February 5, 1968
In the Matter of the Complaint That
B. J. COMPANY
211 East Chicago Avenue
at
Chicago, Illinois 60611
(hereinafter called Respondent), is engaged in conducting a scheme for obtaining money through the mails in violation of 39 U. S. Code 405.
P.O.D. Docket No. 2/281
APPEARANCES:
Arthur S. Cahn, Esq.
Office of the General Counsel
Post Office Department
for the Complainant
John A. Summerfield, Esq.
Summerfield & Summerfield
111 West Washington Street
Chicago, Illinois 60602
INITIAL DECISION OF HEARING EXAMINER[1]
The Complainant has charged the Respondent with engaging in a fraudulent scheme through the mails, the type of scheme that is proscribed by Section 4005 of Title 39, U. S. Code. This section of the postal statutes provides in substance that upon evidence satisfactory to the Postmaster General that any person who is engaged in conducting a scheme or device for obtaining money or property through the mails by means of false or fraudulent pretenses, representations or promises, the Postmaster General then may direct postmasters at the office at which registered letters or other letters or mail arrive addressed to such a person, or to his representative, to return the mail to the sender marked “Fraudulent.”
And the Postmaster General may also forbid the payment by a postmaster to such a person or to his representative of any money order or postal note drawn to the order of either. And the Postmaster General may provide for the return to the senders of the sums named in the money orders or postal notes.
The nature of the scheme alleged in the complaint is that the Respondent is engaged in offering for sale through the mails certain talismans upon the representation that they will produce for the purchasers of these items beneficial results of various kinds, such as enabling them to stay out of jail, to win bets, and to win at games of chance, to ward off evil, to pick good numbers on the basis of interpretations of the purchasers’ dreams, and to pick lucky numbers by means of a certain system sold by the Respondent.
The Respondent in his answer has admitted that he is engaged in business, and that he has utilized the advertising material referred to in the complaint and attached to the complaint as Exhibits A through F-1. But the Respondent denies that he is engaged in the conduct of a scheme with intent to defraud the purchasers.
In addition to the exhibits attached to the complaint, which have already been referred to, there were received in evidence Exhibits G-2 through G-5-B; Exhibits G-16 through G-19-G; Exhibits G-6 through G-15; and Exhibits R-7, R-9 through R-13; and R-15.
Some of these exhibits will be discussed in a bit more detail later.
Now, Exhibit G-1 is an advertisement which the Respondent had inserted in the November 26, 1967, issue of the publication known as the National Enquirer. It reads as follows:
LUCK BAD?
Not Getting
What You Want?
Why Not?
Why not try an Individually Numbered Talisman “fingering stone” from the Mysterious Orient such as the Ancients carried for Good Luck, Wealth, Health and Success in All Endeavors.
You, too, like the Rich Ones, can now have your own age-old Talisman to help make your wishes come true. GENUINE! NATURAL! Guaranteed from the Orient.
Each Numbered Talisman is capped with a beautiful golden diadem and hung on a golden cord. For either men or women. Use it as a pocket “fingering piece” or as a pendant. And don’t forget to send your birth dates. Each stone is given a Special Number.
Order your Individually Numbered Talismans today for yourself and your loved ones. Don’t delay. Supply is limited. Only $2.00. Two for $3.00. Cash, check or M.O. No C.O.D.’s.
B. J. COMPANY, Dept. NE-2
211 E. Chicago Ave.
Chicago, Ill. 60611
Exhibits G-7 through G-15, which were received in evidence upon stipulation by counsel, consist of order blanks for various types of talismans which are offered for sale by the Respondent.
To cite a few examples, Exhibits G-10 offers for sale a talisman for “Winning bets and games of chance.”
Now, attached to G-10 is Exhibit R-10, which is a 1 1/2 by 3, approximately, piece of cardboard with a design on one side of it, and also a representation suggesting money. And on the other side of this card there is the language:
FOR WINNING BETS AND
GAMES OF CHANCE
For hundreds of years this has been a most popular Talisman carried by those who bet and play games for money. The original was owned by the famous gambler Arbatel. In the center is the Hebrew word: Ghibor, “The Powerful”, together with other secret inscriptions to bring confidence and success.
Do not be without this Talisman when you make your play.
I believe that is sufficient to give the nature and character of the rest of these order blanks and the accompanying card by which the order blank solicits purchases.
Now, then, Mr. Benjamin P. Caldwell took the stand in his behalf, and testified to the following effect: that he is engaged in the advertising business, and that specifically in connection with the B. J. Company, the Respondent in this case, he is engaged in conducting what might be called advertising research. And he said that he composed the advertisement in the National Enquirer, and he composed the statements made on the order blanks, in such a way as to make these pieces of advertising materials appeal to the unsophisticated mind, so that he could gauge their response to certain types of advertising.
This account as to the reason for engaging in this business is so patently transparent that I don’t think that anybody could seriously be expected to give it much credence. There are many advertising research firms in this country, I am sure. But I am just as certain that it is not necessary for them to go about selling pieces of stone and pieces of cardboard with printing on them in order for them to be able to engage in the business of advertising research.
When Mr. Caldwell as on the stand, he was asked whether he believed that by using any of these talismans a person would incur good luck or acquire wealth, health, and success. It was perfectly obvious that Mr. Caldwell was extremely uncomfortable under this questioning. And after a good bit of temporizing, he finally said that he didn’t know whether an individual would receive these benefits or not.
In these cases, the general overall issues may be stated as follows: Does the Respondent make the representations which the Complainant charges in the complaint that the Respondent makes?
Secondly, if the Respondent makes these representations attributed to it by the Complainant, are the representations true or false?
Thirdly, if the Respondent makes the representations, and if the representations are false, were those representations knowingly made or made with an intent to deceive?
I think that Mr. Caldwell has succeeded admirably in his effort to cause these advertisements to appeal to the unsophisticated. He stated from the witness stand that he knows that the National Inquirer has readership among persons of not very high intelligence or education, and that he chose this medium for that reason.
Having that audience in mind, and the statement by the Supreme Court in Donald v. Read Magazine, 333 U. S. 178, at page 189, when it said, “Questions of fraud may be determined in the light of the effect advertisements would most probably produce on ordinary minds,” certainly the readership as described and as desired by the Respondent in this case could be expect to believe that if they purchased these devices offered for sale by the Respondent that the beneficial results would follow. Therefore, I find, as a matter of fact, that the Respondent does make the representations attributed to it in the complaint.
Now, as to the next issue, the question of the truth or falsity of these representations found to have been made by the Respondent, despite remarks to the contrary by counsel for the Respondent, who has ably and vigorously presented his side of this controversy, there is this stated from Gottlieb v. Schaffer, 141 Fed. Supp. 7, at page 16:
“Where claims are completely opposed to common knowledge, their falsity may be inferred from their preposterous character. Tryers of fact, whether courts, jurists, or administrators, do not require proof of the improbable, and they may apply common knowledge and experience to matters.”
Now, then, it has previously been pointed out that Mr. Caldwell would not admit that he knew that these devices would not produce the beneficial results for the purchasers which his advertising matter would lead the purchasers to believe they would receive.
But here is where the matter of common sense and common experience and the affairs of every-day life come into play. And it is absurd on the face of it to expect the promised results to flow from the possession of one of these items.
Now, the final issue to be resolved is whether these false statements were made by the Respondent with an intent to deceive. As pointed out by counsel for the Complainant in his very reasonable argument, it is stated in Gottlieb v. Schaffer, which we have earlier cited, that the intent to deceive is rarely capable of direct proof. For example, there have been no empirical tests of what would happen to a man who carried one of these cards around in his pocket. But that is entirely unnecessary in this situation.
The Respondent, Mr. Caldwell, is an educated man, and a sophisticated man. And he has aimed his enticing literature toward an unsophisticated audience. He would not say that he knew or that he knows that the devices would not produce the promised results. But that is not necessary. He said that he didn’t know whether the devices would produce the promised results.
Now, if a person engages in the sale of a product, and particularly if he engages in the sale of this product through the mails, without knowing, and without investigating whether it will produce the results which he assures prospective purchases it will produce, or which he assures prospective purchasers it will produce, or which he suggests to prospective purchasers it will produce, or which he composes literature to lead the prospective purchasers to believe it will produce, that constitutes evidence of the intent to deceive.
In some cases, you have a situation in which the promoter says, if this product does not produce what I tell you it will, then I will give you your money back. We don’t even have that in this case. I have not seen all the literature – and admittedly I am not too familiar with this literature, because I have just seen it this morning – but it is so patent on its face that it is a fraud scheme that no extended time for study is necessary.
So in view of all these matters that I have stated, and the matters that I have referred to, I find that as a matter of law this Respondent is engaged in a scheme to obtain money or property through the mails by means of false pretenses, representations, and promises, in contravention of the provisions of Section 4005 of Title 39 of the U. S. Code. And I shall recommend that a fraud order issue against the name shown in the caption of the complaint.
Proposed findings of fact and conclusions of law submitted by the parties are adopted to the extent I have indicated. Otherwise, such proposed findings and conclusions are denied because they are contrary to the evidence and because of their immateriality.
William A. Duvall
Chief Hearing Examiner