In the Matter of the Complaint Against

 BOX 1040 Post Office Box 1040 at
 Westminster, CA 92683

 U.S. PRESS
 Post Office Box 7408 at
 Colorado Springs, CO 80933

 MAILCO
 Post Office Box 15919 at
 Phoenix, AZ 85060

 P.S. Docket No. 7/100; 

 APPEARANCE FOR RESPONDENT
 Thomas J. Nolan, Esq.
 Stephen D. Miller, Inc.
 8912 West Olympic Blvd.
 Beverly Hills, CA 90211

 02/19/80
 
 Duvall, William A.  

On October 22, 1979, the Consumer Protection Division, Law Department United States Postal Service (Complainant) viled a Complaint in which Box 1040, Post Office Box 1040, at Westminster, CA 92683; U.S. Press, Post Office Box 7408, at Colorado Springs, CO 80933; and Mailco, Post Office Box 15919, at Phoenix, AZ 85060,^1/ are charged with conducting a scheme or device for obtaining money or property through the mails by means of false representations in violation of 39 U. S. Code 3005.

In Count One it is alleged as follows:

"(1) Attention is attracted to said scheme by means of various promotional activities and materials including, but not limited to, advertisements appearing in publications of general circulation, direct mail circulars, order blanks and reorder forms, all of which are calculated to inform prospective customers of the nature and availability of Respondents' products and services, and to induce such persons to remit money through the mail;

"(2) Attached hereto and made a part hereof by reference as Exhibits 1 through 4 are copies of advertising and promotional materials used by Respondents which are typical of those referred to in Paragraph (1), supra;

"(3) By means of such materials, and others similar thereto, Respondents represent, directly or indirectly, in substance and effect, whether by affirmative statements, omissions or implication that the PHOTO ID CARDS furnished by them are officially sanctioned or authorized by every State, U. S. Territory and Canadian Province.

"(4) The aforesaid representations are materially false as a matter of fact."

Count Two of the Complaint reads as follows:

"(5) The introductory paragraph and paragraphs (1) and (2) of this Complaint are repeated and realleged as if fully set forth herein;

"(6) By means of such materials and others similar thereto, Respondents offer to furnish and, in fact, do furnish simulated drivers' licenses, photo identification cards and other instruments which, by virtue of their design, typography and appearance, have the tendency and capacity to mislead and deceive persons to whom they are shown into believing that they are authentic, officially issued documents and that the information contained thereon is accurate and true;

'(7) Under the scheme described herein, Respondents seek the remittances of money through the mail by offering to furnish and, in fact, furnishing simulated drivers' licenses, photo ID cards and other like documents knowing that said documents falsely purport to be genuine and officially issued, and that 95% of the persons seeing them will assume they are real;

"(8) Under the scheme described herein, Respondents seek the remittances of money through the mail by offering to furnish and, in fact, furnishing simulated drivers' licenses, photo ID cards and other like documents knowing that the personal identification data contained thereon are false or with reckless disregard of whether or not such data are true;

'(9) By means of the scheme described herein, Respondents knowingly furnish spurious identification documents which enable and encourage their customers to use the identification documents they have purchased as a means of falsely representing their ages, addresses or identities to third parties. Respondents know or should know that the spurious identification documents thus purchased are, in fact, used or likely to be used for such purposes."

In the Answer to the Complaint Respondent denied each and every allegation in Counts One and Two of the Complaint.

The charges of the Complaint will be disposed of in the order in which they are above stated.

There were received in evidence, as Complainant's Exhibits 6-E and 6-F, copies of each side of a circular used by U.S. Press, Post Office Box 7408, Colorado Springs, CO 80933, which is an advertisement soliciting orders and remittances of money for polaroid photo ID cards. In addition to the ID cards, the circular offers one free birth certificate and one free student ID card with every ID card purchased; extra birth certificates for $2.00 each; and extra student ID cards at $1.00 each. There are further offers for quantity discounts for the ID cards. (See Appendices A and B)

In the right-hand column of Complainant's Exhibit 6-F there is the following language:

"NOW

FOR EVERY

STATE

U.S. TERRITORY

AND

CANADIAN PROVINCE

Complainant's Exhibit 12-A consists of a letter which was sent to appropriate officials of all of the 50 of the United States in which letter the officials were asked, in substance and among other things, whether a particular business concern (not a party to the present proceeding) had been authorized to issue identification cards in the name of each such state. (Tr. 129, 130)

Complainant's Exhibits 12-B through 12-G are replies written in June or July, 1978, from, respectively, officials of the states of Washington, Iowa, Georgia, Florida, Alabama and California. In each instance it is stated, in substance, in the answer to question no. 10 of the circular letter that no business or concern other than the responding state had been authorized to issue official identification cards of the state.

Complainant's Exhibit 10-A is a report of a postal inspector in which it is stated that during an investigation of the Respondent U.S. Press, a detective of the Amherst, New York, Police Department contacted a minor who was attempting to purchase liquor and who used the false identification as proof of his age. The minor provided copies of the U.S. Press order blank, copies of an uncompleted birth certificate and a copy of other identification material available from U.S. Press.

Complainant called as a witness Merle L. Shields, Chief of the Vital Statistics Section of the Department of Health of the State of California. The duties of the office held by Mr. Shields include the registration of all births, deaths, fetal deaths, and marriage dissolutions that occur within the boundaries of the State of California.

As part of his testimony Mr. Shields identified a question- naire related to birth certificate forms he had received from Postal Inspector I. C. Hall in connection with another matter. One of the questions asked was whether the State of California had ever authorized a certain party or certain concerns to issue or sell blank birth certificates. (CX-15, question 5) The response to the inquiry was that "***the State Registrar has never authorized *** or anyone else to issue or sell blank certificate forms." (CX-16, p. 2) That answer was made in a letter dated June 14, 1978, but the answer expresses the present position and policy of California (Tr. 159-166)

The above recitation, together with reference to the related exhibits and testimony, establish the following facts:

(1) The Respondent U.S. Press solicits remittances of money through the mail by means of circular matter for certain polaroid ID cards.

(2) Under a fair reading of the Respondent's advertising circular, the impression that would be made upon the mind of the average reader is that the photographic identification cards issued by Respondent are, and for some time have been, officially sanctioned or authorized by every State, U.S. Territory and Canadian Province.

(3) The oral and documentary evidence received in this proceeding establish that the aforesaid representation found to have been made by the Respondent, U.S. Press, is materially false as a matter of fact.

Complainant's Exhibits 4-A through 4-I consist of test correspondent related to the Respondent designated as Box 1040, at Post Office Box 1040, Westminster, CA 92683. This correspondence was prepared in the office of Postal Inspector Gabbert at the request of Postal Inspector Thomas C. Hall, by whom the investigation of this case was initiated. Complainant's Exhibit 4-C is a letter dated December 19, 1978, signed Angela Gabbert, which reads as follows:

"12-19-78

Dear Sir:

I am writing to order your simulated driver's license. I am only 17 years old at the present time and would like to be able to get into nightclubs with my friends. My correct birthdate is 12-04-61, but I would like the license to show 12-04-60. I am enclosing application, money order and picture.

Thank you.

Angela Gabbert"

This letter was written in response to CX 4-H, which is a copy of circular matter of which an unnumbered original accompanies CX 4-H. (See Appendix C) The above letter was sent with an application and order form (CX 4-B) together with a money order in the amount of $12.00 (CX 4-D) to the Respondent in the envelope, a copy of which is CX 4-A.

Complainant's Exhibit 4-F is an envelope bearing the return address of "Box 1040, Westminster, CA 92683" and also bearing the typewritten address "Angela Gabbert, Rt. 1, Box 1448-J, Waco, TX 76710". Included within that envelope was a form letter on the letterhead of Box 1040, commencing with the statement "Thank you for your order." The addressee is requested to tell her friends about the business of the Respondent. Extra order forms for use in ordering the product from the Respondent are said to be included. Also enclosed in Exhibit 4-F was the original of the Louisiana driver's license ordered in the test correspondence and it shows the date of birth requested in the test letter (CX 4-E). (See Appendix D) One is immediately impressed by the official looking character of the original of the driver license because of the name of the state, the identification of it as a "Class 'A' License", the citation of the purported "D.V. Code" article authorizing its issuance, what appears to be a serial number, the expiration date, renewal instructions, the name and address of the licensee, the descriptive information in the appropriate boxes on the card and the signature of the "Department Director".

There was received in evidence an affidavit identified as Respondent's Exhibit B. In the affidavit the affiant is identified as office manager for the Respondent, U.S. Press. Paragraph 6 of the affidavit reads as follows:

"6. As Office Manager of U.S. Press, I am also familiar with the printed material utilized by mailco in its daily business operations. The document attached hereto as exhibit No. 4 is a true and complete copy of the Mailco Order Form. The document attached hereto as exhibit No. 5 is a true and complete copy of a sales letter transmitted by Mailco to its potential customers."

The Exhibit No. 4 referred to in the foregoing paragraph of Respondent's Exhibit B^2/ is an advertising circular which, except for the name of the promoter appearing at the top of the page bearing the illustration of the driver's license, is identical to the original advertising circular attached to CX 4-H previously referred to, with the following exceptions:

1. In the box which states "THIS OFFER VOID WHERE PROHIBITED" the following language, not present in the attachment to Exhibit 4-H, appears in Exhibit 4 to Respondent's Exhibit B;

"*Void in Arizona, California

Colorado and North Dakota."

2. In the lower right-hand corner of the page, the language "*This offer is void in and for the state of: Arizona, California, Colorado and North Dakota." has been substituted for the language on the attachment to CX 4-H which reads "Know the law. This offer is void where prohibited."

Other language appearing on both Mailco's circular (Resp.'s Ex. B, Exhibit No. 4) and Box 1040's attachment to Complainant's Exhibit 4-H is as follows:

"SIMULATED

DRIVER'S LICENSE

ISSUED DIRECTLY TO YOU FOR ANY STATE YOU WANT-FOR ANY NAME OR AGE]

* * *

FOOL IMAGINE

YOUR FRIENDS THE FUN]

* * *

2. PHOTO

Send one photo per customer. Additional licenses can be made with the same photo if you wish to have different names or ages, etc.

* * *

These are not false or counterfeit licenses. They are not reproductions or duplicates of any state license. They are not a license to drive any vehicle.

They are novelty items and are sold for amusement purposes only. They must not be used for any unlawful purpose."

The statements under "Please Note" are very confusing. If the licenses are not false, counterfeit, reproductions or duplicates, they must be valid in their purported jurisdictions. The foregoing assurances in the minds of the readers will outweigh the subsequent disclaimers concerning novelty items.

Visual comparison of Appendices C and E will demonstrate the preponderance of similarity in, rather than differences between, the two circulars.

Complainant's Exhibits 3 and 4 with sub-exhibits attached thereto disclose the fact that the Respondent Box 1040 furnished an authentic looking driver's license to persons who frankly stated to the Respondent that it was the purchasers' intention to use the driver's license to mislead third persons to believe that the purchasers are older than they really are. The stated purpose of the indicated deception was to gain admission to places from which they would otherwise be excluded because they were under age.

Another witness called by Complainant was John Kocsis, an Investigator with the Department of Motor Vehicles, State of California. His investigations generally have to do with drivers' licenses or vehicle registrations. Within the course of the operation of the Department of Motor Vehicles written and telephone communications are received from various parts of the United States relating to Respondent. The substance of the communications is that Respondent had sold drivers licenses to minors who used them to conceal their true identity or to misstate their age, or both, for the purpose of gaining admittance to dance places or for buying alcohol. Most of the communications were from irate parents and most of the offenses were misdemeanors. (Tr. 166-167, 171-172) In addition, the witness reported having numerous complainants from two or three states in which law enforcement officers had stopped minors who presented them with driver licenses or identification cards, purchased from Respondent, purportedly from another state, by which the officers were fooled or made uncertain as to the validity of the licenses or cards. (Tr. 173, 178) In his testimony the witness recalled that in some complaints received by him Box 1040 was specifically mentioned. (Tr. 184) The last call the witness had in which in which it was indicated that Respondent was the supplier of a driver license or an identification card about which such a complaint was made was in June or July, 1979. (Tr. 183)

In the affidavit which is Respondent's Ex. B it is stated, in part, as follows:

"The document attached hereto as exhibit No. 5 is a true and complete copy of a sales letter transmitted by Mailco to its potential customers."

The language of exhibit No. 5 to Respondent's Ex. B warrants examination since it currently is in use. Included in the language of this sales letter is the following excerpt:

"Our exciting new license has all the features that you want - Finest Quality, Full Color, Best Lamination - and its 100% Guaranteed. It is manufactured by the exact same process that most states now use for making their actual driver's licenses.

"This hot new item is so realistic it is almost unbelievably. It's nearly impossible to distinguish from the real thing. In a recent survey, 95% of those shown our simulated 'License' assumed that it was real]

"Take advantage of this pre-advertising offer and be among the first in your city to have your own 'License'. Just think of the fun you can have - fool your friends - impress anyone. Think of the possibilities, use your imagination]"

To young people impatient to attain their majority, this letter must seem to offer the complete answer. Mailco's product is manufactured by the exact same process that most states now use for making their actual driver's licenses -- 95% of the people to whom they have been shown believed they were genuine -- and the prospective purchasers are counseled to think of the fun they can have -- "fool your friends" -- "impress anyone" -- "Think of the possibilities" and "use your imagination]" It would be difficult to compose a more alluring, enticing invitation to young people to buy Respondent's product to accomplish an objective already so greatly desired. And the above language, it must be kept in mind, is language submitted by Respondent with other material to show how it has corrected its advertising material and made its claims conform more closely to the truth -- at least as it sees the truth. In addition, in order that the young readers will not fear that Mailco is connected with any concern which the reader may have heard has had legal problems, the message ends with the following post script:

"P.S.

Mailco is not affiliated with any other company and it;s exclusive simulated 'Driver's License' is not available anywhere else."

The broad hints, suggestions and invitations in Respondent's advertisements, (particularly Exhibits 4 and 5 to Respondent's Exhibit B), and the test letters in CX 3 and 4, are persuasive evidence that the Respondent is fully aware that the materials which it supplies are capable of being used, and will be used, by the purchasers thereof as a basis for the making of misrepresentations to third parties. Equally clear is the fact that Respondent encourages such use. It is precisely this type of situation which was found by the Court in United States v. International Term Papers, 477 F.2d 1277 (CA 1, 1973) to warrant the issuance of a mail-stop order against that seller.

The Respondent introduced no evidence in its behalf other than the affidavit which was received in evidence as Respondent's Exhibit B with the sub-exhibits thereto attached.

Respondent did present four principal arguments which it asserted should preclude the issuance of a mail-stop order in this case. The first such argument was that it is constitutionally defective for the Respondent to be forced to defend itself simultaneously in two proceedings - one civil and the other criminal - relating to the same matter. The Respondent at first asserted its belief that while the Postal Service administrative proceeding is in progress, there is also going forward, under the direction of the Department of Justice and with the cooperation of the Postal Service, a criminal investigation of the Respondents based upon the identical activities which have been outlined above.

Testimony in the record makes it clear that, other than the instant one, there is no investigation of these Respondents by the Postal Service going forward at the time of this proceeding. Similarly, no criminal investigation is being actively pursued at the time this proceeding may have some effect on the decision to be made later in the Department of Justice as to whether to proceed with a criminal investigation of these Respondents. (Tr. 222-226) Hence, the first point raised by Respondent in its defense is moot.

As a second matter of defense, the Respondent pointed out that the issuance of a mail-stop order is a drastic remedy which, insofar as the Respondents are concerned, if such an order is issued in this case, would be punitive in nature, since it would in effect cut the life-line of the business. Commenting generally in a case in which the constitutionality of 39 U. S. Code 3005 was attacked, Senior Circuit Judge Medina made the following statement:

"If, in a given case such as the one now before us, the selling of some particular nostrum is the sole business in which the plaintiff is engaged and the stop order will put him out of business, so much the better, if the proofs substantially support the finding that the false statements were made as part of a scheme to defraud." Lynch v. Blount, 330 F. Supp. 689, 693 (U.S.D.C., S.D.N.Y. 1971); aff'd. 404 U.S. 1007 (1972)

As a third matter of defense Respondent argued that the literature used by the Complainant in this proceeding does not make the representations alleged in the Complaint. The meaning of advertising representations is to be judged from a consideration of the advertisement as a whole and the impression it would most probably create in ordinary minds. Donaldson v. Read Magazine, 333 U.S. 178 (1948); Vibra-Brush Corp. v. Schaffer, 152 F. Supp. 461 (S.D.N.Y., 1957); Borg-Johnson Electronics v. Christenberry, 169 F. Supp. 746 (S.D.N.Y., 1959). Applying the foregoing test to the advertisements used by the Respondent in this proceeding I conclude that the Respondent makes the representation set forth in Count One of this Complaint.

Finally, Respondent urges that the issuance of a mail-stop order against this Respondent would be unwarranted in view of the fact that the Respondent claims to have ceased making the representations and conducting its business in the manner heretofore described. To the contrary, the Respondent, under the names of Mailco and Box 1040, is still inviting persons to buy driver licenses and to use them to deceive third persons. This conclusion is reached, in part, because of the currently used language in Exhibit No. 5 to Respondent's Exhibit B which previously has been considered. Even if it were accurate to state that Respondent has abandoned its former method of conducting business, such fact would not act as a bar to the issuance of a mail-stop order in this proceeding. With respect to a similar argument it has been said:

"Both sides agree to the abstract proposition that voluntary cessation of allegedly illegal conduct does not deprive the tribunal of power to hear and determine the case, i.e., does not make the case moot. *** The defendant is free to return to his old ways ***. The courts have rightly refused to grant defendants such a powerful weapon against public law enforcement." U.S. v. W.T. Grant Co., 345 U.S. 629, at 632 (1953); U.S. v. Phosphate Association, 393 U.S. 199, 203 (1968); Allee, et al. v. Medrano, et al., 416 U.S. 802, 811 (1974); and Hampton v. Mow Sun Wong, 426 U.S. 88, 98 (1976)

1. Respondent, under the name U.S. Press, is engaged in a scheme or device for obtaining money through the mails in the sale of identification cards by means of materially false representations within the meaning of 39 U. S. Code 3005.

2. Respondent, under the names Box 1040 and Mailco, is selling materials through the mails to purchasers whom Respondent knows, or ought to know, will use such materials to deceive third persons. If Respondent does not know the use to which purchasers will put such materials, that lack of knowledge bespeaks a reckless disregard as to the use to which the materials may be put. United States v. International Term Papers, Inc., supra; Parker v. Summerfield, 265 F.2d 359 (D.C. Cir., 1959); Corliss v. United States, 7 F.2d 455 (8th Cir., 1925)

3. The Answer to the Complaint is signed by Michael Ives; various Postal Service official documents and applications are signed by Michael Ives, Michael R. Ives, M. R. Ives and John Ives (CX 1); and in a November 26, 1979, motion for a continuance of the hearing, it is stated that the firm of which Respondent's Counsel is a member was retained to represent, in this proceeding, John and Michael Ives and the companies named in the caption hereof. Since all of these companies are owned by the same two men, each of the companies is chargeable with knowledge of the activities of the other companies.

4. By these findings and conclusions I do not suggest that U.S. Press is not operating in the manner described under Count Two, nor that Box 1040 and Mailco are not making false representations within the meaning of 39 U. S. Code 3005. In view of the findings and conclusions stated in 1 and 2, above, it is not necessary to find, although the evidence would support such a finding, that the Respondent, under all of the names listed in the caption, is conducting its operations as alleged in both counts of the Complaint.

Proposed findings of fact and conclusions of law submitted by the parties have been fully considered. To the extent herein indicated those proposed findings of fact and conclusions of law are adopted. Otherwise, those proposed findings of fact and conclusions of law are rejected because they are either unsupported by or contrary to the evidence or because of their immateriality.

A remedial order pursuant to 39 U. S. Code 3005, substantially in the form attached, should be issued against this Respondent.

William A. Duvall

Chief Administrative Law Judge

ADDENDUM

P.S. DOCKET NO. 7/100

On February 8, 1980, Respondent's attorney advised the Administrative Law Judge that the attorney was that day mailing to the Recorder, for inclusion in the file of this case, a Memorandum of Law on the question of the unconstitutionality of requiring a party to be confronted simultaneously with a criminal and a civil investigation growing out of the same activities.

As of the date of the decision to which this addendum is attached, the Memorandum of Law has not arrived. It is not believed to be appropriate further to withhold issuance of the decision. The subject matter of the Memorandum of Law was commented upon the hearing and it is discussed, also, in the body of the Initial Decision. If the Respondent feels it to be necessary or desirable, Respondent may file an exception on appeal from either (1) the issuance of the Initial Decision prior to the receipt of the Memorandum of Law or (2) to the merits of the conclusions stated in the Initial Decision with respect to the subject matter to which the Memorandum of Law is addressed.

Thus the Respondent's rights will be preserved and Respondent will not be prejudiced.

1/ In this decision, the discussion of Count One applies to U.S. Press and the discussion of Count Two applies to Box 1040 and to Mailco.

2/ Exhibit 4 to Respondent's Ex. B is attached as Appendix E.