In the Matter of the Complaint Against BRASWELL, INC. at P. O. Box 10064, Atlanta, GA 30319 and at 470 E. Paces Ferry Road, Atlanta, GA 30305, HEAD START, INC. at P. O. Box 14052, Atlanta, GA 30324 and at P. O. Box 53141, Atlanta, GA 30355 and at 470 E. Paces Ferry Road, Atlanta, GA 30305 P.S. Docket No. 9/140; P.S. Docket No. 9/141 June 4, 1981 Quentin E. Grant Administrative Law Judge APPEARANCE FOR COMPLAINANT: Daniel S. Greenberg, Esq. Consumer Protection Division Law Department United States Postal Service Washington, DC 10160 APPEARANCES FOR RESPONDENT: John M. Creger, Esq. H. Robert Ronick, Esq. Katz, Paller & Land 470 E. Paces Ferry Road Suite 2000 Atlanta, GA 30363
These proceedings were initiated by Complaints filed on October 21, 1980, alleging that Respondent is in violation of 39 U.S.C. 3005 by engaging in a scheme or device for obtaining money or property through the mails by means of false representations.
The Complaints specifically allege, in pertinent part, as follows:
I
"That Respondent attracts attention to said scheme by means of advertisements calculated to induce readers thereof to purchase its Independent Sales Representative ('I.S.R.') Kit, and to become distributors of its products;
II
"That, as part of the 'I.S.R.' Kit, Respondent sends advertisements to be used to induce the sale of its products by the purchasers to third parties. These advertisements contain false representations for various products sold by Respondent including, but not limited to:
(1) Appetite Eliminator;
(2) Digestaid;
(3) Willpower;
(4) Fat Off;
(5) Formula-12 Creme;
(6) The South American Diet;
(7) Guarana;
"The representations alleged to be false are the subject of separate complaints which are incorporated herein and made a part hereof by reference.
III
"that, by means of the scheme described herein, Respondent obtains remittances of money through the mails based upon false representations made by the purchasers of said kit, at Respondent's inducement, to third parties."
Respondent filed answers to the Complaints, denying the making and the material falsity of the alleged representations and being engaged in violation of 39 U.S.C. 3005.
To observe the necessity for repetition of the testimony and pleadings, these cases were consolidated by Order dated January 22, 1981.
On motion of Respondent the location of the hearing was changed from Washington, D.C. to Atlanta, GA, where it was held from January 26 through 30, 1981.
The parties have filed written argument and proposed findings of fact and conclusions of law all of which have been fully considered and, to the extent indicated, have been adopted. Otherwise, they have been rejected as unsupported by or contrary to the evidence or because of their irrelevance or immateriality.
1. Respondent, under the names and using the addresses shown in the captions of these proceedings, is engaged in selling a product called INDEPENDENT SALES REPRESENTATIVE (hereinafter sometimes "I.S.R.") Kit and obtaining money or property therefor through the mails. (CX-161-168, 169, 186, 187; Tr. 188-213)
2. Attached hereto as Exhibit A is a typical example of Respondent's advertisements and certain other promotional material for the I.S.R. Kit (CX-161-167).
3. As part of the I.S.R. Kit Respondent sends to purchasers thereof advertisements to be used by purchasers to induce the sale of Respondent's products to third parties. These advertisements appear in complimentary copies of Respondent's magazine called Body Forum (CX-165, 166, p. 3, and 186, p. 3).
4. Representations made by Respondent in advertisements in the Body Forum magazine relating to the seven products listed in paragraph II of the Complaint, supra , have been the subject of other proceedings brought against Respondent under 39 U.S.C. 3005 which were consolidated with the subject docket numbers for hearing and decision.
5. The allegations of misrepresentation contained in the Complaints filed in those proceedings, the advertisements on which such allegations were based, and the initial decisions heretofore issued in those proceedings are incorporated herein as if fully set forth. Those proceedings and the product involved in each group thereof are identified as follows:
(a) Appetite Eliminator , P.S. Docket Nos. 9/121 et al.
(b) Digestaid , P.S. Docket Nos. 9/118 et al.
(c) Willpower , P.S. Docket Nos. 9/124 et al.
(d) Fat Off , P.S. Docket Nos. 9/126 et al.
(e) Formula-12 Creme , P.S. Docket Nos. 9/129 et al.
(f) The South American Diet , P.S. Docket Nos. 9/139 et al.
(g) Guarana , P.S. Docket Nos. 9/134 et al.
6. Based on the findings of fact and conclusions of law contained in the initial decision in each group of proceedings listed above, it is found that the advertisements appearing in Body Forum magazine for each of the products involved, as admitted in evidence in the consolidated hearing and as furnished to purchasers of the I.S.R. Kit contain materially false representations as to each of the products listed above.
7. Purchasers of the I.S.R. Kit, by means of the Body Forum magazine furnished therewith by Respondent, and at Respondent's inducement (CX-161-168, 169, 186, 187) make to third parties the false representations found above, Respondent thereby obtaining remittances of money through the mails.
1. Respondent is engaged in the conduct of a scheme, involving its product, the I.S.R. Kit, to obtain money or property through the mails by means of materially false representations as to Respondent's products listed in paragraph II of the Complaint.
2. Complainant's evidence falls short of proving that purchasers of the I.S.R. Kit are themselves deceived by such false representations. However, since the advertisements for such products in Body Forum magazine furnished to purchasers of the kit are obviously intended to induce third parties to purchase these products, on the basis of the false representations made therein, the scheme falls within the prohibition of 39 U.S.C. 3005. United States v. International Term Papers, Inc. , 477 F.2d 1277 (lst Cir. 1973).
3. An order pursuant to that statute in the form attached should be issued against Respondent.