July 21, 1959
In the Matter of the Complaint That
C. ISABEL MAYER,
MRS. CORA ISABEL MAYER,
ROCKET RECORDS,
ROCKET RECORD MFG. CO.,
ROCKET RECORD CO., and
ROCKET RECORDING STUDIES
at
Portland, Oregon
(hereinafter called Respondent), is engaged in conducting a scheme for obtaining money through the mails in violation of 39 U.S. Code 259 and 732
P.O.D. Docket No. 1/89
INITIAL DECISION OF HEARING EXAMINER
Mrs. C. Isabel Mayer, the Respondent in this proceeding, is engaged in the business of producing phonograph records in Portland, Oregon. In the conduct of this business Mrs. Mayer uses her name as it has been stated, she uses the name Mrs. Cora Isabel Mayer, and she also does business under the names Rocket Records, Rocket Record Mfg. Co., Rocket Record Co. and Rocket Recording Studios, through Post Office Box 3896, at Portland, Oregon.
The General Counsel for the Post Office Department, the Complainant, issued a complaint in which it was charged that the Respondent, under all of the aforesaid names, is engaged in conducting a fraudulent scheme in violation of Sections 259 and 732 of Title 39, United States Code. It is charged in the complaint that the Respondent advertises her business in publications of national circulation, and that the Respondent also promotes her business by means of personal correspondence. The Complainant charges that the Respondent in the conduct of her business makes the following representations which are alleged to be false and fraudulent:
a. That respondent will professionally evaluate any lyrics or song submitted and will furnish an impartial report and frank disclosure of the merit or sales potential of the same;
b. That any lyrics or song accepted for recording will be recorded by “TOP PROFESSIONAL MUSICIANS”, some of whom are presently playing with, or formerly played for, the “PORTLAND SYMPHONY/orchestra/”;
c. That any lyrics or song accepted for recording will be recorded in an “$8,000.00 equipped Studio, by a recording expert”;
d. That “Rocket” records are “MANY TIMES NATIONALLY ADVERTISED”;
e. That “PROGRAM MANAGERS [of radio broadcasting stations] IN 42 STATES, (ANY MANY IN EACH) HAVE WRITTEN [to respondent] ASKING FOR THE ‘ROCKETS’ AND OFFERING TO BROADCAST THEM”, and that these stations include “WEEI BOSTON, CBS NEW YORK, THE DIXIE BROADCASTING CORPORATION, ETC.”;
f. That every record released under the “ROCKET” label is heard by “MANY MILLIONS” of people;
g. That when a recording is made of any lyrics or song, respondent pays “THE HEAVY PRODUCTION COSTS, THE EXTENDED AND VERY COSTLY CAMPAIGN EXPENSE”; i.e., that respondent will promote the nation-wide distribution and sale of any lyrics or song selected for reproduction at respondent’s own expense;
h. That “Reports will be made to Author each January and July, for as long as the record sells on the market, with whatever royalties have accrued”;
i. That the recording will be broadcast in Portland, Oregon, placed with a large record distributor, sent to many radio stations, disk jockies, [sic] distributors, and juke box owners, and will be placed with “Rocket Record Mfg. Co.” representatives throughout the country;
The hearing in this case was held in Portland, Oregon, and both parties were represented by counsel who participated in the examination and cross-examination of witnesses and who have submitted proposed findings of fact, conclusions of law and reasons in support thereof.
The first witness for the Complainant was Mr. Roland A. Severtson, a postal inspector who is domiciled at Portland. The inspector testified that he has seen advertisements used by the Respondent in various magazines of national circulation. One example of the advertisement employed by the Respondent is Department Exhibit A which was identified by the inspector as a part of page 206 from the December, 1958, issue of Science and Mechanics.
The inspector initiated test correspondence with the Respondent on June 11, 1958, in which he submitted some lyrics to which music was to be supplied by the Respondent and of which a recording was to be made. (Dept. Exhibits B-1, B-2)
In reply to this correspondence the inspector received a letter from the Respondent dated June 21, 1958, and postmarked June 22, 1958. Transmitted with this letter (Dept. Exhibits C-1 and C-2) were Department Exhibits C-3, a piece of sheet music containing a piano and voice arrangement of a number called “Montana Nights” and Department Exhibit C-4, which is a sample of the label of Rocket Records.
Because no satisfactory reply had been received by the inspector from the Respondent a further test letter, dated July 23, 1958, was sent by the inspector to the Respondent. (Dept. Exhibit D-1) In reply to this letter, the inspector received a letter dated July 29, 1958, with which was enclosed a sample contract (Dept. Exhibit D-4) which the Respondent offers to persons who seek to obtain her services. Department Exhibits B, C and D, with sub-exhibits thereto, comprise the test correspondence conducted by the inspector under the name Roberta Ellison, Missoula, Montana. Further correspondence was conducted by the inspector with the Respondent under the name of Mrs. Myrtle Barber, P.O. Box 992, Pocatello, Idaho. This correspondence was conducted in October of 1958, and comprises Department Exhibits E and F with sub-exhibits hereto. In this correspondence, the inspector submitted to the Respondent excerpts from the words and music of a number entitled “From Me To You,” a song written by Wayne King, F. Andre and Pat Conney, and copyrighted in 1933 by M. Witmark & Sons, Publishers. The Respondent advised the inspector that he had “what with [her] arrangement can be a very good song.”
In addition to test correspondence the inspector had interviews with the Respondent on various occasions. (Tr. 22) On one of these occasions Mrs. Mayer gave to Inspector Severtson a sample of her recordings which was introduced as Department Exhibit G and consists of a record entitled “Our Policeman” on one side and “Because You Changed Your Mind” on the other side.
Additional exhibits offered by the Complainant and received in evidence are:
H - a sheet containing the words and melody line of a song, identified as a “lead” sheet.
I - a letter, dated June 20, 1956, from the Respondent to Mr. John Caven, 2535 S.E. 92nd Street, Portland, Oregon.
J. - “lead” sheet from song “Our Policeman,” words by Mr. Caven, music by Respondent.
The exhibits which have been identified thus far constitute the basis on which this case is predicated.
There were received in evidence on behalf of the Respondent certain exhibits purporting to establish that Mrs. Mayer is a competent musician and composer (Resp. Exhibits 1 through 8); a shipping receipt and invoice purporting to show that certain phonograph records had been shipped to the Respondent on January 16, 1959, by Alco Research and Engineering, 1107 El Centro Avenue, Los Angeles 38, California, a recording company (Resp. Exhibit 11); a sample of the records represented by Respondent’s Exhibit 11, being a record on one side of which is a number called “Little Chick,” and on the other side of which is a number entitled “Cute Chick” (Resp. Exhibit 12); certain postal receipts for ordinary mail dispatched in February, 1959, which receipts Respondent testified represented shipments of records to the addressees indicated on the receipts (Resp. Exhibits 13-A through 13-H); certain exhibits tending to show that the Respondent receives requests for records and record catalogs from persons in radio and television, that the Respondent has filled such requests, and that Rocket Records are played on various radio stations (Resp. Exhibits 14, 15, 15-A, 18, 19 and 23); a copy of the contract entered into on April 15, 1957, by the Respondent and the agent for Mrs. Dan Dart Dackins, 187 N.E. 119th Avenue, Portland 20, Oregon (Resp. Exhibit 20); and a record containing a song written by Mrs. Dackins and produced under the Rocket label (Resp. Exhibit 21).[1]
The first charge is that the Respondent is falsely and fraudulently representing that she will professionally evaluate any lyrics or songs submitted to her and will furnish an impartial report and frank disclosure of the merit or the sales potential of the lyrics or song. While a representation of the type just stated may be implicit in the advertising and correspondence and in the type of business conducted by the Respondent, I do not find in any of the exhibits introduced by the Complainant any statement which explicitly sets forth the matter contained in paragraph (3)a. of the complaint. For example, the furnishing of an impartial report and frank disclosure of the merit or sales potential of songs or lyrics carries with it the suggestion that when unsatisfactory songs or lyrics are submitted to the Respondent she will advise the person submitting them that their potential is slight or nonexistent. On the other hand, I find nothing in the Respondent’s literature which suggests that she will return or has returned as unsatisfactory any material that has been submitted to her. All of the literature issued by the Respondent suggests to my mind that she will take any song or any lyrics and attempt to produce them commercially.
Sub-paragraph b. of paragraph (3) of the complaint alleges that the Respondent falsely and fraudulently represents that any lyric or song accepted for recording will be recorded by “TOP PROFESSIONAL MUSICIANS,” some of whom are presently playing with, or formerly played with, the Portland Symphony Orchestra. I find that the Respondent does make this representation in Department Exhibits D-4 and F-1.
The representation that any lyrics or songs accepted for recording by the Respondent will be recorded in an “$8,000.00 equipped studio by a recording expert” which the Complainant alleges to be false and fraudulent is made in Department Exhibits D-4 and F-3.
The representation in sub-paragraph d. of paragraph (3) of the complaint, also alleged by the Complainant to be false and fraudulent, that “Rocket Records are many times nationally advertised” is made in Department Exhibit F-1 and Department Exhibit I.
The representation which the Complainant alleges in subparagraph E. of paragraph (3) of the complaint as being falsely and fraudulently made by the Respondent is made in paragraph 3 of Department exhibit F-1.
The representation contained in sub-paragraph F. of paragraph (3) of the complaint, “That every record released under the ‘ROCKET’ label is heard by ‘MANY MILLIONS’ of people is made in the third paragraph of Department Exhibit C-1 and in the fifth paragraph of Department Exhibit D-2.
In sub-paragraph g. of paragraph (3) of the complaint it is alleged that the Respondent falsely and fraudulently represents that when a recording is made of any lyrics or songs submitted, the Respondent pays “THE HEAVY PRODUCTION COSTS, THE EXTENDED AND VERY COSTLY CAMPAIGN EXPENSE,” and that in substance the Respondent will promote the nationwide distribution and sale of any lyrics or songs selected for reproduction at the Respondent’s own expense. While I do not find all of the quoted language in the Respondent’s literature, the substance of this charge is contained in Department Exhibits D-4, F-3, the last paragraph of Department Exhibit C-1 and the last paragraph of Department Exhibit F-1.
Sub-paragraph h. of paragraph (3) of the complaint contains the allegation that the Respondent is falsely and fraudulently representing that “Reports will be made to the Author each January and July, for as long as the record sells on the market, with whatever royalties have accrued.” This representation is made in Department Exhibits D-4 and F-3.
The last representation charged in the complaint as being falsely and fraudulently made by the Respondent is that the recording will be broadcast in Portland, Oregon, placed with a large record distributor, sent to many radio stations, disc jockies, distributors, and juke box owners, and will be placed with the Respondent’s representatives throughout the country. This representation is made in Department Exhibits D-4 and F-3.
For the sake of convenience the representations which the Complainant charges are falsely and fraudulently made by the Respondent will be identified by their letter designations in paragraph (3) of the complaint.
Representation b. is false. Mrs. Mayer testified that in 1958 she had 12 numbers recorded, of which number 10 were performed by a group known as the “Echomores.” (Tr. 242, 247) One of the witnesses for the Complainant was Mr. John Skiles, the leader of the “Echomores.” It was his testimony (Tr. 71) that none of the musicians who has played in this group has ever been a member of the Portland Symphony Orchestra.
Mrs. Mayer agreed with this testimony. (Tr. 247) While all of the musicians who compose this group are professional musicians in the sense that they received pay for their services from Mrs. Mayer, none of them derives his livelihood from music, but exercises his musical ability as an avocation. (Tr. 71) Most of the musical work of this group consists of playing for clubs, at fairs, and at rodeos. (Tr. 75) While I do not wish to cast any aspersion on this group of musicians, the evidence of record indicates that to call them “top professional musicians” is to overstate their qualifications – at least, at the present.
Of the 12 numbers which Mrs. Mayer had recorded in 1958, 10 were recorded in her home studio. Inspector Severtson, on one occasion, interviewed Mrs. Mayer in her home and the equipment which he found consisted of an upright piano, a tape recorder, amplifier, microphone and stand. (Tr. 24, 25) Mrs. Mayer testified that in addition to these items, she has a desk, a display of records, a combination record player and all supplies required in an office. (Tr. 207) Mrs. Mayer paid $550.00 for the recorder and the microphone but she assigned no value to the remainder of the equipment. It is obvious that the value of all the equipment would not total $8,000.00. Representation c. is false.
Rocket Records have been advertised in the Portland, Oregon Journal, and they have been advertised, in the Respondent’s view, by their being sent to various radio stations. So far as the evidence in this proceeding shows, the only publication of national distribution in which Rocket Records have been advertised by name is the 1949 edition of “The Purchaser’s Guide to the Music Industries,” a publication of The Music Trades Corporation. (Resp. Exhibit No. 1) This quantity of advertising is not consistent with claims that Rocket Records are “many times nationally advertised.” Representation d. is false.
In the record of this proceeding, there is evidence, admittedly hearsay in character, that the Respondent does receive requests for records from persons connected with television shows and numerous radio stations. (Resp. Exhibits 14, 15, 19 and 23) Upon the basis of this evidence, I find that representation e. is true.
There is insufficient, competent, probative evidence in the record to establish either the truth or the falsity of representation f.
In discussing representation g. it will be necessary to refer to a few of the details of the arrangements between the Respondent and the people with whom she deals. In some instances the Respondent arranges the lyrics and the music and in other instances she supplies the music for lyrics which have been submitted. The evidence indicates that the customer pays $198.00 to the Respondent, in return for which the Respondent agrees to furnish the customer with 200 copies of the recording of the customer’s song. The customer may sell these to reimburse himself insofar as possible for his outlay to the Respondent, or the customer may otherwise do whatever he desires with his records. Also, out of the $198.00, the Respondent pays the cost of the tape on which the song is recorded, the fees to the musicians who make the records, the fees to the recording companies in Los Angeles, California, which cut the master records and make the copies ($14.50 per 100) and print the labels ($24.00 per 500), the shipping, mailing and advertising costs. The average cost of producing one record is $148.00, leaving $50.00 as the Respondent’s average net profit per record. Aside from some income from the sale of a piece of real estate, and some assistance she receives from an uncle and from her daughter, the operation of this business was the Respondent’s sole source of income in 1958. Her net income from the operation of this business in 1958 was approximately $560.00. (Tr. 40. 41, 208-219) From all of the foregoing facts, it is clear that the production costs for Rocket Records are not heavy, and it is equally clear that the customer – not the Respondent – pays the cost of whatever sales promotion efforts are made. Representation g. is false.
Representation h. probably is literally false, but the fact of the matter is that the sales of records have been so few and the royalties therefrom have been so small that there has been very little, if any, need for the Respondent to make financial reports to her customers. The falsity of this representation is inconsequential. (Tr. 29, 262-3)
Concerning representation i., Mrs. Mayer testified that stations KEX, KGW, KVAN and PDQ frequently play rocket records. (Tr. 239) A check with the Federal Communications Commission discloses that KEX and KGW are located in Portland; KVAN is located in Vancouver, Washington, and that, insofar as the United States is concerned, there is no radio station having the call letters PDQ. The Complainant has the burden of establishing the falsity of the representations charged as being false, and while there is no proof – other than Mrs. Mayer’s testimony – that KEX and KGW do play Rocket Records, there is no proof that these stations do not play them. There is also testimony by Mrs. Mayer that she sends records to various stations, distributors, juke box owners, disc jockies and to a sort of a floating representative of hers. The Complainant did not meet its burden of showing that Mrs. Mayer does not do these things, so the question of the truth of this claim must be resolved in favor of the Respondent.
In recapitulation, it is seen that Mrs. Mayer has falsely stated that all her recordings are made by top professional musicians, some of whom are presently with, or were formerly with, the Portland Symphony Orchestra; that the records are made in an expensively equipped studio; that her records are nationally advertised many times; and that she undertakes, at her own expense, an extensive advertising and publicity campaign for the promotion and sale of records produced under her label.
All of these matters are peculiarly within the knowledge of the Respondent. They are matters with which hopeful, amateur song-writers and lyricists would not be familiar and concerning which they most easily could be deceived. They are matters which such hopeful amateurs would be most happy to have handled by someone who holds himself out to be experienced, expert and well known in the field of their endeavors.
A review of the record in this proceeding, including the weighing of the testimony of the witnesses, listening to the phonograph records introduced as evidence, the consideration of all of the exhibits, and the study of the briefs submitted by the parties convinces me that these representations made by the Respondent are so palpably and grossly false as to constitute a reckless and willful disregard of the truth (Corliss v. United States, 7 F.(2d) 455; Knickerbocker, et al. v. United States 13 F.(2d) 544), and that an intent to deceive must be presumed to have motivated the Respondent in making them (Crosby v. United States, 183 F.(2d) 373; Gottlieb v. Schaffer, 141 F. Supp. 7). I conclude, as a matter of law, that the Respondent has been engaged in and is engaging in a scheme for obtaining money through the mails by means of false and fraudulent pretenses, representations and promises in violation of Sections 259 and 732 of Title 39, United States Code.
For the reasons herein indicated, the proposed findings of fact and conclusions of law submitted by the Respondent are rejected.
There is attached hereto for execution by the Judicial Officer the appropriate order for the suppression of the fraudulent enterprise.
William A. Duvall
Hearing Examiner