In the Matter of the Complaint Against SAMMY Y. IP at 5628 Montezuma Road San Diego, CA 92ll5-2828 MARKETING INTERNATIONAL at P.O. Box 0l97 San Diego, CA 92ll5-0870 COMMISSION MAILING DIVISION at P. O. Box 0l97 San Diego, CA 92ll5-0870 COMMISSION MAILING at P. O.Box l5967 San Diego, CA 92ll5-0790 MARKETING INTERNATIONAL COMMISSION MAILING DIVISION at P. O. Box l5967 San Diego, CA 92ll5-0790 MARKETING INTERNATIONAL at P. O. Box l5967 San Diego, CA 92ll5-0790 NATIONAL DIVISION at P. O. Box l5877 San Diego, CA 92ll5-0780 DEPT. A NATIONAL DIVISION at P. O. Box l5877 San Diego, CA 92ll5-0780 P.S. Docket No. 20/65; 11/29/85 James A. Cohen APPEARANCES FOR COMPLAINANT: Nan M. Kalthoff, Esq. James A. Harbin, Esq. Consumer Protection Division Law Department United States Postal Service Washington, DC 20260-1112 APPEARANCE FOR RESPONDENT: Sammy Y. Ip 5628 Montezuma Road San Diego, CA 92ll5-2828
Respondent, Sammy Y. Ip, has appealed from an Initial Decision of an Administrative Law Judge which holds that Respondent, using the names and addresses in the caption of this proceeding, is engaged in conducting a scheme or device to obtain money or property through the mail by means of materially false representations in violation of 39 U.S.C. § 3005.
The Consumer Protection Division, Law Department, United States Postal Service (Complainant), initiated this proceeding by filing a Complaint alleging that Respondent is engaged in conducting a scheme or device to obtain money or property through the mail by means of materially false representations relating to a work-at-home program stuffing envelopes. The Complaint, as amended, alleges that Respondent uses a two-part promotional scheme involving classified advertisements and direct mail circulars to obtain money or property through the mail. Specifically, it is alleged in the Amended Complaint that Respondent's classified advertisements falsely represent directly or indirectly, in substance and effect, whether by affirmative statements, implications or omissions, that participants in the program:
"4. a. Will earn $360 a week or more; and
b. The money earned is for work consisting primarily of mailing circulars." It is further alleged in the Complaint that circulars distributed by Respondent to those responding to the classified advertisements, either singularly or in conjunction with the classified advertisements, falsely represent directly or indirectly, in substance and effect, whether by affirmative statements, implication, or omissions, that participants:
"7. a. Will be paid for work consisting primarily of stuffing circulars into pre-addressed stamped envelopes and mailing them;
b. Will typically make hundreds of dollars weekly in net earnings;
c. Will receive an income limited only by the amount of time spent stuffing and mailing circulars;
d. Will be paid by the CMA and/or CM/NA for their at-home work;
e. Will be paid for each circular stuffed and mailed; and
f. Will receive from the CMA and/or CM/NA any amount of envelopes and circulars that they want."
In a timely-filed Answer, Respondent admitted making the representation alleged in paragraph 4b of the Complaint, denied making the other alleged misrepresentations and denied that any of the alleged representations were materially false. At a hearing before an Administrative Law Judge, Complainant presented the testimony of Lynn Bautista and John Neff, Postal Inspectors, and Mr. Roger Lourie, an expert in direct response and mail order marketing. Mr. Ip testified on his own behalf. Both parties presented documentary evidence. Following the filing of proposed findings of fact and conclusions of law, the Administrative Law Judge issued an Initial Decision in which he found that Respondent makes the representations alleged in the Complaint and that those representations are materially false.
Respondent has filed eight exceptions to the Initial Decision. In Exceptions 2 - 5, Respondent argues that the Administrative Law Judge erred in interpreting Respondent's promotional materials as making the representations alleged in the Complaint. Respondent relies on dictionary definitions, the absence of express promises, and the advice that the participant will be engaging in his own mail order business to support his contention that he does not falsely represent his program. While the language referred to by Respondent might very well lead the wary and sophisticated reader to understand the true nature of the program, the promotional materials must nevertheless be considered as a whole and in the light of their probable impact on a person of ordinary mind. Donaldson v. Read Magazine, 333 U.S. l78 (l948); Peak Laboratories, Inc. v. United States Postal Service, 556 F.2d 1387 (5th Cir. l977). A review of Respondent's promotional material supports the Administrative Law Judge's finding that persons of ordinary mind would most probably inter pret the advertisements as making the representations alleged in the Complaint. Thus, there is no merit to Respondent's Exceptions 2 - 5. 1/
In Exceptions l and 7, Respondent takes issue with Finding of Fact 2 and Conclusion of Law 9 in which the Administrative Law Judge found the names and addresses and stamped return envelopes received by Respondent in response to the classified advertisements to constitute property. Testimony from Complainant's expert established the property value of the responses to the classified advertisements (Tr. 92). Thus, the record supports the Administrative Law Judge's finding and conclusion. Additionally, the representations made in Respondent's classified advertisements and the responses thereto are part of the overall scheme which ultimately results in participants remitting money to Respondent. Kurzon v. United States Postal Service, 539 F.2d 788, 795 (lst Cir. l976). Accordingly, Respondent's Exceptions l and 7 are without merit.
In Exception 6, Respondent argues that statistical evidence on the average income of persons engaged in mail order businesses (RX l, 2) was improperly found to have little probative value. This exception is without merit, since Respondent has established no correlation between the statistics and the earnings of persons participating in Respondent's program (Tr. 169-73). Moreover, the testimony of Complainant's expert establishes that participants in Respondent's program are unlikely to achieve the results represented (Tr. 60-75). Thus, the Administrative Law Judge did not err in finding that Respondent's statistical evidence had little probative value with respect to earnings which could be achieved by following Respondent's program.
Finally, Respondent's Exception 8 takes issue with the Administrative Law Judge's reliance on agency precedent in reaching the conclusion that Respondent should be precluded from receiving self-addressed stamped envelopes in response to his classified advertisements. The Administrative Law Judge relied on American Association of Home Income Programs or AAHIP, P.S. Docket No. 8/19 (P.S.D. July 29, l980), a final agency decision in which it was held that stamped, self-addressed envelopes should be withheld from the promoter of a scheme violating 39 U.S.C. § 3005. It was clearly appropriate for the Administrative Law Judge to have followed that agency precedent in this case. See Greyhound Corp. v. ICC, 55l F.2d 4l4 (D.C. Cir. l977) and cases cited therein at p. 416. Moreover, even if the issue of the nature of stamped, self-addressed envelopes was raised as a matter of first impression in this case, the same result would be reached. Accordingly, Respondent's Exception 8 is denied.
Respondent also contends that the issuance of the orders authorized by 39 U.S.C. § 3005 would violate his constitutional rights. It is well established that the issuance of orders based on a finding of a violation of § 3005 do not violate any constitutional rights. 2/ See United States Postal Service v. Athena Products, Ltd., 654 F.2d 362 (5th Cir. 1981). A violation of the statute has been found in this case. Thus, this contention is without merit.
After consideration of the entire record, it is concluded that the Administrative Law Judge correctly found that Respondent is engaged in a scheme to obtain money or property through the mail by means of materially false representations. Accordingly, the orders sought in the Complaint and authorized by 39 U.S.C. § 3005 are issued herewith.
James A. Cohen Judicial Officer