UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

UNITED STATES OF AMERICA, Plaintiff,

vs.

QX INTERNATIONAL, INC., a corporation, and ANTHONY F. FRANCIS, individually and as an officer of the corporation, Defendants.

Civil Action No. 3:98-CV-0453-D

STIPULATED FINAL JUDGMENT AND ORDER OF PERMANENT INJUNCTION AS TO INDIVIDUAL DEFENDANT ANTHONY F. FRANCIS

Plaintiff, the United States of America, acting upon notification and authorization to the Attorney General by the Federal Trade Commission ("FTC" or the "Commission"), commenced this action by filing the Complaint herein. Defendant Anthony F. Francis was personally served with the summons and the complaint and is appearing pro se.

The individual defendant, Anthony F. Francis (hereafter "defendant"), and the United States, through its counsel, now hereby agree to settlement of this action without adjudication of any issue of fact or law and without defendant admitting liability for any of the violations alleged in the Complaint;

THEREFORE, on the joint motion of defendant Anthony F. Francis and the United States, it is hereby ORDERED, ADJUDGED AND DECREED as follows:

1. This Court has jurisdiction of the subject matter and of the defendant pursuant to 28 U.S.C. §§ 1331 and 1345, and 15 U.S.C. § 45, 53(b), and 57b.

2. The Complaint states a claim upon which relief may be granted against the defendant under Sections 5(a), 5(m)(1)(A), 9, 13(b), 16(a) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 45(a), 45(m)(1)(A), 49, 53(b), 56(a), and 57b.

3. The activities of the defendant as alleged in the Complaint are or were in or affecting commerce, as defined in 15 U.S.C. § 44.

4. Entry of this Stipulated Judgment and Order is in the public interest.

5. The defendant enters into this Stipulated Judgment and Order freely and without coercion. Defendant further acknowledges that he has read the provisions of this Stipulated Judgment and Order and is prepared to abide by them.

6. Defendant Francis hereby waives all rights to appeal or otherwise challenge or contest the validity of this Stipulated Judgment and Order.

DEFINITIONS

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

1. "Franchise Rule" is defined as the Commission's Trade Regulation Rule entitled "Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures," 16 C.F.R. Part 436, as currently promulgated or as it may hereafter be amended. A copy of the Franchise Rule is attached hereto as Attachment A and incorporated herein as if fully set forth.

2. "Franchise" is defined in Section 436.2(a) of the Franchise Rule, 16 C.F.R.§ 436.2(a), which is attached as Attachment A and shall also encompass any successor definition in any later trade regulation rule promulgated by the Commission.

3. "Business opportunity" or "Business venture" means any written or oral business arrangement, however denominated, whether or not covered by the Franchise Rule, which consists of the payment of any consideration for: (a) the right or means to offer, sell, or distribute goods or services (whether or not identified by a trademark, service mark, trade name, advertising, or other commercial symbol); and (b) assistance to any person or entity in connection with or incident to the establishment, maintenance, or operation of a new business or the entry by an existing business into a new line or type of business.

4. "Defendant" means Anthony F. Francis, his successors and assigns, and his agents, employees, officers, and attorneys, and other persons directly or indirectly under his control or in active concert or participation with him who receive actual notice of this order by personal service, facsimile or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device.

5. "Person" means a natural person, organization, or other legal entity, including a corporation, partnership, proprietorship, association, cooperative, government or governmental subdivision or agency, or any other group or combination acting as an entity.

ORDER

I. PROHIBITED BUSINESS PRACTICES

A. IT IS THEREFORE ORDERED that defendant is hereby permanently restrained and enjoined from engaging, participating, or assisting in any manner or in any capacity whatsoever in the advertising, marketing, promoting, offering for sale or selling of any business opportunity, franchise or business venture, whether directly or indirectly, in concert with others, or through any intermediary, business entity or device.

B. IT IS FURTHER ORDERED that defendant, in connection with the advertising, marketing, promoting, licensing, offering for sale or selling of any goods and services, is hereby permanently restrained and enjoined from making, or assisting in the making, either orally or in writing, expressly or by implication, any false or misleading statements or representations of fact, including, but not limited to, statements or representations regarding the following:

(1) The income, profit, or sales volume that a purchaser can achieve through the use of the goods or services;

(2) The income, profit or sales volume achieved by other consumers who have used the goods or services;

(3) The cost of the goods or services or the cost to use the goods or services;

(4) The length of time that it may or will take to recoup the cost of the goods or services;

(5) The independence or authenticity of any reference attesting to qualities of the goods or services;

(6) The assistance in using the product that will be provided to a consumer by the defendant; and

(7) The defendant's ability, due to privacy or other concerns or restrictions, to disclose the names, addresses and telephone numbers of consumers who have used the goods or services previously.

II. MONETARY RELIEF

IT IS FURTHER ORDERED that judgment is hereby entered against defendant Anthony F. Francis in the amount of FOUR MILLION Dollars ($4,000,000) for consumer redress and/or disgorgement, and for paying any attendant expenses of administration of any redress fund. Provided, however, that this judgment shall be suspended until further order of the Court pursuant to Paragraph III of this Order.

III. FINANCIAL STATEMENT

IT IS FURTHER ORDERED that the plaintiff's agreement to and the Court's approval of this Order is expressly premised upon the truthfulness, accuracy, and completeness of the financial statement and information provided by the defendant to the plaintiff dated April 3, 1999 which contains material information relied upon by the plaintiff in negotiating and agreeing to the terms of this Order. If the plaintiff has reason to believe that the above-referenced financial statement failed to disclose any material asset the value of which exceeds $1,000, materially misrepresented the value of any asset, or made any other material misrepresentation or omission, the plaintiff may request that this Order be reopened for the sole purpose of allowing the plaintiff to modify the monetary liability of the defendant. If the Court finds that the defendant failed to disclose any material asset, materially misrepresented the value of any asset, or made any other material misrepresentation or omission in the above-referenced financial statement, the Court shall reinstate the suspended judgment against the defendant, in favor of the plaintiff, in the amount of FOUR MILLION dollars ($4,000,000), as set forth in Paragraph II of this Order. Provided, however, that in all other respects this Order shall remain in full force and effect unless otherwise ordered by the Court; and, provided further, that proceedings instituted under this provision would be in addition to and not in lieu of any other proceedings the plaintiff may initiate to enforce this Order. Solely for the purposes of reopening or enforcing this Paragraph, the defendant waives any right to contest any of the allegations set forth in the Complaint filed in this matter.

IV. COLLECTING UNPAID REDRESS

IT IS FURTHER ORDERED that the defendant shall cooperate fully with the plaintiff and its agents in all attempts to collect any amounts which become due pursuant to Paragraphs II and III. In such an event, the defendant agrees to provide the plaintiff with his federal and state tax returns for the three (3) years preceding the reopening of this Order, and with full updated financial disclosures, in the form as was previously submitted by the defendant as referenced in Paragraph III, above, within ten (10) business days of receiving a request from the plaintiff to do so. The defendant further authorizes the plaintiff to verify all information provided on his financial disclosure forms with all appropriate third parties, including but not limited to, financial institutions. The defendant is hereby required, in accordance with 31 U.S.C. § 7701, to furnish the plaintiff his taxpayer identifying number (social security number or employer identification number), which shall be used for purposes of collecting and reporting on any delinquent amount arising out of the defendant's relationship with the government.

V. CUSTOMER LISTS

IT IS FURTHER ORDERED that the defendant is permanently restrained and enjoined from selling, renting, leasing, transferring, or otherwise disclosing the name, address, telephone number, credit card number, bank account number, e-mail address, or other identifying information of any person who purchased a franchise or business venture from the defendant or any of his agents, representatives, brokers or employees, prior to the entry of this Order. Provided that the defendant may disclose such identifying information to a law enforcement agency or as required by any law, regulation, or court order.

VI. RECORD KEEPING PROVISIONS

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, the defendant, in connection with any business where the defendant is the majority owner of the business or directly or indirectly controls or directs the business is hereby required to keep and to retain for a period of three (3) years following the date of such creation, unless otherwise specified:

A. Books, records and accounts that, in reasonable detail, accurately and fairly reflect the cost of goods or services sold, revenues generated, and the disbursement of such revenues;

B. Records accurately reflecting: the name, address, and telephone number of each person employed in any capacity by such business, including as an independent contractor or consultant; that person's job title or position; the date upon which the person commenced work; and the date and reason for the person's termination, if applicable. The businesses subject to this Paragraph shall retain such records for any terminated employee for a period of two (2) years following the date of termination;

C. Records containing the names, addresses, phone numbers, dollar amounts paid, quantity of items or services purchased, and description of items or services purchased, for all consumers to whom such business has sold, invoiced or shipped any goods or services, or from whom such business accepted money or other items of value;

D. Records that reflect, for every consumer complaint or refund request, whether received directly or indirectly or through any third party:

(1) the consumer's name, address, telephone number and the dollar amount paid by the consumer;

(2) the written complaint or refund request, if any, and the date of the complaint or refund request;

(3) the basis of the complaint, including the name of any salesperson complained against, and the nature and result of any investigation conducted concerning any complaint;

(4) each response and the date of the response;

(5) any final resolution and the date of the resolution; and

(6) in the event of a denial of a refund request, the reason for the denial; and

E. Copies of all sales scripts, training materials, advertisements, or other marketing materials utilized; provided that copies of all sales scripts, training materials, advertisements, or other marketing materials utilized shall be retained for (3) years after the last date of dissemination of any such materials.

VII. DISTRIBUTION OF ORDER BY DEFENDANT

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, the defendant shall:

A. Provide a copy of this Order to, and obtain a signed and dated acknowledgment of receipt of same from, (1) each officer or director, immediately upon employing or retaining any such persons, for any business where the defendant is the majority owner of the business or directly or indirectly manages or controls the business, and (2) each individual serving in a management capacity, all personnel involved in responding to consumer complaints or inquiries, and all sales personnel, whether designated as employees, consultants, independent contractors or otherwise, immediately upon employing or retaining any such persons, for any business where the defendant is the majority owner of the business or directly or indirectly controls the business.

B. Maintain for a period of three (3) years after creation, and upon reasonable notice, make available to representatives of the Commission, the original signed and dated acknowledgments of the receipt of copies of this Order, as required in Section A of this Paragraph.

VIII. COMPLIANCE REPORTING BY DEFENDANT

IT IS FURTHER ORDERED that, in order that compliance with the provisions of this Order may be monitored:

A. For a period of five (5) years from the date of entry of this Order, the defendant shall notify the Commission, at the address set forth in paragraph D, below, of the following:

(1) Any changes in defendant's residence, mailing addresses, and telephone numbers, within ten (10) days of the date of such change;

(2) Any changes in defendant's employment status (including self-employment) within ten (10) days of such change. Such notice shall include the name and address of each business that defendant is affiliated with or employed by, a statement of the nature of the business, and a statement of defendant's duties and responsibilities in connection with the business or employment; and

(3) Any proposed change in the structure of any business entity owned or controlled by the defendant such as creation, incorporation, dissolution, assignment, sale, merger, creation, dissolution of subsidiaries, proposed filing of a bankruptcy petition, or change in the corporate name or address, or any other change that may affect compliance obligations arising out of this Order, thirty (30) days prior to the effective date of any proposed change; provided, however, that, with respect to any proposed change in the corporation about which the defendant learns less than thirty (30) days prior to the date such action is to take place, the defendant shall notify the Commission as soon as is practicable after learning of such proposed change;

B. One hundred eighty (180) days after the date of entry of this Order, the defendant shall provide a written report to the FTC, sworn to under penalty of perjury, setting forth in detail the manner and form in which the defendant has complied and is complying with this Order. This report shall include but not be limited to:

(1) Defendant's then current residence addresses and telephone numbers;

(2) Defendant's then current employment, business addresses and telephone numbers, a description of the business activities of each such employer, and the defendant's title and responsibilities for each employer;

(3) A copy of each acknowledgment of receipt of this Order obtained by the defendant pursuant to Paragraph VII;

(4) A statement describing the manner in which the defendant has complied and is complying with the

(a) Injunctive provisions in Paragraph I of the Order; and

(b) Monetary relief provisions in Paragraph II of the Order;

C. Upon written request by a representative of the Commission, the defendant shall submit additional written reports (under oath, if requested) and produce documents on fifteen (15) days' notice with respect to any conduct subject to this Order;

D. For the purposes of this Order, the defendant shall, unless otherwise directed by the Commission's authorized representatives, mail all written notifications to the Commission to:

Regional Director
Federal Trade Commission, Dallas Regional Office
1999 Bryan Street, Suite 2150
Dallas, Texas 75201

Re: FTC v. QX International, Inc., et al.
Civ. Act. No. 3:98-CV-0453-D

E. For the purposes of this Paragraph, "employment" includes the performance of services as an employee, consultant, or independent contractor; and "employers" includes any individual or entity for whom the defendant performs services as an employee, consultant, or independent contractor.

F. For purposes of the compliance reporting required by this Paragraph, the Commission is authorized to communicate directly with the defendant.

IX. AUTHORITY TO MONITOR COMPLIANCE

IT IS FURTHER ORDERED that the plaintiff is authorized to monitor the defendant's compliance with this Order by all lawful means, including but not limited to, the following means:

A. The plaintiff is authorized, without further leave of court, to obtain discovery from any person in the manner provided by Chapter V of the Federal Rules of Civil Procedure, Fed. R. Civ. P. 26 - 37, including the use of compulsory process pursuant to Fed. R. Civ. P. 45, for the purpose of monitoring and investigating the defendant's compliance with any provision of this Order;

B. The Commission is authorized to use representatives posing as consumers and suppliers to defendant, defendant's employees, or any other entity managed or controlled in whole or in part by the defendant, without the necessity of identification or prior notice; and

C. Nothing in this Order shall limit the Commission's lawful use of compulsory process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49, 57b-1, to investigate whether the defendant has violated any provision of this Order or Section 5 of the FTC Act, 15 U.S.C. § 45.

X. ACCESS TO BUSINESS PREMISES

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, for the purpose of further determining compliance with this Order, the defendant shall permit representatives of the Commission, within three (3) business days of receipt of written notice from the Commission:

A. Access during normal business hours to any office, or facility storing documents, of any business where the defendant is the majority owner of the business or directly or indirectly controls or directs the business. In providing such access, the defendant shall permit representatives of the Commission to inspect and copy all documents relevant to any matter contained in this Order; and shall permit Commission representatives to remove documents relevant to any matter contained in this Order for a period not to exceed five (5) business days so that the documents may be inspected, inventoried, and copied; and

B. To interview the officers, directors, and employees, including all personnel involved in responding to consumer complaints or inquiries, and all sales personnel, whether designated as employees, consultants, independent contractors or otherwise, of any business to which Section A of this Paragraph applies, concerning matters relating to compliance with the terms of this Order. The person interviewed may have counsel present.

Provided that, upon application of the plaintiff and for good cause shown, the Court may enter an ex parte order granting immediate access to the defendant's business premises for the purposes of inspecting and copying all documents relevant to any matter contained in this Order.

XI. ACKNOWLEDGMENT OF RECEIPT OF ORDER BY DEFENDANT

IT IS FURTHER ORDERED that, within five (5) business days after receipt by defendant of this Order as entered by the Court, defendant shall submit to the Commission a truthful sworn statement, in the form shown on Attachment B, that shall acknowledge receipt of this Order.

XII. EQUAL ACCESS TO JUSTICE ACT

Defendant agrees that this Stipulated Judgment and Order does not entitle defendant to seek or to obtain attorneys' fees as a prevailing party under the Equal Access to Justice Act, 28 U.S.C. § 2412, amended by Pub. L. 104-121, 110 Stat. 847, 863-64 (1996), and defendant further waives any right to attorneys' fees that may arise under said provision of law.

XIII. CONSENT TO ENTRY OF JUDGMENT AND ORDER

The settling parties, the government through its counsel and Anthony F. Francis, hereby consent to entry of the foregoing Stipulated Judgment and Order which shall constitute a final judgment and order in this matter. The settling parties further stipulate and agree that the entry of the foregoing Stipulated Judgment and Order shall constitute a full, complete and final settlement of this action. The settling parties further stipulate that this Stipulated Judgment and Order embodies all of the agreements among them and that they have not relied upon any representations or statements not included herein.

XIV. IMMEDIATE ENTRY

IT IS FURTHER ORDERED that there is no just reason for delay of entry of this Order and, pursuant to Federal Rule of Civil Procedure 54(b), the clerk shall enter this Order immediately.

XV. RETENTION OF JURISDICTION

IT IS FURTHER ORDERED that the Court shall retain jurisdiction of this matter for the purpose of enabling the settling parties to apply to the Court at any time for such further orders and directions as may be necessary or appropriate for the interpretation, modification or enforcement of this Order, or for the punishment of violations thereof.

IT IS SO ORDERED.

ENTERED this ________ day of ____________________, 1999.

__________________________________
SIDNEY A. FITZWATER
UNITED STATES DISTRICT JUDGE

The parties, hereby consent to the terms and conditions of the Stipulated Final Order as set forth above and consent to entry thereof. Each party shall bear its own costs and attorney's fees.

FOR THE PLAINTIFF:

PAUL COGGINS
United States Attorney

PAULA M. BILLINGSLEY
Assistant United States Attorney

JACQUELINE H. EAGLE
D.C. Bar No. 936898
Senior Trial Counsel
Office of Consumer Litigation
U.S. Department of Justice
P.O. Box 386
Washington, D.C. 20044
202- 307-0052
Of Counsel:

Thomas B. Carter
Texas Bar No. 03932300
Regional Director
Dallas Regional Office
Federal Trade Commission

Susan E. Arthur, Attorney
Texas Bar No. 01365300
Dallas Regional Office
Federal Trade Commission
1999 Bryan Street, Suite 2150
Dallas, TX 75201
(214) 979-9370

FOR DEFENDANT:

ANTHONY F. FRANCIS, individually and as an officer of QX International

ATTACHMENT B

UNITED STATES DISTRICT COURT

_______________ DISTRICT OF ______________

UNITED STATES OF AMERICA, Plaintiff,

v.

DEFENDANT, et al. Defendants.

CIVIL ACTION NO.

DECLARATION OF DEFENDANT --------

[Name of defendant], being duly sworn, hereby states and affirms as follows:

1. My name is_______________________. My current residence address is ______________________________________________________. I am a citizen of the United States and am over the age of eighteen. I have personal knowledge of the facts set forth in this Affidavit.

2. I am a defendant in US v. Defendant, et al. (United States District Court for the _____________ District of _____________).

3. On [date], I received a copy of the [state full name of the Final Order as it appears on the Order itself], which was signed by the Honorable [name of U.S. District Judge] and entered by the Court on [date of entry of Order]. A true and correct copy of the Order I received is appended to this Affidavit.

I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct. Executed on [date], at [city and state].

___________________________________
[Full name of defendant]

State of ____________________, City of ____________________

Subscribed and sworn to before me this _____ day of _________, 199___.

_____________________________
Notary Public
My Commission Expires:

_____________________________

___________________________________

[Full name of defendant]