UNITED STATES DISTRICT COURT FEDERAL TRADE COMMISSION, Plaintiff, v. RESORTS EXCHANGE INTERNATIONAL OF AMERICA, INC. and ANTHONY A. ARRIGONI, Defendants. Case No. _____-CIV.(_______________________) STIPULATED FINAL JUDGMENT AND ORDER FOR PERMANENT INJUNCTION Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), has commenced this action by concurrently filing its Complaint and this Stipulated Final Judgment and Order for Permanent Injunction ("Final Judgment and Order"). The Complaint seeks a permanent injunction and other relief pursuant to Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b, charging that the defendants violated Section 5 of the FTC Act, 15 U.S.C. § 45, and the FTC's Telemarketing Sales Rule, 16 C.F.R. Part 310. Plaintiff, through its counsel, and defendants Resorts Exchange International of America, Inc. and Anthony A. Arrigoni, by and through their counsel, have agreed to the entry of this Final Judgment and Order by this Court in order to resolve all matters in dispute in this action. The Commission and the defendants have consented to entry of this Final Judgment and Order 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, the Commission, Resorts Exchange International of America, Inc., and Anthony A. Arrigoni, to enter this Final Judgment and Order, IT IS HEREBY ORDERED, ADJUDGED AND DECREED AS FOLLOWS: FINDINGS 1. This Court has jurisdiction of the subject matter of this case and of all parties hereto; 2. The complaint states a claim upon which relief may be granted against the defendants under Sections 5, 13(b), and 19 of the FTC Act, 15 U.S.C. §§ 45, 53(b), and 57b and the Telemarketing Sales Rule; 3. Venue in this district is proper under 28 U.S.C. § 1391(b) and (c), and 15 U.S.C. §§ 53(b) and 57b; 4. The acts and practices of the defendants were and are in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44; 5. Entry of this Final Judgment and Order is in the public interest; 6. Defendants have 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 Order; and 7. Except as provided in Sections II and V of this Final Judgment and Order, the Final Judgment and Order does not constitute and shall not be interpreted to constitute either an admission by the defendants or a finding by the Court of any facts, other than the facts set forth above, or that the defendants have engaged in violations of the FTC Act or any other law. DEFINITIONS For purposes of this order, the following definitions shall apply: 1. "Plaintiff," "Commission" or "FTC" means the Federal Trade Commission. 2. "Defendants" means Resorts Exchange International of America, Inc. and Anthony A. Arrigoni, and each of them, and their officers, agents, directors, employees, salespersons, independent contractors, attorneys, subsidiaries, affiliates, successors, assigns and all other persons or entities in active concert or participation with them who receive actual notice of this Final Judgment and Order by personal service or otherwise, whether acting directly or through any trust, corporation, subsidiary, division or other device. 3. "Assets" means all real and personal property of any defendant, or held for the benefit of any defendant, including but not limited to, "goods," "instruments," "equipment," "fixtures," "general intangibles," "inventory," "checks," or "notes," (as these terms are defined in the Uniform Commercial Code), lines of credit, and all cash, wherever located. 4. "Travel-related product or service" means any product or service that purports to provide transportation, accommodations, or amenities usable during travel. This definition specifically includes, but is not limited to: travel planning services; booking and reservation services; transportation or accommodation tickets; certificates, vouchers, coupons, reservation forms or other documents that purport to be full or partial payment, or redeemable, for transportation or accommodations, car rental, tours, sports or other activities, meals, drinks, or entrance to special events or locations; providing or offering credit cards or other financial instruments that purport to allow the consumer to purchase travel-related products or services. 5. "Travel package" means all written documents sent to consumers after their initial purchase of travel-related goods and services, including but not limited to, all forms necessary to confirm or schedule travel-related products or services. 6. "Telemarketing" shall mean any business activity (which includes, but is not limited to, initiating or receiving telephone calls, managing others who initiate or receive telephone calls, operating an enterprise that initiates or receives telephone calls, owning an enterprise that initiates or receives telephone calls, or otherwise participating as an officer, director, employee or independent contractor in an enterprise that initiates or receives telephone calls) that involves attempts to induce consumers to purchase any item, good, service, partnership interest, trust interest or other beneficial interest, or to enter a contest for a prize, by means of telephone sales presentations, either exclusively or in conjunction with the use of other forms of marketing. Provided that the term "telemarketing" shall not include transactions that are not completed until after a face-to-face contact between the seller or solicitor and the consumers solicited. Provided further, that for the purposes of Paragraph ID, the definition of telemarketing shall be consistent with 16 C.F.R. § 310.2. 7. "Assisting others" means knowingly providing any of the following goods or services to another entity: (1) performing customer service functions, including, but not limited to, receiving or responding to consumer complaints; (2) formulating or providing, or arranging for the formulation or provision of, any telephone sales script or any other marketing material; (3) providing names of, or assisting in the generation of, potential customers; or (4) performing marketing services of any kind. I. PROHIBITIONS AGAINST MISREPRESENTATIONS A. IT IS THEREFORE ORDERED that defendants, in connection with the advertising, marketing, offering for sale or sale of any travel-related product or service, are hereby permanently restrained and enjoined from:
B. IT IS FURTHER ORDERED that, with respect to the advertising, marketing, promoting, offering for sale, or sale of any good or service, defendants Resorts Exchange International of America, Inc. and Anthony A. Arrigoni, and their successors, assigns, directors, officers, agents, servants, employees, attorneys, and all other persons or entities in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device, are hereby permanently restrained and enjoined from misrepresenting, expressly or by implication, any fact material to a consumer's decision to purchase defendants' products or services; and
C. IT IS FURTHER ORDERED that defendants Resorts Exchange International of America, Inc. and Anthony A. Arrigoni, and their successors, assigns, directors, officers, agents, servants, employees, attorneys, and all other persons or entities in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device, are hereby permanently restrained and enjoined from violating or assisting others in violating any provision of the Telemarketing Sales Rule, 16 C.F.R. Part 310, including but not limited to, failing to disclose in a clear and conspicuous manner before consumers pay for travel-related products or services: (1) all material restrictions, limitations or conditions to purchase, receive, or use the goods or services that are the subject of the sales offer; (2) the total costs to purchase, receive, or use any goods or services that are the subject of the sales offer; and (3) all material terms and conditions of their cancellation or refund policy when making a representation about such policy. II. MONETARY RELIEF IT IS FURTHER ORDERED that defendants Resorts Exchange International of America, Inc. and Anthony A. Arrigoni shall be jointly and severally liable for payment of equitable monetary relief, including, but not limited to, consumer redress and/or disgorgement, and for paying any attendant expenses of administration of any redress fund, in the amount of FOUR MILLION DOLLARS ($4,000,000). Provided, however, that this judgment shall be suspended until further order of the Court pursuant to Paragraph V of this Order. III. BOND IT IS FURTHER ORDERED that defendants Resorts Exchange International of America, Inc. and Anthony A. Arrigoni, and each of them, shall obtain a performance bond in the principle sum of four hundred thousand dollars ($400,000.00) before engaging in or assisting others engaged in telemarketing or in the advertising, marketing, promoting, offering for sale, or sale of travel-related products or services, whether directly, indirectly, or in concert with others, or through intermediaries, business entities or other devices. The terms and conditions of the bond requirement are as follows:
IV. PROHIBITION AGAINST DISCLOSING CUSTOMER IT IS FURTHER ORDERED that, except for the purpose of making travel reservations at the request and in the names of individual consumers, defendants are permanently restrained and enjoined from selling, renting, leasing, transferring, or otherwise disclosing the name, address, telephone number, social security number, credit card number, bank account number, e-mail address, or other identifying information of any person who paid any money to either defendant in connection with the offering for sale or sale of any travel-related product or service at any time prior to entry of this Final Judgment and Order. Provided, however, that defendants may disclose such identifying information to a law enforcement agency or as required by any law, regulation, or court order. V. FINANCIAL STATEMENTS IT IS FURTHER ORDERED that the Commission's agreement to and the Court's approval of this Order are expressly premised upon the truthfulness, accuracy, and completeness of the financial statements and information provided by defendants Resorts Exchange International of America, Inc. and Anthony A. Arrigoni to counsel for the Commission on or about August 1, 2000, which contain material information relied upon by the Commission in negotiating and agreeing to the terms of this Order. IT IS FURTHER ORDERED that if the Commission should have evidence that the above-referenced financial statements and information 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 Commission may move that the Court reopen this Order for the sole purpose of allowing the Commission to modify the monetary liability of the defendants. If the Court finds that any defendant(s) 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 statements and information, the Court shall reinstate the suspended judgment against such defendant(s), in favor of the Commission, in the amount of FOUR MILLION DOLLARS ($4,000,000), which the defendants and the Commission stipulate is the amount of consumer injury caused by the defendants, 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. Any proceedings instituted under this Paragraph shall be in addition to and not in lieu of any other proceedings the Commission may initiate to enforce this Order. Solely for the purposes of reopening or enforcing this Paragraph, defendants waive any right to contest any of the allegations set forth in the Complaint filed in this matter. VI. MONITORING COMPLIANCE OF SALES PERSONNEL IT IS FURTHER ORDERED that, in connection with any business operated by defendants, or where defendant Anthony A. Arrigoni is the majority owner of the business or directly or indirectly manages or controls the business and where the business is engaged in advertising, marketing, promoting, offering for sale or selling travel-related products or services or assisting others engaged in these activities, defendants are hereby permanently restrained and enjoined from:
VII. ACKNOWLEDGMENT OF RECEIPT OF ORDER BY DEFENDANTS IT IS FURTHER ORDERED that, within five (5) business days after receipt by defendants of this Final Judgment and Order as entered by the Court, defendants shall submit to plaintiff a truthful sworn statement, in the form shown on Appendix A, that shall acknowledge receipt of this Final Judgment and Order. VIII. DISTRIBUTION OF ORDER BY DEFENDANTS IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Final Judgment and Order:
IX. RECORD KEEPING PROVISIONS IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Final Judgment and Order, defendants, and any other business entity wherein defendant Anthony A. Arrigoni is the majority owner of the business or directly or indirectly manages or controls the business, and where the business is engaged in advertising, marketing, promoting, offering for sale or selling travel-related products or services, or assisting others engaged in these activities, are hereby restrained and enjoined from failing to create, and from failing to retain for a period of five (5) years following the date of such creation, unless otherwise specified:
X. COMPLIANCE REPORTING BY DEFENDANTS IT IS FURTHER ORDERED that, in order that compliance with the provisions of this Final Judgment and Order may be monitored:
XI. PLAINTIFF'S AUTHORITY TO MONITOR COMPLIANCE IT IS FURTHER ORDERED that plaintiff is authorized to monitor defendants' compliance with this Final Judgment and Order by all lawful means, including but not limited to the following means:
XII. ACCESS TO BUSINESS PREMISES IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Final Judgment and Order, for the purpose of further determining compliance with this Final Judgment and Order, defendants shall permit representatives of the Commission, within three (3) business days of receipt of written notice from the Commission:
Provided that, upon application of the Commission and for good cause shown, the Court may enter an ex parte order granting immediate access to defendants' business premises for the purposes of inspecting and copying all documents relevant to any matter contained in this Final Judgment and Order. XIII. ATTORNEYS' FEES IT IS FURTHER ORDERED that each party to this Final Judgment and Order hereby agrees to bear its own costs and attorneys' fees incurred in connection with this action. XIV. CONTINUING JURISDICTION IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for all purposes. DONE AND ORDERED, this _____day of _______________________, 2001, at _____ o'clock, .m. _________________________________ SO STIPULATED: Dated: Gary D. Kennedy Dated: Resorts Exchange International of America, Inc. Dated: Anthony A. Arrigoni, individually and Dated: Andrew N. Cove |