UNITED STATES DISTRICT COURT FEDERAL TRADE COMMISSION, Plaintiff, v. B.B.M. INVESTMENTS, INC., and TIMOTHY RYAN ATKINSON, Defendants. Civil No. COMPLAINT Plaintiff Federal Trade Commission ("FTC" or "Commission") brings this action under Sections 5(a), 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 45(a), 53(b) and 57b, and the Telemarketing and Consumer Fraud and Abuse Prevention Act ("Telemarketing Act"), 15 U.S.C. § 6101 et seq., to obtain temporary, preliminary and permanent injunctive relief, rescission of contracts, restitution, disgorgement, and other equitable relief for defendants' deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the FTC's Trade Regulation Rule entitled "Telemarketing Sales Rule" ("TSR"), 16 C.F.R. Part 310. JURISDICTION AND VENUE 1. Subject matter jurisdiction is conferred upon this Court by 15 U.S.C. §§ 45(a), 53(b), 57b, 6102(c), and 6105(b) and 28 U.S.C. §§ 1331, 1337(a), and 1345. 2. Venue in the Western District of Washington is proper under 15 U.S.C. §§ 53(b) and 6103(a) and 28 U.S.C. § 1391(b), (c) and (d). PARTIES 3. Plaintiff, 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 also enforces the TSR, 16 C.F.R. Part 310, which prohibits deceptive or abusive telemarketing acts or practices. The Commission may initiate federal district court proceedings to enjoin violations of the FTC Act and the TSR and to secure such equitable relief as is appropriate in each case, including restitution for injured consumers. 15 U.S.C. §§ 53(b), 57b, and 6105(b). 4. Defendant B.B.M. Investments, Inc. ("BBM"), is incorporated in British Columbia, Canada. Its office and principal place of business is at 2661 Kingsway, #202, Vancouver, British Columbia, Canada. BBM maintains mailing addresses at 137-1027 Davie Street, Vancouver, British Columbia and 902-488 Helmcken Street, Vancouver, British Columbia. BBM has transacted business in the State of Washington and throughout the United States. 5. Defendant Timothy Ryan Atkinson ("Atkinson") is the sole director of BBM. Atkinson rents a mail box at 1122 East Pike Street, Seattle, Washington, and provides BBM's address on the rental application. At all times relevant to this Complaint, acting alone or in concert with others, he has participated directly in, or has had authority to control, the acts and practices of BBM, including the acts and practices set forth in this Complaint. Atkinson has transacted business in the State of Washington and throughout the United States. COMMERCE 6. At all times relevant to this complaint, defendants' course of business, including the acts and practices alleged herein, has been and is in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44. DEFENDANTS' BUSINESS PRACTICES 7. Defendants BBM and Atkinson induce United States residents, many of whom are elderly, to purchase purported Premium Bonds that are supposedly offered by National Savings, the second largest savings institution in the United Kingdom. Genuine Premium Bonds, offered by National Savings, are government securities issued by the British Treasury. The interest earned on the genuine bonds is pooled and then distributed to randomly-selected bond holders through monthly prize drawings. The bonds can be redeemed at any time for their full face value. 8. During telephone solicitations, defendants BBM and Atkinson make representations to consumers to induce their purchase of the purported National Savings Premium Bonds. For example, defendants BBM and Atkinson represent that BBM is authorized to sell these Premium Bonds to U.S. consumers. Defendants BBM and Atkinson also claim that consumers who pay BBM will receive Premium Bonds from National Savings that are entered in monthly drawings for cash prizes. In some instances, BBM tells consumers that they will receive monthly interest or dividend payments. In addition, defendants BBM and Atkinson represent that the cash prizes from the monthly drawings are tax-free. Defendants BBM and Atkinson do not advise consumers that the sale and trafficking in foreign lottery materials is a crime in the U.S. 9. Relying on BBM and Atkinson's statements and representations, consumers pay BBM thousands of dollars in the expectation of receiving tax-free, no-risk bonds and thereby ensure that consumers' registered bond numbers will be entered in the Premium Savings Bond Program's monthly drawings for cash prizes. In fact, consumers who pay BBM receive nothing. National Savings is the only organization authorized to sell Premium Bonds. National Savings has never authorized any third party to sell its bonds to U.S. consumers. Premium Bonds can only be issued to individuals, not businesses, and the bonds are not transferable. VIOLATIONS OF SECTION 5 OF THE FTC ACT 10. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits unfair or deceptive acts or practices in or affecting commerce. 11. Misrepresentations or omissions of material fact constitute deceptive acts or practices prohibited by Section 5(a) of the FTC Act. COUNT ONE 12. In numerous instances, in connection with telemarketing British bonds to U.S. consumers, defendants have represented, expressly or by implication, that BBM is authorized to sell Britain's Premium Savings Bonds to U.S. consumers. 13. In truth and in fact, BBM is not authorized to sell Britain's Premium Savings Bonds to U.S. consumers. 14. Therefore, the representation set forth in Paragraph 12 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 TWO 15. In numerous instances, in connection with telemarketing British bonds to U.S. consumers, defendants have represented, expressly or by implication, that consumers who purchase from defendants become registered bond holders in Britain's Premium Savings Bond Program and thereby are entered into the Premium Savings Bond Program's monthly drawings for cash prizes. 16. In truth and in fact, consumers who purchase from the defendants do not become registered bond holders in Britain's Premium Savings Bond Program, and are not entered into the Premium Saving Bond Program's monthly drawings for cash prizes. 17. Therefore, the representation set forth in Paragraph 15 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 18. In numerous instances, in connection with telemarketing British bonds to U.S. consumers, defendants have represented, expressly or by implication, that consumers who purchase bond units from defendants will receive dividends or monthly interest payments. 19. In truth and in fact, consumers who purchase bond units from defendants do not receive dividends or monthly interest payments. 20. Therefore, the representation in Paragraph 18 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 FOUR 21. In numerous instances, in connection with telemarketing British bonds to U.S. consumers, defendants have represented, expressly or by implication, that the cash prizes from the monthly drawings are tax-free. 22. In truth and in fact, the cash prizes from the monthly drawings are not free from United States income taxes. 23. Therefore, the representation set forth in Paragraph 21 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 FIVE 24. The sale of and trafficking in foreign lottery materials is a violation of federal criminal law, including laws prohibiting the importing and transmitting of lottery materials by mail and otherwise, 18 U.S.C. §§ 1301 and 1302. 25. In numerous instances, in connection with telemarketing foreign bond products with lottery features, defendants fail to disclose that the sale of and trafficking in foreign lottery materials is a crime in the United States. 26. Therefore, defendants' failure to disclose this material fact is deceptive, and violates Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). VIOLATIONS OF THE TELEMARKETING SALES RULE 27. In the Telemarketing Act, 15 U.S.C. § 6101, et seq., Congress directed the FTC to prescribe rules prohibiting deceptive telemarketing acts or practices. On August 16, 1995, the Commission promulgated the TSR, 16 C.F.R. Part 310. The TSR became effective December 31, 1995. 28. Defendants are "telemarketers" or "sellers" engaged in "telemarketing" as those terms are defined in the TSR, 16 C.F.R. § 310.2(r), (t) and (u). 29. The TSR requires sellers and telemarketers to disclose all material restrictions, limitations, or conditions to purchase, receive, or use the goods or services that are the subject of the sales offer. 16 C.F.R. § 310.3(a)(1)(ii). 30. The TSR prohibits sellers and telemarketers from making a false or misleading statement to induce any person to pay for goods or services. 16 C.F.R. § 310.3(a)(4). 31. Pursuant to Section 3(c) of the Telemarketing Act, 15 U.S.C. § 6102 (c), and Section 18(d)(3) of the FTC Act, 15 U.S.C. § 57a(d)(3), violations of the TSR constitute deceptive acts or practices in or affecting commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). COUNT SIX 32. In numerous instances, in connection with telemarketing British bonds to U.S. consumers, defendants have made false or misleading statements to induce the purchase of purported bonds that include, but are not limited to, the following:
33. Therefore, these defendants have violated Section 310.3(a)(4) of the TSR, 16 C.F.R. § 310.3(a)(4). COUNT SEVEN 34. In numerous instances, in connection with telemarketing British bonds to U.S. consumers, defendants have failed to disclose that the sale of and trafficking in foreign lottery materials is a crime in the United States. Therefore, these defendants have violated Section 310.3(a)(1)(ii) of the TSR, 16 C.F.R. § 310.3(a)(1)(ii). CONSUMER INJURY 35. Consumers throughout the United States have suffered and continue to suffer substantial monetary loss as a result of defendants' unlawful acts or practices. In addition, defendants have been unjustly enriched as a result of their unlawful practices. Absent injunctive relief by this Court, the defendants are likely to continue to injure consumers, reap unjust enrichment, and harm the public interest. THIS COURT'S POWER TO GRANT RELIEF 36. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to grant injunctive and other ancillary relief, including consumer redress, disgorgement, and restitution to prevent and remedy any violations of any provision of law enforced by the Commission. 37. Section 19 of the FTC Act, 15 U.S.C. § 57b, and Section 6(b) of the Telemarketing Act, 15 U.S.C. § 6105(b), authorize this Court to grant such relief as the Court finds necessary to redress injury to consumers or other persons resulting from defendants' violations of the TSR, including the rescission and reformation of contracts and the refund of monies. 38. 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 the Federal Trade Commission, pursuant to Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, Section 6(b) of the Telemarketing Act, 15 U.S.C. § 6105(b), and the Court's own equitable powers, requests that the Court:
Dated:________________________, 2000 Respectfully Submitted, DEBRA A. VALENTINE CHARLES A. HARWOOD ___________________________ |