In the Matter of the Complaint Against

 P. COLYER General Delivery
 at Easton, MA 02334

 and

 Richard Canfield
 P. O. Box 763
 at Mansfield, MA 02048

 and

 Ben Lane
 P. O. Box 3719
 at Laureldale, PA 19605

 and

 Steven Collins
 1400 Buckert Road
 at Gilbertsville, PA 19525

 P.S. Docket No. 14/54;  

 11/05/82

 Mason, Randolph D.  

 APPEARANCE FOR COMPLAINANT:
 Rode rick P. Sullivan, Jr., Esq.
 Consumer Protection Division
 Law Department
 United States Postal Service
 Washington, DC 20260

 APPEARANCE FOR RESPONDENT:
 Ronald L. Colier
 2 Bonnie Lane
 Mansfield, MA 02048

This proceeding was initiated on August 31, 1982, when the Consumer Protection Division, Law Department, U. S. Postal Service ("Complainant"), filed a Complaint which alleges that Respondents are engaged in conducting a scheme or device for obtaining money or property through the mails by means of false representations, as well as a lottery or scheme for the distribution of money by chance in violation of 39 U.S.C. § 3005. Specifically, the Complaint alleges in Count I that Respondents' scheme constitutes a lottery.Count II of the Complaint alleges that Respondents' brochure falsely represents that the names and addresses listed therein are the true names and addresses of four different individuals who are participating in the program. In a timely filed Answer, Ronald L. Colier denied any violation of the statute.

A hearing was held by the undersigned on October 6, 1982, in Washington, D.C. Respondents failed to appear at the hearing and the Complainant was permitted to introduce evidence and make pro- posed findings of fact and conclusions of law. By order dated October 8, 1982, Respondents were afforded an opportunity to submit proposed findings and conclusions; these have been received and duly considered. To the extent indicated below proposed findings and conclusions have been adopted; otherwise, they have been rejected as irrelevant or contrary to the evidence. Based on the entire record herein, including my observation of the witnesses and their demeanor, the exhibits and other relevant evidence adduced at the hearing, I make the following findings of fact and conclusions of law:

1. Ronald L. Colier is engaged in conducting a scheme or device for obtaining money through the mails under the names and addresses contained in the caption of this proceeding. In this regard, Colier admitted that he "controlled" all of the names and addresses in the caption (Tr. 5; see also Ans. § 9). Moreover, Postal Service records reveal that Colier receives mail under the names "R. Collier", "P. Colyer", and "R. Colier", in Easton, MA (Exh. 2); that he rented P. O. Box 763 in Mansfield, MA (Tr. 14; Exh. 4); and, that he applied for P. O. Box 3719 for "Ben Lane Ent." in Laureldale, PA (Tr. 12; Exh. &).

2. A prospective purchaser ("P") of Respondents' scheme receives a document in the mail entitled "The Letter" (Exh. 1). P is told that he can "earn up to $1,220,700 in the next 50 days" with Respondents scheme because it has the "multiplying power of a 'chain letter'." The "Letter" contains a list of four named individuals ("A", "B", "C", and "D") under the heading "Co-Op Advertisers Ad Section." This section purports to advertise for sale four separate one-page reports for $3.00 each. Report No.s 1, 2, 3, and 4 are offered for sale by the individuals previously referred to as A, B, C, and C, respectively. The brochure instructs the prospective purchaser, P, to do the following:

(a) P orders the four reports from the four names listed as advertisers by sending each of them $3.00. In addition to the reports, P also obtains "the unconditional right to reproduce all four reports and sell them to other people, and participate in this novel 'Co-operative Advertising Program'."

(b) P is then instructed to substitute his name and address as the advertiser of Report No. 1. The names and addresses of A, B, and C are then moved down one position on the Nos. 2, 3, and 4, respectively. By this procedure, D's name is eliminated from the list. P is told not to worry about D because " h e was once in the number one position and has possibly received several hundreds of thousands of dollars by now."

(c) After substituting the names in accordance with the above instruction, P is told to have 500 copies printed.

(d) P then mails out 500 copies of the "Letter" with his name and address in the number one position.

3. The "Letter" then demonstrates how a participant can receive as much as $1,220,700. It notes that if P receives a 5% response from his mailing he will receive $75 for Report No. 1 (25 x $3.00). If each of his 25 purchasers distributed 500 letters, then 12,500 letters would have P's name and address in the No. 2 position selling Report No. 2 for $3.00. Again assuming a 5% response at each level, the "Letter" reveals the potential income for each stage of the scheme as the original participant's name moves through the four positions in the list of "Co-op Advertisers." Thus if a 5% response is attained at each level, and every participant follows all instructions, P is told that he would receive $1,220,700 from a total investment of about $230 for printing, postage, envelopes, and a mailing list. He is also informed that " e ven only a 1% return would bring you $2,340.00 . . . . " (Exh. 1).

4. As alleged in Count II of the Complaint, Respondents falsely represent that the names and addresses of "Co-op Advertisers" listed in the "Letter" are the true names and addresses of four different individuals who are participating in the program. ^1/ Respondents' brochure lists the names and addresses set forth in the caption of this proceeding as the "Co-op Advertisers" purportedly selling Report Nos. 1, 2, 3, and 4, respectively. As indicated in Finding of Fact No. 1, these names and addresses are "controlled" and used by Ronald L. Colier. They are not bonafide participants. This false representation is material because it makes it appear that the scheme has been successful for the individuals in the second, third, and fourth positions on the list. Since a reader would reasonably assume that their names have been moved down the list in accordance with the plan, it appears that they have received money from the sale of other reports. Thus the false representation tends to induce persons to participate in the scheme.

5. Respondents' program constitutes a lottery or scheme for the distribution of money by chance. Conclusions of Law

1. The first issue for consideration is whether Respondents violated 39 U.S.C. § 3005, which provides for a mail stop order when it is found that . . . any person is engaged in conducting . . . a lottery gift enterprise, or scheme for the distribution of money or of real or personal property, by lottery, chance, or drawing of any kind. . . .

The necessary elements of a "lottery" are the furnishing of a consideration, the offering of a prize, and the distribution of the prize by chance. Brooklyn Daily Eagle v. Voorhies, 181 F. 579, 581, (1910); Tenpen Sales Corporation, P.O.D. Docket No. 2/35 (May 10, 1961). A simple chain letter has been held to constitute a lottery. United States v. 21 Items of Mail, Nos. 79-114M, 79-115M, 79-123M, 79-124M (W.D. Pa., filed Oct. 14, 1980), aff'd mem., 649 F.2d 861 (3rd Cir. 1981). However, Respondent Colier appears to be arguing that his plan does not contain all the requisite elements of a lottery due to certain distinguishing characteristics.

2. An identical scheme was the subject of a previous Postal Service proceeding and was held to constitute a chain letter and lottery. Success Institute, P.S. Docket No. 6/72 (Initial Decision, May 23, 1978). For the reasons set forth below, I agree with that conclusion.

3. First, it is clear that the amount of money that a participant, "P", receives is dependent on chance. Like a chain letter, P's success depends upon the efforts of future buyers who continue to "advertise" for themselves and for P. Whether or not future buyers continue to participate and retain P's name on the list "depends upon contingencies largely beyond P's control." New v. Tribond Sales Corporation, 19 F.2d 671 at 674 (D.C. Cir. 1927); Zebelman v. United States, 339 F.2d 484 (10th Cir. 1964).

4. Respondents' brochure alleges that the scheme is legal "since each person sending $3.00 is actually purchasing information." thus Respondents are contending that no consideration is paid for the chance to win a prize. However, it is clear that in return for $3.00, the participant receives not only the one-page report but the right to reproduce the report and sell it to other people, and the opportunity to participate in Respondents' scheme. The fact that the one-page report may have had some intrinsic value does not alter this conclusion. The element of consideration is present even when the purchaser receives merchandise or other property in addition to his chance to win a prize. Horner v. United States, 147 U.S. 449 (1893); Tenpen Sales Corporation, supra. The same conclusion has been reached where the purchaser receives, in addition to the merchandise or other property, a "free" chance in a drawing. F.C.C. v. American Broadcasting Co., 347 U.S. 284, 290 n. 8 (1953). In any event, I must conclude and hold that at least a portion of the $3.00 is paid as consideration for the opportunity to participate in the scheme. Finally, this portion constitutes the distribution of a "prize;" to this extent, the payment is identical to that which is made to the person at the top of the list in a chain letter. See, United States v. 21 Items of Mail, supra.

5. In view of the foregoing, I hold that Respondents are engaged in conducting a lottery or scheme for the distribution of money by chance in violation of 39 U.S.C. § 3005.

6. With respect to the false representation issue raised in Count II of the Complaint, Respondents' brochure is to be considered as a whole and the meaning is to be determined in light of the probable impact of this material on a person of ordinary mind. Donaldson v. Read Magazine, 333 U. S. 178, 189 (1948); Peak Laboratories, Inc. v. U. S. Postal Serv., 556 F.2d 1387, 1389 (5th Cir. 1977). The impression of advertising on the ordinary mind is a question of law for the presiding officer to determine and testimony on interpretation is not required to make that determination. Vibra-Brush v. Schaffer, 152 F. Supp. 461 (S.D.N.Y. 1957). Express misrepresentations are not required. It is the net impression that the advertisement is likely to make upon individuals to whom it is directed that is important, and even if an advertisement is so worded as not to make an express representation, if it is artfully designed to mislead those responding to it, the false representation statute is applicable. G. J. Howard Co. v. Cassidy, 162 F. Supp. 568 (E.D.N.Y. 1958); see also, Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, 425 U.S. 748 (1976).

7. Applying the foregoing standards, I find that Respondents' promotional materials make the representation alleged in Count II of the Complaint. For the reasons set forth in Finding of Fact No. 4, this representation is materially false in fact. Complainant has established its case by a preponderance of the reliable and probative evidence of record. S.E.C. v. Savoy Industries, 587 F.2d 1149, 1168 (D.C. Cir. 1978).

8. Respondents are engaged in the conduct of a scheme for obtaining remittances of money through the mails by means of materially false representations in violation of 39 U.S.C. § 3005.

9. In view of the foregoing violations, the attached order should be issued against Respondents.

1/ Respondents admit that the brochure implicitly represents that they are bona fide participants (Ans. § 8). In addition, it expressly states that the fourth name was once in the No. 1 position (see Finding 2(b), supra).