In the Matter of the Complaint Against UNIQUE IDEAS, INC. ERNIE TUCKER, PRESIDENT SPECIAL AGENT DEPARTMENT ERNIE TUCKER, SPECIAL AGENT DEPT., PRES 1674 Broadway, Room 409 at New York, New York 10019 and 200 West 72nd Street at New York, New York 10023 P.S. Docket No. 3/144; APPEARANCES: Thomas A. Ziebarth, Esq.; Law Department, U. S. Postal Service, Washington, D.C. 20260 for Complainant Robert Ullman, Esq.; 747 Third Avenue, New York, New York 10017 for Respondent
This is a proceeding by Complainant against Respondent under 39 U.S. Code § 3005 which authorizes action against Respondent upon evidence satisfactory to the Postal Service that Respondent is "engaged in conducting a scheme or device for obtaining money or property through the mails by means of false representations."
Complainant alleges that Respondent is engaged in such a scheme in the sale of Ernie Tucker's "Proven Easy Money Method" in advertisements appearing in publications of general circulation as well as by direct mail advertising circulars all of which are calculated to induce the readers thereof to remit money through the mail. Specifically Complainant alleges in paragraph (3) of the Complaint that:
"(3) By means of such materials, and others similar thereto, Respondent represents, directly or indirectly, in substance and effect, whether by affirmative statements, omissions or implication:
(a) That the Ernie Tucker Method is a 'proven easy money method' which is designed to help the participant 'get rich fast and acquire a fortune in a hurry';
(b) That the 'certified, notarized and documented Ernie Tucker Method' involves absolutely no major risks;
(c) That the Method outlined in its promotional materials is the same Method which enabled Ernie Tucker to make '$35,000 in just 1 day at home in bed with the flu' and which enables Ernie Tucker's earnings to continue to average 'in the thousands every week';
(d) That the 'potential income projections' which may be expected by its letter handler collection agents (hereinafter, 'agents') are 'strictly honest estimates based on actual test mailings as well as ads in various national publications';
(e) That it will furnish its agents with the names and addresses of 'fresh, guaranteed mail order buyers' already typed on gummed labels;
(f) That it will furnish its agents with 'tested and proven, big money' advertising circulars such as the 'Mink Show Off' ad (which features assorted novelty items fashioned from scraps of mink with prices ranging from $3.50 to $15.95) and the 'Mink and Sable' ad (which offers arrangements of artificial flowers made from scraps of mink and sable at prices ranging from $14.50 to $145.00);
(g) That the 'Mink and Sable' ad, when mailed by Respondent's agents to the persons whose names and addresses appear on the gummed labels furnished by Respondent, will result in orders averaging $40.00 per order from at least 5% of such persons or a minimum gross return of two dollars for each circular which is mailed; and
(h) That the 'Mink Show Off' ad, when mailed by Respondent's agents to the persons whose names and addresses appear on the gummed labels furnished by Respondent, will result in orders averaging $10.00 per order from at least 10% of such persons or a minimum gross return of one dollar for each circular which is mailed."
In its answer docketed February 24, 1975, Respondent denied all these allegations and pleaded inability to respond to the allegation with respect to other "similar" materials without further identification. Respondent also moved for an expedited hearing before the Judicial officer "by reason of collateral proceedings instituted by Complainant under 39 U.S.C. § 3007". That motion was granted and an evidentiary hearing was held in New York City on February 28, 1975. After a full day of testimony from six witnesses and introduction of numerous exhibits including the transcript of testimony in ancillary proceedings by two additional witnesses and stipulations as to the testimony of 22 further witnesses, the case was continued for oral argument in Washington on March 6, 1975, the parties electing not to file written briefs. At the time of oral argument the record was further clarified as to previous stipulations and there was received in evidence on behalf of Respondent a monograph authored by Complainant's expert witness. The case is now ready for decision.
It first must be determined whether Respondent in its advertising literature makes the representations that are claimed in the Complaint. Through advertisements appearing in numerous national magazines, Ernie Tucker solicited orders for his "proven easy money method".
These advertisements appeared in a number of national magazines including "Red Book" (CX 25 1/ ); "Popular Mechanics" (CX 26, Tr. 5, 40); "Handy Man" (CX 13, Tr. 27); "True", "McCalls", "Penthouse", "Playboy", "Agrosy", "Popular Science", "Modern Screen" and many others (CX 26) 2/ . Those ordering the "My Proven Easy Money Method" received a brochure, the full impact of which can be appreciated only by reading in entirety. It is attached to this decision and made a part thereof as Exhibit 1. Page 2 of the brochure contains a reprint of the magazine advertisement. As can be seen the plan is that the purchaser of the materials will receive a kit of envelopes, labels, "Mink Show Off" advertisements and reply envelopes with his or her name imprinted on the reply envelope. Any orders received will be processed to Ernie Tucker along with half the proceeds.
It is crystal clear that the representations alleged in Complaint paragraphs (a), (b), (c) and (e) are made in the promotional materials sent through the mails. The representations contained in Complaint allegation (d) that "potential income projections" which may be expected by Respondent's "letter handler collection agents", are "strictly honest estimates based on actual test mailings as well as ads in various national publications", while not directly made would be reasonably implied from the statements made on pp. 7, 9, and 11 of Exhibit 1 attached to this decision. They are, however, made in very direct language on page 11 of the brochure Respondent sent out on the "Genuine Mink and Sable Roses" promotion (CX 10). By necessary implication, the reader would conclude, and the promotional material is directly geared to create the conclusion, that items to be sold by the mailers which will be purchased are in fact "tested and proven, big money" advertising circulars as alleged in Complaint paragraph (f). Likewise I consider it inescapable, when the promotional material is read in its entirety, that the representations and expected returns as alleged in Complaint paragraphs (g) and (h) are the natural conclusion intended to be conveyed to the reader. In the leading case of Donaldson v. Read Magazine, 333 U.S. 178, 189 (1948), the Supreme Court stated that advertisements should be considered as a whole and that should be interpreted "in the light of the effect they would most probably produce on ordinary minds". The heart of the sales promotion to the buyer is what's in it for him and Ernie Tucker makes that unmistakably clear. The reader is led to believe that a 10% return, average $10 order, for the "Mink Show Off" jewelry is just about in the bag if one reads the representations on p. 10 and 12 in the light of the complete sales pitch. With respect to the "Mink and Sable Roses" promotion contained in the Respondent's brochure, in evidence as Complainant's Exhibit 10, the 5%, average $40 order, representations can be found at pp. 11, 14, 16, and 17. Respondent's characterization of Ernie Tucker's "My Proven Easy Money Method" as nothing more than "Speculative projection on a business venture" bears little resemblance to the promotional material which is the basis for this proceeding. In Baslee Products Corp. v. United States Postal Service, 356 F.Supp 841 (1973), the court, in citing Spiegel, Inc. v. F.T.C., 411 F.2d 481, 483 (7th Cir. 1969) for the proposition that "the meaning and impression upon the mind of the reader arises from the sum total of not only what is said but also of all that is reasonably implied" went on to emphasize "After all, as I have already stressed, to hold that the law is otherwise would be to provide immunity to the master of the artful phrase who was able to convey a subtle but penetrating message by seemingly innocuous but carefully contrived verbalisms." The court there also found it pertinent to cite the statement in Colgate-Palmolive Co. v. F.T.C., 310 F.2d 89, 91 (1st Cir. 1962) that "advertisements are not judged by scholarly dissection in a college classroom".
Applying these tests, I find that the representations alleged in the Complaint were in fact made by Respondent and were material representations. That Respondent's brochure was successful in attracting people to become "Letter Handler-Collection Agents" and purchase the mailers at prices ranging from $53 to$325 is shown by the stipulation that Respondent received over 10,000 such orders in approximately a one month period (Tr. 111, Tr. II-5).
This brings us to the second issue in the case and that is whether the representations were false. With the exception of Complaint allegation (c) involving the claim that Ernie Tucker "made $35,000 in just one day at home in bed with the flu", the other representations are all intertwined and the findings which the evidence warrants can best be treated at one time. Complainant's first witness, Mr. Elpidio Brito, saw the advertisement in "Popular Mechanics Magazine", sent in the $10 for the money making plan and received the brochure and thereafter purchased 2000 mailers from Respondent for $195. He paid $12.85 in C.O.D. charges for four boxes containing 1750 mailers and after buying stamps, he sent out 1104 of the mailers. (Tr. 6-14). He received one order for $4 and 150 letters were returned as undeliverable. He received two other brochures (CX 10, 11) from Respondent much like the first but soliciting orders for mailers for "Genuine Mink and Sable Roses" which were mink floral arrangements. The prices for these items ranged from 414.50 to $145, whereas the prices for the "Mink Show Off" jewelry ranged from $3.50 to $15.95 (CX 3, 10, 20). Complainant's second witness, Ivan Kacarevic, saw the advertisement for the "Proven Easy Money Making Plan" in "Handy Man" magazine (CX 13, Tr. 27). He ordered the plan sending in $10, and upon receiving the brochure (CX 15) he remitted his check for $325 to cover 5,000 mailers (CX 16, 17, Tr. 28). After purchasing the necessary stamps he mailed the entire quantity of 5,000 (Tr. 31). Approximately 200 of the mailers mailers came back undeliverable. He received no orders except for one which was unacceptable because it was C.O.D. (Tr. 30).
Complainant's third witness was Mr. Gregory Alulis, who saw the advertisement in "Popular Mechanics" and after sending in $10 for the brochure, he ordered 1000 mailers for $105 (CX 21, 22, Tr. 40, 41). He mailed out 990 of the mailers, had 150 returned as undeliverable and received no orders (Tr. 43). He requested a refund from Respondent and received in return what appears to be a form letter from Ernie Tucker rejecting the request and pointing out:
"But if you recall in My Easy Money Booklet (which I sent you) I stated emphatically that my expectations of potential order response were only estimates based on my years of mail order experience coupled with the results our company have received from the test mailing and publishing of the "Mink Show Off" Advertisement, in such national publications as Lady's Circle, Playgirl and various other women magazines. (CX 23).
Mr. Alulis, while testifying as to some doubts about the estimates in the brochure at the time he placed his order, also testified that he expected to receive 50 orders for his investment (Tr. 45, 46). there was also introduced by stipulation (Tr. 110), the transcript of the testimony of Mrs. Jeanne Borkowski in the related 39 U.S.C. § 3007 court hearing (CX 25). Mrs. Borkowski saw the advertisement in "Red Book", sent for the brochure and thereafter placed her order for 500 mailers, 250 of which she mailed, stopping at that point because some 28 were returned as undeliverable. She received no orders (CX 25). In June of 1974 a subpoena duces tecum was issued by the Attorney General of the State of New York calling for, among other items, production of "Such books and records as will disclose names and addresses of consumers who purchased 'money making materials' and became 'letter handler collection agents'; originals or true copies of each order form for money making materials placed by such agents". Mrs. Gail Tucker, Respondent's wife, appeared to testify at the time and place specified in the subpoena, identified herself as Secretary/Treasurer of Unique Ideas, Inc., and produced order forms for the month of July as the only existing company records in response to the item quoted above. The forms produced involve 136 orders, and five follow-up letters by Respondent requesting clarification of the name to be printed on the advertising material 3/ . These order forms reveal that seven orders were for materials in the amount of $53;4/ sixty-one orders were for materials in the amount of $63; thirty-three orders were for materials in the amount of $105; one order was for materials in the amount of $154;4/ twenty-four orders were for materials in the amount of $195; one order was for materials in the amount of $220,4/ and nine orders were for materials in the amount of $325. The total dollar value to Respondent of these orders was $16,032. The number of mailings provided by the various size orders, assuming the agent uses first class mail at 10 cents per envelope would approximately double his investment.
After receiving copies of these orders, the New York Attorney General's office sent out questionnaires to all those who names appeared on the order forms supplied by Mrs. Tucker and Complainant's Exhibit 30 contains forty-one responses reporting the results of mailing. Approximately 20 responses which stated the recipient had not yet received the materials ordered are not included in Exhibit 30. The remaining 75 persons did not respond to the questionnaire (Tr. 179,Tr. II-10). I have closely examined the responses to the questionnaire in relation to the order forms supplied by Respondent in response to the subpoena and make the following findings of fact in connection therewith. Excluding two responses which indicate no mailings or late mailings, the remaining 39 responses show a total mailing to 36,312 ultimate prospective customers of the mink jewelry. The total investment by those responding can be closely approximated by taking the price paid to Respondent, as reflected on the appropriate order form for materials purchased from Respondent, and adding the amount shown in the corresponding questionnaire for postage expended in mailing these materials to the prospective purchasers of the mink jewelry. This comparison shows that the 39 so-called "Unique Ideas Letter Handler-Collection Agents" paid Respondent $4,631 for some
47,500 mailers. In addition they expended $2,961.38 for postage to mail out 36,312 of these mailers. A total of $7,592.38 was expended, not including the initial C.O.D. charges for receipt of the materials or the $10 charges to hear about Ernie Tucker's money making idea in the first place. The responses to the questionnaires reveal that from this total mailing of 36,312, only three orders were received from prospective purchasers in sums of $24.85, $17.00 and $20.90, a grand total of $62.75, half of which, under the terms of the agent's agreement, was supposed to be sent to Respondent. A similar review of the twenty-two stipulations as to testimony of other Ernie tucker "Letter Handler-Collection Agents" shows that of 38,000 mailers received by these people 32,775 were mailed and only 4 orders were received. Adding these results to those in the answers to the New York State questionnaire and to those indicated by the testimony of witnesses above described, reveals a grand total of eight orders received out of 76,431 mailings. This amounts to one-hundredth of 1% (.0001) return in orders on the direct mail advertising sent out to the names furnished by Respondent. 5/
Respondent contends that the responses to the New York Attorney General's questionnaire have no probative value 6/ and that it should be assumed that those who did not respond had no complaint. I disagree. If, in fact, their luck was much better this would be pertinent, but the failure of a response does not establish that fact nor does it suggest the probability of it. If anything, the record supports the opposite conclusion. Complainant produced as an expert witness in the field of promotion and sale of products by mail, Mr. Edward McLean whose experience and qualifications in direct mail selling are well established in the record (Tr. 117, 118). Mr. McLean testified that he would be "amazed" if the others had a different experience (Tr. 161, 162). His expert opinion of the pull that the "Mink Show Off" advertisement would have, even assuming the use of an extremely good mailing list was 1/10 to 2/10 of 1% because the use of an ad reprint with an unstamped business reply envelope is the weakest form of mail selling (Tr. 125). His opinion of the estimate of a 10% return in the Ernie Tucker brochure was that it was "absolutely impossible" (Tr. 126). With respect to the "Mink and Sable" advertisement, his opinion was that the response would be "infinitesimal" (Tr. 127) because of the higher prices. While he agreed on cross-examination that experts may disagree on many things and sometimes an opinion is proven wrong in practice, he did not alter his opinion on the advertisements in question. Respondent offered no evidence to rebut these opinions. Compare Sims Organ & Co. v. S.E.C., 293 F.2d 78. There was additional testimony and argument regarding the percentage of mail returned as undeliverable being indicative that the names supplied were not on an acceptably recent mailing list. The record indicates (RX 2 received in evidence by stipulation, Tr. 185) that the lists furnished by Respondent to its "Letter Handler-Collection Agents" come from brokers for various firms, some of which Mr. McLean would not question as being recent or "cleaned" lists. Complainant's evidence falls short of establishing that the lists were not recent or were not of people who at one time had purchased a product through the mail. However, of the invoices for some 13,000,000 names Respondent purchased for one time use, only 25% indicate that they involve known purchasers of jewelry (RX 2). Respondent's brochure on page 9 makes the statement that it has access to millions of names and addresses of mail order buyers and "many of these buyers have shown interest in jewelry and accessories and are ready to spend cash money right now for existing collection of genuine mink show offs". The first part of that statement is only partially true; the second part is quite clearly not true. For those who did not receive labels of names and addresses of known mail order jewelry buyers, the promise was completely hollow. Moreover, the constant reference to "guaranteed" mail order buyers in context of the hard sell approach of the brochure, conveys far more than that all was being sold was the name of a person who had purchased something through the mail. The representations made in Complaint allegations (a), (b), (e), (f), (g), and (h) are found to be substantially and materially false.
Some additional findings are appropriate with respect to Complaint allegation (d) regarding the potential income projections being based upon "strict but honest estimates based on actual test mailings as well as ads in various national magazines." At the outset it must be noted that scienter is not an essential element in a proceeding under 39 U.S.C. § 3005. Judge Medine stated the law quite clearly in Lynch v. Blount, 330 F.Supp 689 (1971), aff'd 404 U.S. 1007 when, in referring to the 1968 amendment (82 Stat. 1153) to 39 U.S.C. § 3005, he said "The reasoning is that the law now plainly permits a stop order to issue without proof of scienter or intent to defraud *** The purpose of these laws is not to punish the offender but to protect the public. The Post Office Department strongly supported the 1968 amendment for the very purpose of making it less difficult to put an end to these swindles. We think that was a worthy purpose." In response to the New York State Attorney General's subpoena, Mrs. Tucker testified that Respondent kept no records of the orders for its money making kits or of merchandise orders received from its "Letter Handler-Collection Agents", and that any moneys received were commingled with other earnings. Respondent did not appear in the instant proceeding and the Postal Service does not have subpoena power in these proceedings. However, Mr. McLean testified in answer to the hypothetical question that if 25 people were to mail out 25,000 of the "Mink Show Off" direct mail pieces and receive no more than a dozen orders, assuming the use of the best mailing lists, he would not believe any test report run by Mr. Tucker which projected a return rate of 10%. (Tr. 161) Assuming that Respondent conducted a test mailing, the evidence strongly supports the conclusion that it was totally unreliable. There is no evidence to suggest otherwise. Whether it was an "honest" estimate is highly questionable in the light of the entire record, but the statement that it was, when read with the rest of the claims in the brochure, is geared to lead the potential purchaser of Respondent's mailer materials to rely upon these results as something important in making a decision to invest what to many was a substantial amount of money in this get rich quick idea. Thus, the representations hold out something responsibly substantial rather than being a caveat as Respondent would presently have it appear. Viewed in this light, it is substantially and materially false. Complaint allegation (c) relates to the representation that the method outlined in Respondent's promotional materials is the same method which enabled Ernie Tucker to make $35,000 in just one day at home in bed with the flu and which enables his earnings to continue to average "in the thousands every week." Respondent's position here is that Ernie Tucker did in fact receive orders in one day in excess of that amount and that the method is simply the mail order method. In response to the New York State Attorney General's subpoena, Mrs. Tucker produced documents from distributors for Ernie Tucker covering $41,283.41 for casettes, records, albums and eight track tapes which she testified represented orders received in one day (CX 29). It is quite evident that this merchandise had nothing to do with, and was completely dissimilar from, that which potential "Letter Handler-Collection Agents" were being touted to sell. Moreover, an investigator for the Federal Trade Commission testified that Mrs. Tucker in an official interview, and represented by counsel, stated that radio advertising had been used in connection with this merchandise (Tr. 92). 7/ It means very little to the reader of Respondent's glowing claim of making $35,000 in one day if it involved something without any meaningful connection to what he is being told is his being chance to become wealthy. This is even more grievous when the promotion involves the use of other sales media which fact is not revealed. Ernie Tucker's method was nothing more than direct mail selling of certain items. The items as well as the method of promotion were essential ingredients of any success. Those who parted with their money to share in his fabulous profits had a right to believe that there was some real relationship. There was not. I find the representation alleged in Complaint paragraph (c) to be substantially and materially false.
As indicated in the court decisions cited above, it is not possible to view this case by isolating a word here and there in Respondent's promotion of his "Proven Easy Money Method". When read in completeness, the impact upon the reading public comes across with resounding force. Here is a proven way, the buyer is told, to make substantial money selling products which made Ernie Tucker rich. Ernie Tucker may well have been getting rich using his proven easy money method, but with respect to this promotion one is inextricably drawn to the conclusion that it would have been in selling his method to "Letter Handler-Collection Agents" and not in sharing in their profits which from all the evidence were virtually non-existent. Some exaggeration and puffing is perhaps to be expected in sales, but when the truth is so distorted that it can no longer be recognized, the public's right to protection surpasses any claim that the targets of the promotion should have known better. If the promotional materials had been drafted in accordance with the truth in the first instance there undoubtedly would have been no proceeding and just as undoubtedly there would have been far fewer, if any, purchases of Ernie Tucker's "Proven Easy Money Method" and his mailing kits.
Accordingly, and having found a violation of 39 U.S.C. § 3005 as charged in the Complaint, I am issuing an appropriate order under that statute contemporaneously with this decision.
03/11/75
Lussier, Edward F.
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1/ The designation "CX" is used for Complainant's Exhibits. "RX" for Respondent's Exhibits, "TR" for transcript of the hearing and "TR II" for transcript of the oral argument.
2/ For proof the direct mail advertising see Complainant's Exhibit 10.
3/ Two of these follow-up orders, to Bauman's Gifts at 7409 Maxine Street, S.E., Lacey, Washington 98503, and to B. F. Brinson, Inc., 5867 Kennedy Ave., Cincinnati, Ohio 45213, appear to be related to orders produced for the same addresses. The other three do not appear to relate to the orders which were produced.
4/ These orders were for materials without name and address labels.
5/ The record reveals that all of these mailings involved the use of labels furnished by Respondent.
6/ If the results of the New York questionnaire are not included the percentage of return is still 1/100 of 1%.
7/ The record is not clear that mail advertising was not also used.