In the Matter of the Complaint Against NATIONAL OPPORTUNITY RESEARCH SERVICE 199 Nassau Street at Princeton, New Jersey 08540 P.S. Docket No. 2/125; APPEARANCES: James J. Robertson, Esq. Law Department United States Postal Service Washington, D.C. 20260 for Complainant Sidney Schreiberg, Esq. 233 Broadway New York, New York 10007 for Respondent
The business of Respondent in this proceeding under 39 U.S.C. 3005 is to sell memberships at $10.00 each in its organization on the promise that it will furnish members opportunities for earning money. The complaint charges that Respondent makes six false representations to induce remittances of the membership fee through the mail.
The Initial Decision entered after hearing and briefing found for Respondent on one charge but sustained the complaint on the other five and recommended the issuance of a remedial order.
That the representations charged to be false have been made is not seriously challenged and on appeal Respondent concedes that two of the representations are not true as a matter of fact. These are:
"(3) That members of Respondent's program will be supplied free products by nationally known research organizations and that these members will be paid substantial sums for their written opinions about these products;
"(4) That the members of Respondent's program will be shown how to get thirty cents a word for each word they write in opinions about the free products".
Respondent urges, however, that the use of those false representations does not justify issuance of a remedial order. Its view is "the only possible way in which fraud could have been established would have been by a witness who would testify that he received the Respondent's brochure, read it to mean only that the 30c / a word offer and the opinion research offer were being made, become a member of the Respondent because of these two offers only *** and then did not receive the offers." 1/ No authority has been cited to support any phase of that sweeping statement. And indeed none exists. The making of false representations rather than fraud is what is charged in the complaint in this proceeding. 2/ It has long been settled that there is no requirement in these proceedings that Complainant establish that some person was in fact deceived. 3/
Accordingly, since representations 3 and 4 are materially false, a remedial order would be warranted without regard to the Administrative Law Judge's findings in the Initial Decision on representations 2, 5, and 6. Those findings are, however, supported by the record. The latter representations are:
"(2) That members of Respondent's program will earn up to $10,000 return for each dollar they invest in Respondent's program";
"(5) The cost of membership in Respondent's program for two years, has been reduced from its normal cost of $24.00 to $10.00;
"(6) That members of Respondent's program will be eligible to purchase all types of merchandise at costs 35 percent below wholesale."
Respondent essentially contends that the evidence does not support findings that these representations are false. Complainant's evidence consisted not only of a Postal Inspector's testimony as to his investigation and the offers he received in response to his purchase of a membership, but of interrogatories answered by Respondent, depositions of Respondent's sole owner and Respondent's sole employee, and a transcript of a judicial hearing. 4/ That evidence established a prima facie case in support of the charges in the complaint that are in issue here. Thereafter Respondent presented the testimony of some members of Respondent's service as well as testimony of several business men who solicit Respondent's members with offers of "business opportunities".
Some of the language used by the Administrative Law Judge in discussing the evidence as to the representations involved here read in isolation is susceptible of being construed as meaning that findings should be against Respondent because the evidence does not show the truth of the representations. Nevertheless, a reading of the decision as a whole in the light of the record establishes that such is not the case. The discussion in which that language is present is concerned with whether Respondent's evidence overcame the showing made by Complainant and concluded that it did not. My own independent review of the evidence leads me to the same conclusion as that reached by the Administrative Law Judge.
Only in the most unusual and fortuitous circumstance could a member hope to earn $10,000 from his membership. It is also clear that even if at some distant past period Respondent may have sought memberships at $24.00, that circumstance would not be a basis for concluding that $24.00 rather than $10.00 is the normal charge. Representations 2 and 5 are falsely made.
The depositions and answers to interrogatories mentioned above demonstrate Respondent had not established arrangements by which members "as an extra added benefit" are "eligible to purchase all types of merchandise for as much as 35% below wholesale." That evidence establishes the falsity of representation 6. The testimony of Respondent's witnesses relates not to "all kinds" of merchandise but to a few items. Moreover, for the reasons stated by the Administrative Law
Judge the testimony is too inconclusive to be accepted as overcoming the evidence of falsity.
Upon review of the Initial Decision in the light of Respondent's exceptions, I find as did the Administrative Law Judge in the Initial Decision that Respondent is engaged in a scheme or device for obtaining money or property through the mail by means of materially false representations and that a remedial order should be issued against this Respondent pursuant to 39 U.S.C. 3005. Such an order is being issued contemporaneously with this decision.
03/06/74
Wenchel, Adam G.
____________________
1/ Brief on Appeal, pp. 8 and 9.
2/ See Lynch v. Blount, 330 F.Supp. 689 at 693 (S.D.N.Y. 1971), aff'd 404 U.S. 1007 (1972). See also P.S. Decisions in Sharon Woodman (2/12/74), P.S. Docket No. 2-122, p. 5, and Wisdom(1/8/74), P.O.D. Docket No. 3/64, p. 16.
3/ Farley v. Heininger, C.C.A. D.C. 1939, 105 F.2d 79, cert. den. 308 U.S. 587.