER ORDERED that defendant Lovern agrees that the facts as alleged in the Complaint filed with this Final Judgment shall be taken as true in any subsequent litigation filed by the Federal Trade Commission or the State of Arkansas to enforce their rights pursuant to this Final Judgment, including but not limited to a nondischargeability complaint in any subsequent bankruptcy proceeding.

IT IS FURTHER ORDERED that each party to this Final Judgment hereby agrees to bear its own costs and attorneys’ fees incurred in connection with this action; provided, however, in the event the Federal Trade Commission or the State of Arkansas initiate proceedings to enforce the provisions of this Final Judgment, and provided further, that the Court determines that the defendant Lovern violated any terms or provisions of this Final Judgment, the defendants shall pay the costs and attorneys’ fees incurred by the Federal Trade Commission or the State of Arkansas in connection with proceedings to enforce this Final Judgment.

VI.

IT IS FURTHER ORDERED that, for a period of five (5) years, commencing with the date of entry of this Final Judgment, defendant Lovern and his assigns, agents, servants, and employees, and those persons in active concert or participation with any of them who receive actual notice of this Final Judgment by personal service or otherwise, whether acting directly or through any corporation, subsidiary, division, trust, investment, or other device, are hereby restrained and enjoined from creating, operating or controlling any business entity, including any partnership, limited partnership, joint venture, sole proprietorship, or corporation, without first providing the plaintiffs with a written statement disclosing (1) the name of the business entity, (2) the address and telephone number of the business entity, (3) the names of the business entity's officers, directors, principals, managers and employees, and (4) a detailed description of the business entity's proposed activities.

VII.

IT IS FURTHER ORDERED that, in order to facilitate the monitoring of compliance with the provisions of this Permanent Injunction, defendant Lovern shall, for a period of five (5) years commencing with the date of entry of this Final Judgment:

A. Notify the Commission in writing of any change in his residential address within ten (10) days after such change; and

B. Notify the Commission in writing of any change in his employment status within ten (10) days after such change. Such notice shall include the name and address of each business that defendant Lovern is employed by, a statement of the nature of the business, and a statement of his duties and responsibilities in connection with the business.

VIII.

A. Notify the Commission in writing at least thirty (30) days prior to the effective date of any proposed change in the structure of any business entity owned or controlled by defendant Lovern, 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 Final Judgment;

B. After receiving reasonable notice from the Commission, permit duly authorized representatives of the Commission access during normal business hours to the offices of any business owned or controlled in whole or in part by defendant Lovern to inspect and copy all documents relating in any way to any conduct subject to this Final Judgment;

C. Refrain from interfering with duly authorized representatives of the Commission who wish to interview the officers, directors, or employees of any business owned or controlled in whole or in part by defendant Lovern with respect to any conduct subject to this Final Judgment;

D. Upon written request by any duly authorized representative of the Commission, submit written reports (under oath, if requested) and produce documents on thirty (30) days notice with respect to any conduct subject to this Final Judgment; and

E. Appear on fifteen (15) days notice for deposition with respect to any conduct subject to this Final Judgment.

IX.

IT IS FURTHER ORDERED that the plaintiffs’ agreement to this Final Judgment is expressly premised upon the truthfulness, accuracy, and completeness of defendant Lovern's financial condition as represented to counsel for the Commission in his financial statement and in his sworn testimony in deposition, which contain material information upon which the plaintiffs relied in negotiating and agreeing to the amount and/or terms of the redress payment stated in the Final Judgment. If, upon motion by the Commission or the State of Arkansas, this Court finds that defendant Lovern failed to disclose any material asset, or materially misrepresented the value of any asset, or made any other material misrepresentation in or omission from the financial statement or in the deposition of defendant Lovern taken by the Commission, the Final Judgment herein shall be reopened for the purpose of modifying the amount and/or terms of the redress payment; provided, however, that in all other respects this Final Judgment shall remain in full force and effect unless otherwise ordered by the Court; and provided further, that proceedings instituted under this paragraph are 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 or the State of Arkansas may initiate to enforce this Final Judgment. Defendant Lovern further authorizes the Commission or the State of Arkansas to verify all information provided on the financial disclosure form with all appropriate third parties, including but not limited to financial institutions.

IT IS FURTHER ORDERED that, within sixty (60) days after the date of entry of this Final Judgment, defendant Lovern shall file a report with the Commission setting forth in detail the manner and form in which he has complied with this Final Judgment. This report shall include the current residence address for defendant Lovern and his employment status, including the name and business address of his current employer(s), if any, a statement of the nature of the business, and a statement of his duties and responsibilities in connection with the business.

XI.

IT IS FURTHER ORDERED that all notices required of defendant Lovern by this Final Judgment shall be mailed to the following address:

Director
Atlanta Regional Office
Federal Trade Commission
Suite 5M35, Midrise Building
60 Forsyth Street, SW
Atlanta, GA 30303-2322

XII.

IT IS FURTHER ORDERED that this action and the relief awarded herein is in addition to and not in lieu of other remedies as may be provided by law including both civil and criminal remedies.

XIII.

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for all purposes, including but not limited to the enforcement of compliance with the Final Judgment, or the punishment of violations thereof.

SO ORDERED, this ______ day of __________, 1998.

___________________________________
United States District Judge
Jack T. Camp

The parties hereby stipulate and agree to the terms and conditions set forth above and consent to entry of this Final Judgment.

For Plaintiffs the Federal Trade Commission and the State of Arkansas

Dated:

Cindy A. Liebes
Attorney for plaintiffs
Federal Trade Commission
Suite 5M35, Midrise Building
60 Forsyth Street, SW
Atlanta, Georgia 30303-2322
(404) 656-1353

Dated:

James DePriest
Attorney for plaintiffs
Senior Assistant Attorney General
Arkansas Attorney General’s Office
323 Center Street, Suite 200
Little Rock, AR 72201
(501) 682-6150

For Defendant Steve Lovern

Dated:

Steve Lovern
Defendant

Dated:

Thomas DeRosay
Attorney for Defendant