In the Matter of the Complaint Against THE NATIONAL GOLD MINT, 3222 "M" Street, N.W., Washington, DC 20007-3621, NATIONAL COMMEMORATIVE MINT, INC., 150 Central Park South, New York, NY l00l9-1566, FULFILLMENT CENTER, INC., 17 Mifflin Avenue, Havertown, PA 19083-4617, DAVID MARGULIES, 150 Central Park South, New York, NY l00l9-l566, FRANCIS MARGULIES, 17 Mifflin Avenue, Havertown, PA l9083-46l7, TOM BRUSH, 14 Fordham Road, Alston, MA 02l34-3006 P.S. Docket No. 22/165 September 30, 1987 James D. Finn, Jr. Associate Judicial Officer APPEARANCE FOR COMPLAINANT: Sandra C. McFeeley, Esq. Consumer Protection Division Law Department United States Postal Service Washington, DC 20260-lll2 APPEARANCES FOR RESPONDENTS: Basil J. Mezines, Esq. Jacob A. Stein, Esq. Helen Randolph, Esq. Stein, Mitchell & Mezines l800 M Street, NW, Suite #l060N Washington, DC 20036-5834
Respondents have filed a Motion For Reconsideration of the Postal Service Decision dated May l, l987, and a Motion For Revocation or Modification of the False Representation Order and Cease and Desist Order which accompanied the Decision. The return portion of the False Representation Order (No. 87-36) has been temporarily stayed by the issuance of Supplement A to the Order pending review of the motions. Complainant opposes the motions. For the reasons set forth below, Respondents' motions are denied.
Respondents first argue that False Representation Order No. 87-36 is unnecessarily broad. In this regard they contend that Respondents Francis Margulies and Fulfillment Center, Inc. should be excluded from the coverage of the Order and that the Order should be limited to apply only to the particular medals involved in this proceeding. Respondents also argue that the Cease and Desist Order issued with the Decision is impermissibly broad and ambiguous and should be modified.
Respondents' argument pertaining to the exclusion of Francis Margulies and Fulfillment Center, Inc. from the Order is by their own admission a reiteration of an argument previously made in their Brief On Appeal. The argument was considered and rejected in the Decision. Therein it was stated at page 25:
"Both Fulfillment Center, Inc. and Francis Margulies were active participants with significant involvement in the mail order scheme. Fulfillment Center is engaged almost exclusively in fulfilling mail orders for businesses operated by David and Francis Margulies. Francis Margulies is the manager of Fulfillment Center (Stipulation No. 2). Their participation in the scheme makes it necessary that they be included in the Cease and Desist Order. The Administrative Law Judge correctly discussed the law on this issue ...."
Respondents have not identified any new factual or legal basis in their Motion For Reconsideration which is supportive of their position on this argument.
Respondents' argument that the Order should be limited to the particular gold pieces involved in these proceedings is likewise rejected. The Order properly described Respondents' false representation scheme as one involving the sale of medals. While four of the false representations, those described in paragraphs ll(c) through (f) of the Amended Complaint, specifically pertain to Respondents' Statue of Liberty-American Eagle Gold Piece, the other two representations are not so limited. The false representations described by paragraphs 11(a) and (b) pertain to Respondent National Gold Mint, not the particular offering. In fact, paragraph ll(b) pertains as well to the broad category of coins or medals. Thus, in formulating a written description of Respondents' false representation scheme the use of the more inclusive term "medal" in the Order was proper, rather than the more restrictive "Statue of Liberty-American Eagle Gold Piece."
Additionally, the false representation statute allows the issuance of mail stop orders to prevent future injury to the public by denying use of mails to aid a fraudulent scheme. Donaldson v. Read Magazine , 333 U.S. l78 (l948). It applies to all mail sent to the named Respondents unless it clearly has nothing to do with the scheme that is covered. Danco , P.S. Docket No. 5/l5 (P.S.D. April l5, l977). To restrict its application solely to the product described in the advertisements placed in evidence could defeat the statutory purpose by enabling Respondents to continue the scheme by slightly modifying or redesignating its product. Cf . Danco, supra .
In arguing that the Cease and Desist Order is impermissibly broad and ambiguous Respondents again contend that Fulfillment Center, Inc. and Francis Margulies should be excluded from coverage. Their argument is rejected for the reasons previously discussed.
Respondents also allege the specific provisions of the Order are not clear and precise and deprive Respondent, National Gold Mint, the use of its trade name. The Order, according to Respondents, prohibits the use of the word "Mint" in future advertisements. Respondents thus request guidance as to how to comply with the Order. The contents of the Order have been carefully considered. In rejecting Respondents' previous contentions contained in their Brief On Appeal as to alleged infirmities of the Order, the Postal Service Decision states at page 26, "[t]he proposed Order is neither ambiguous, incomprehensible, nor beyond the authority of the Postal Service to issue." That holding is affirmed. Respondents misconceive the Order's prohibition regarding the use of the word "Mint" in future advertisements. Its use is not specifically prohibited. What is prohibited is any representation by Respondents that they possess or control a place where coins, medals, or similar goods are made, if in fact they do not have such possession or control. Respondents' request for guidance on this matter is denied. The terms of the Order are clear. Moreover, the Judicial Officer does not issue advisory opinions or review and give approval to proposed advertisements. Mid-Am. Marketing, Inc ., P.S. Docket No. 24/l2 (P.S.D. On Recon ., May 7, l987).
Respondents' other major argument is that the Postal Service Decision is not supported by the evidence of record. Respondents contend that Complainant did not prove by a preponderance of evidence that Respondents made the representations alleged in the amended Complaint, or that the alleged representations were material.
Thus, they argue no representations were made that: National Gold Mint is an agency of or affiliated with the United States Government; their product was minted in Washington, DC; the product's issuance was limited by the Government; the issuance was the same as the Government's Statue of Liberty coin; the issuance was offered for sale by the Government; the pieces offered were solid gold. Their arguments in support of this position are with one exception identical to arguments contained in their Brief On Appeal and were previously considered and addressed in the Decision. They have advanced no new legal theories and rely on no facts overlooked or not considered in the Decision. Their main, but not only, objection pertains to the conclusion that they falsely represented National Gold Mint's Government affiliation, since that representation forms the foundation for, or at least strongly supports, the conclusions that most of their other representations (except the solid gold one) were false. Respondents rely heavily on the existence of their advertisements' small disclaimer. They also contend the Decision placed undue reliance both on certain words contained in the advertisements and on the similarities of their offering to United States coins. Their arguments on these points are not persuasive. The Decision correctly held that the disclaimer was too inconspicuous to be effective, that key words in the advertisements such as "National", "Mint", and "Official" indeed contributed to the false representation, and that the similarity between Respondents' gold piece and United States coins reinforced the false impression created by the advertisements. Respondents' remaining arguments, previously presented in their Brief On Appeal, have again been considered and again are rejected.
The only new contention presented by Respondents pertains to the false representation that their product was solid gold. Respondents contend that the Decision erred in considering and comparing their price offering ($328 or $330) with the world gold price for a troy ounce ($323 to $327.75). Their contention is without merit. The advertisement described the gold piece's weight as one troy ounce. It also contained information as to the world price for one troy ounce. The world price and Respondents' offered price were similar, thus contributing to the ultimate conclusion that Respondents represented its piece was solid gold. Consideration of these matters thus was quite relevant and proper.
In regard to the issue of the materiality of their represen- tations, Respondents have presented no new arguments and only reiterate those made in their Brief On Appeal. They contend generally that Complainant did not carry its burden of proof on the materiality issue since no witnesses from the public testified as to the general public's perception of Respondents' advertisements. They additionally contend the conclusions in the Decision regarding materiality lacked factual support.
Respondents' position as to the necessity for Complainant to present testimony by members of the public in order to prove the materiality of their representations was addressed specifically at page 24 of the Decision. Their argument was rejected then and is again rejected for the same reasons stated therein. As to the other issue, the alleged lack of factual basis to support the conclusions of materiality, each representation was considered in light of the applicable legal standard for materiality ( Chaachou v. American Central Ins. Co ., 24l F.2d 889, 893 (5th Cir. l957)), and each was found to be material. See P.S.D. at p. l6.
Since the Respondents have not demonstrated any error of fact or law in the Postal Service Decision, it is concluded that the Motion For Reconsideration should be denied. Respondents' Motion For Revocation or Modification of the False Representation Order and Cease and Desist Order is likewise denied. Accordingly, Supplement A to False Representation Order No. 87-36 is hereby revoked.