In the Matter of the Complaint Against: ACCURATE CHECKWRITER SERVICE CO., 487 Broadway at New York, NY 10013 P.S. Docket No. 4/14 12/08/75 Duvall, William A.; Chief Administrative Law Judge Daniel S. Greenberg, Esq., Law Department, United States Postal Service, Washington, D.C., for Complainant Murray Richman, Esq., 1930 Grand Concourse, Bronx, New York, for Respondent Before: William A. Duvall, Chief Administrative Law Judge
This case was initiated when the General Counsel for the United States Postal Service, the Complainant, filed a complaint in which it is alleged that Accurate Checkwriter Service Company, of New York City, the Respondent, is engaged in conducting a scheme or device for obtaining money or property through the mails by means of false representations within the meaning of 39 U.S. Code, Section 3005.
The representations specifically charged as being falsely made are the following:
"A. That the recipient is currently obligated to Respondent in the amount shown on Exhibit A for an insurance policy and for mechanical inspections (hereinafter referred to collectively as 'services'), previously requested of Respondent by recipient;
"B. That, alternatively, the premium shown in Exhibit A reflects the amount due for renewal of services previously obtained from Respondent by the addressee;
"C. That said insurance policy is:
(1) underwritten by the insurance company known as Lloyds of London;
(2) sold by the brokerage firm known as Anthony Gibbs & Sons of London, England."
The Respondent filed an answer in which it generally denied the allegations of the complaint and affirmatively averred that its principal business is the sale of mechanical checkwriters. In the answer the Respondent also states that the documents attached to the complaint were obtained by a competitor of Respondent through misrepresentation and deceit. Finally, the Respondent alleges that certain papers, which will be described more fully later in this decision, which Respondent sends to persons are evidence of an existing agreement and represent a bill for services to be rendered.
The matter came on for hearing and both parties were represented by counsel who participated in the examination and cross-examination of witnesses and the introduction of documentary evidence. Counsel for both parties have submitted proposed findings of fact and conclusions of law and supporting arguments.
The first witness called by Respondent was Mr. Arthur Rumsky of Brokers Facilities Corporation located on Beekman Street in New York City.
Mr. Rumsky testified that he arranged to have some insurance issued to Respondent by Lloyds of London and he also arranged for some insurance coverage by Anthony Gibbs of London, England. These concerns told Mr. Rumsky in 1973 to terminate their coverage of Respondent. Mr. Rumsky communicated with Accurate Checkwriter Service Company and relayed the information that he had received from England. Mr. Rumsky asked for and obtained a letter, which was received in evidence as Complainant's Exhibit 1, in which it is stated that Accurate Checkwriter Service Company had submitted no policies and had therefore not subjected his insurers, Lloyds of London and Anthony Gibbs, to any risk for the period April 7, 1973 to September 7, 1973. The letter also includes the following paragraph:
"In addition, we understand that we are not to issue or renew any covenants of indemnity after the cancellation date of Sept. 7, which displays name of Lloyds and/or Anthony Gibbs or Brokers facilities. We will in fact, destroy any of the unused printed certificated of insurance."
This letter is dated September 20, 1973, and it bears in script the name Robert Saveloff, President, and typed under the signature of Mr. Saveloff are the name and title.
As a result of this letter the insurance with the English firm was terminated effective in April of 1973 and the premium was refunded to Respondent.
The next witness to testify was Martin Stitsky, who is the manager of office machine products for Burroughs Corporation located at 80 Pine Street in New York City.
On April 28, 1975, Mr. Stitsky returned to his office at some time during the day and received notification in writing, which was received in evidence as Complainant's Exhibit 2, that he was to call a Mrs. Floran. And underneath the name of that person are the words, "Accurate Co." and beneath that are the figures of a telephone number, obviously, 226-5744.
When Mr. Stitsky returned that call, he contacted a person who identified herself as Mrs. Floran, and was advised by Mrs. Floran that she represents Lloyds of London; that Burroughs' insurance coverage had expired; and she was inquiring about the premium.
Mr. Stitsky said that he was not aware of any insurance coverage by Lloyds of London that was carried by Burroughs, and he asked the woman to send the related papers to him and he would examine those papers and determine definitely whether his division had any insurance with Lloyds of London. If not, he would then canvass the other divisions of Burroughs to see if they were insured by Lloyds of London. Mr. Stitsky testified that he did make those checks and the information was that no division of Burroughs was insured by Lloyds of London.
Later, he received through the mail a document which was received in evidence as Complainant's Exhibit 3, which is a document which has at the top of it the word "INVOICE," then the name of the Respondent. It is addressed to Burroughs Corp., 80 Pine Street, New York, New York, attention Mr. Martin Stitsky, and it indicates that there is a premium of $89.10 due for $10,000 of forgery and alteration insurance and guaranteed mechanical inspections for a period of two years.
With that invoice that was received by Mr. Stitsky, another document was received in evidence as Complainant's Exhibit 4, which bears the name of the Respondent in the top center of the document, and to the left of that are two phone numbers, one of which is "226-5744," which was the number that Mr. Stitsky previously was told to call and did call. At the bottom of this exhibit there is a place for the agent's signature, and in that space there is the name "Josephine Floran."
In the second line under the name of the Respondent at the top of the exhibit is this language: "FORGERY CLAIMS DIVISION LONDON," and then there is a space followed by the words, "AND AT LLOYDS." Underneath this line is the following language:
"APPLICATION IS HEREWITH MADE FOR THE CHECKWRITER SYSTEM OF PROTECTION FOR 2 YEARS. OUR CHECK, TO YOUR ORDER, IN FULL PAYMENT IS ENCLOSED."
This exhibit contains a guarantee of mechanical inspections of checkwriters sold by the Respondent, and it also guarantees check forgery and alteration insurance limited to an aggregate of $10,000. Mr. Stitsky also received a specimen insurance policy which was received in evidence as Complainant's Exhibit 5.
The next witness was Richard M. Newcomb, who is the insurance manager for Time, Inc., Time-Life Building, New York. Mr. Newcomb manages the insurance program for Time, Inc. on a worldwide basis. Mr. Newcomb received a document which was received in evidence as Complainant's Exhibit 6 and which is a certificate similar to Complainant's Exhibit 4, which was just discussed.
Mr. Newcomb also received through the mail a document which was received in evidence as Complainant's Exhibit 7 and is captioned "INVOICE." It is similar to Complainant's Exhibit 3 which was previously described. The invoice sent to the Time-Life Corporation to the attention of Mr. Newcomb is dated July 29, 1974, and requests payment of $136.08 for $10,000 of check forgery and alteration insurance and mechanical inspections for one year.
Mr. Newcomb, also, determined that Time, Inc. did not at that time and never, so far as he was aware, had held insurance with either Lloyds or the Respondent. He then contacted the legal department of Time, Inc. and at his request the original of papers of which Exhibits 6 and 7 are copies were returned to the Respondent with the demand that these and other practices of Respondent cease. This letter was received in evidence as Complainant's Exhibit 8.
The next witness was Mr. Sam Berkovits, who is the comptroller of the Knights of Pythias, Associated Health Foundation, Incorporated, 164 Fifth Avenue, New York City.
Mr. Berkovits was employed by the Foundation in August of 1972, and, since May of 1973, it has been his function to make out checks for all disbursements of the office of the Foundation. In May of 1973 he received a document, which was received in evidence as Complainant's Exhibit 9, and is an invoice similar to Complainant's Exhibit 3, which indicates that there is due the payment of a premium in the amount of $66.08 for one year of coverage under the check forgery and alteration insurance and for mechanical inspections.
Mr. Berkovits did nothing with respect to this invoice for some time, and he later received a call from a person representing himself to be a representative of the Respondent. The purpose of the call was to ask why the premium had not been paid. Mr. Berkovits inquired around his office and he talked with the accountant of the Foundation, who said, in effect: "Well, if it's an insurance premium, go ahead and pay it." Mr. Berkovits prepared a check in payment of the premium, and he had Mr. Leonard M. Eisenberg, president of the Foundation, sign the certificate (Complainant's Exhibit 10), and both the check and the certificate were deposited in the mails addressed to the Respondent.
At the time of the mailing of these exhibits, the Postal Service was subject to an order that had been issued by the United States District Court for the Southern District of New York instructing the Postal Service to hold mail addressed to the Respondent relating to the enterprise under consideration in this proceeding. The Postal Inspector who investigated this case was John Ellis. Mr. Ellis obtained the address of the Foundation from the mail held pursuant to the Court's order and he then contacted the Foundation and talked with Mr. Berkovits. From the record it appears that Inspector Ellis made the arrangements for Mr. Berkovits to appear at this hearing as a witness.
The next witness was Mr. Richard Wolkind, who is the assistant director of the Midtown School of Business, located at 19 West 44th Street, New York, New York.
Mr. Wolkind received a document which was received in evidence as Exhibit 16. This document is an invoice similar to Complainant's Exhibit 3, which was described earlier, and it indicates that there is due a payment of $89.10 as premium for the insurance sold by the Respondent and for mechanical inspections. There was also received by Mr. Wolkind a certificate similar to Complainant's Exhibit 4. The certificate received by Mr. Wolkind was received in evidence as Complainant's Exhibit 17.
Mr. Wolkind contacted the director of the school and determined that there was no insurance in effect with Lloyds or with the Respondent. Mr. Wolkind then sent the two documents to the Better Business Bureau of New York City with a letter, a copy of which was received in evidence as Complainant's Exhibit 18.
With each of the foregoing witnesses the Respondent attempted to show that it was possible that someone in the various businesses represented by the witnesses had ordered the insurance put into effect. Each witness in turn stated that anything is possible, but that in the normal course of business they were the ones who would be authorized to, and who would in fact, arrange for insurance coverage for their respective companies, and that they were clear in their own minds that no such insurance coverage had been ordered.
With respect to the testimony of Mr. Stitsky, the representative of the Burroughs Corporation, an effort was made to show that there was some sort of a policy or a program or a campaign on the part of Burroughs to put the Respondent out of business because of the fact that the Respondent is a competitor of Burroughs. The witness Stitsky is thoroughly credible, and he testified that there is no such policy, program or campaign. Even if, contrary to what the record shows, there was such a campaign on the part of the Burroughs Corporation, there certainly would be no such desire on the part of Time, Inc. or on the part of the Associated Health Foundation of the Knights of Pythias, or on the part of the Downtown School of Business.
To warrant the issuance of an order under Section 3005 of Title 39, United States Code, it is not necessary that a scheme or device contemplated by that section be successful. It is only necessary that it be shown that such a scheme exists. The design of the Respondent in this case, however, appears to have been successful because in the case of each one of these witnesses he was originally of the impression that these invoices represented statements of bills due for issuance currently in effect. It was not until they had conducted a search or made some inquiries that these representatives of the various companies learned that no insurance was in effect either with Lloyds of London or with the Respondent.
Perhaps the leading case on the subject of the interpretation of advertising material is Donaldson v. Read Magazine, which is reported at 333 U.S. 178, where at page 189 it is stated, in substance, that advertising is to be interpreted in the light of the effect that it would most probably produce on ordinary minds.
Looking at these exhibits that have been received in evidence in this case, those invoices sent out by this Respondent, the conclusion is inescapable that they are designed to, and do, create the impression in the mind of the recipient that there is due to the Respondent a payment of the amount stated on the respective invoices.
It is also clear that the person who receives one of the certificates sent through the mails by the Respondent would believe that the insurance is underwritten by Lloyds of London from the statement that appears under the name of the Respondent on that certificate.
Further, on the specimen insurance policy that is sent to various persons, and particularly the one that was received in evidence as Complainant's Exhibit 5, there is the statement that this
"GUARANTEE OF
FORGERY AND
CHEQUE ALTERATION
ISSUED BY
ACCURATE OFFICE MACHINES INC.
Placed Through
ANTHONY GIBBS & SONS
(INSURANCE) LTD.
STANDARD HOUSE
BONHILL STREET
LONDON EC2A 4RZ AND AT LLOYDS"
Of course, the name "Lloyds of London" is known throughout the world as being one of the most reputable and one of the largest insurance concerns in the world. The recipient of the specimen insurance policy would be impressed to know that there is a relationship between the Respondent and Lloyds of London. But the fact of the matter is that even though the invoice sent to the Burroughs Corporation is dated April 28, 1975, the testimony in this record is that the coverage by Lloyds of London was terminated effective April 1973. There is, therefore, as this record clearly shows, no connection between the Respondent and Lloyds of London at this time, nor was there at the time of the mailing of the exhibits concerning which the representatives of the various companies and organizations testified.
Considering all the facts of record in this case, I find the following as matters of fact:
1. The Respondent uses the mails in the conduct of its business;
2. The Respondent does make the representations set forth in the complaint and quoted above; and
3. The representations found to have been made by Respondent are material and they are false as to matters of fact.
Based upon the foregoing findings of fact, it follows as a matter of law that the Respondent is engaged in conducting a scheme or device for obtaining money or property through the mails by means of false representations within the meaning of Section 3005 of Title 39, United States Code.
Proposed findings of fact and conclusions of law were submitted by counsel for both parties. To the extent indicated herein, those proposed findings of fact and conclusions of law are adopted. Otherwise, those proposed findings of fact and conclusions of law are rejected for reasons stated, or because they are inconsistent with, contrary to, or unsupported by the evidence, or because they are immaterial.
Based upon all of the foregoing findings and conclusions, an order of the type provided in 39 U.S. Code 3005, should be issued against this Respondent.
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