In the Matter of the Complaint ) September 19, 1996
Against )
)
JAMES LUNSFORD, et al. )
at )
309 N. Kings Court )
Slidell, LA 70458-1027, etc. ) P.S. Docket No. FR 96-117
APPEARANCE FOR COMPLAINANT: Rodney T. Gould, Esq.
Civil Practice Section
United States Postal Service
Washington, DC 20260-1127
APPEARANCE FOR RESPONDENT: Ralph S. Whalen, Jr., Esq.
3170 Energy Centre
1100 Poydras Street
New Orleans, LA 70163-1100
On June 6, 1996, the General Counsel of the United States Postal Service (Complainant) filed a Petition(1) alleging that Respondent, James Lunsford, has
breached the terms of an Agreement Containing Consent Order to Cease and Desist (Agreement) executed on March 20, 1996. According to Complainant, Respondent has resumed seeking remittances through the mail, using false or misleading representations, which he agreed to permanently discontinue.
On June 7, 1996, an Interim Detention Order, as authorized by paragraph 8 of the Agreement, was issued directing the detention of mail addressed to the name and address to which Respondent currently seeks remittances. The Interim Detention Order granted Respondent ten days to file a Reply to the Petition. On June 24, 1996, Respondent filed a timely Reply, in which he denies the allegations of the Petition and requests that the Petition be dismissed.
FINDINGS OF FACT
1. Complainant originally initiated this proceeding by filing a Complaint alleging that Respondent, doing business as National Mailing Corp., Commercial Mail Corp., CMC, and Corporate Mailers, was conducting a scheme to obtain money or property through the mail by means of materially false representations within the meaning of 39 U.S.C. §3005 (1988 and Supp. V 1993). Specifically, Complainant alleged that Respondent distributed solicitations containing false representations in connection with a direct mail work-at-home envelope stuffing scheme.
2. On March 20, 1996, Respondent entered into the Agreement which Complainant now contends Respondent has breached. In paragraph 2 of the Agreement, Respondent agreed that "[t]he promotional materials and activities attached to or referred to in the [C]omplaint [were] employed by Respondent in seeking the remittance of money through the United States Mail and may reasonably be construed as making the representations alleged in the [C]omplaint." Respondent agreed in paragraph 3 of the Agreement that "[t]he use of the promotional activities and representations challenged in the complaint for obtaining money or property through the mails have been and will be permanently discontinued and abandoned, and will not hereafter be resumed by any means, directly or indirectly, under any name or names, or through any corporate or other device."
3. In paragraph 6 of the Agreement, Respondent consented to the issuance of the Cease and Desist Order attached to the Complaint, which was issued as Cease and Desist Order No. 3933 on April 8, 1996. The Cease and Desist Order directed Respondent "to cease and desist from falsely representing . . . that:
"[a] Persons sending the required remittance through the mails to
Respondent will typically earn large sums of money in a relatively short period
of time by stuffing envelopes, e.g., $2,000 per week.
[b] The initial remittance required to enter Respondent's program is the total
amount of money to be expended for successful participation;
[c] The amount of income earned by the participant is limited only by the time
and effort invested stuffing envelopes; and
[d] The work to be performed by the participant consists primarily of stuffing
envelopes."
4. Subsequent to the execution of the Agreement and the issuance of the Cease and Desist Order, Respondent, using the name Continental Mailers, began distributing solicitations seeking remittances through the mail in connection with a new work-at-home envelope stuffing promotion. This solicitation and its fulfillment are virtually identical in format and text to the solicitation and fulfillment which Respondent agreed to discontinue using.(2)
5. Respondent's current solicitation, like the previous solicitation, is a one page, two-sided, 8 ½ x 11" circular. While the original solicitation contains the following headline, "EARN $2,000.00 WEEKLY STUFFING ENVELOPES AT HOME!!" in bold capital letters, the new solicitation contains the same heading in somewhat smaller bold capital letters, but with a reduced dollar figure of $1,000.00. Under the headline of the current solicitation, readers are told in bold print that they can receive ". . . $2.00 For Each Envelope You Stuff . . . Pay Checks Mailed Out On Tuesdays So That You Receive Them By Friday . . . FREE MATERIALS . . . START NOW, AND LET 1996 BE YOUR YEAR FOR EARNING LOTS OF MONEY!"(3) Further, while both the current and original solicitation inform recipients of the need to "secure and stuff" envelopes, the current solicitation contains more references to "secure and stuff" than the previous solicitation, which for the most part only refers to stuffing envelopes.
6. Both solicitations inform recipients that "[a]ll envelopes will have the postage stamp already affixed to it. That means you will not have to address any envelopes or buy any postage stamps for those envelopes. Just secure the envelopes per our instructions and send them to us for payment."(4) The current and previous solicitation also similarly direct the recipient to "[p]icture . . . stuffing 250 envelopes and making $500.00. Or stuffing 500 envelopes making $1,000.00. If you are really ambitious and motivated, you could very well make more than $1,000.00 per week. It is all up to YOU."(5) On the reverse of both the current and previous solicitations is a detachable "HOME WORKERS REGISTRATION FORM," which requests the recipient to remit a refundable $37.00, or $39.00 for rushed service.
7. Recipients of both the current and former solicitation who paid the required fee received a nearly identical eight page "Two Dollars Per Envelope Secured, Instruction Manual." The primary difference between the two manuals is that the current manual directs recipients to solicit "entrepreneurs" to order a "Home Income Opportunity Digest" while the original manual directed recipients to solicit "entrepreneurs" to order wholesale directories and a letter book.(6)
DISCUSSION
Respondent contends that he made significant changes to his promotional materials and is now engaged in a legitimate business enterprise. Respondent further contends that the changes were made on the advice of counsel and that he was also advised by a former Assistant United States Attorney, as well as Postal Inspectors, that the redrafted solicitation complied with the terms of the Agreement. Thus, Respondent argues he has made every possible effort to assure that he is in compliance with the law and the terms of the Agreement. Finally, Respondent argues that he cannot be found to have violated the terms of the Agreement because the Judicial Officer previously found that his solicitation contained no false representations.(7)
While Respondent may have acted on the advice of counsel and others in modifying his solicitation and fulfillment, the Agreement provides that the Judicial Officer is to determine whether a breach has occurred when a petition is filed by Complainant. A review of the solicitation and fulfillment establishes that Respondent has breached the terms of the Agreement in the manner alleged in the Petition.
Although Respondent has made changes to his solicitation, the minor changes to the text have not altered the overall impression conveyed to the ordinary reader(8) that "[a] Persons sending the required remittance through the mails to Respondent will typically earn large sums of money in a relatively short period of time by stuffing envelopes, e.g., $2,000 per week. [b] The initial remittance required to enter Respondent's program is the total amount of money to be expended for successful participation; [c] The amount of income earned by the participant is limited only by the time and effort invested stuffing envelopes; and [d] The work to be performed by the participant consists primarily of stuffing envelopes."(9) It is equally true that the fulfillment manual currently furnished by Respondent contains only minor changes to the program for which Respondent currently seeks remittances. With only minor changes to the solicitation and the fulfillment, it is clear that Respondent has resumed making the representations prohibited by both the Agreement and the Cease and Desist Order and that those representations are materially false.Conclusion
The record establishes that Respondent has breached the terms of the
Agreement in the manner alleged in the Petition. Accordingly, pursuant to
paragraph 8 of the Agreement, a false representation order as described in 39
U.S.C. §3005(a) is issued herewith.
James A. Cohen Judicial Officer
2. Compare, Petition (June 6, 1996) Exhibit 5 of Exhibit C, Exhibits AA-BB, with Complaint, Exhibits 1-3.
3. Petition (June 6, 1995), Exhibit 5 of Exhibit C; See, Complaint Exhibits 1-2.
4. Id.
5. Id.
6. Compare Petition, (June 6, 1996), Exhibits AA-BB, with Complaint, Exhibit 3.
7. Complainant first filed a breach petition on May 15, 1996, which was dismissed because Complainant had not included the fulfillment to the current solicitation with its Petition and therefore, it could not be determined whether the promotion was the same as that which Respondent had agreed to discontinue. However, Complainant's June 6, 1996 Petition included the fulfillment to the current solicitation and thus a falsity determination can be made.
8. Donaldson v. Read Magazine, Inc., 333 U.S. 178 (1948); Borg-Johnson Electronics v. Christenberry, 169 F. Supp. 746 (S.D.N.Y. 1959); Virbra Brush Corp. v. Schaffer, 152 F. Supp. 461 (S.D.N.Y. 1957), rev'd on other grounds, 256 F.2d 681 (2d Cir. 1958); Charles Smith, et al., P.S. Docket No. 36/129 at 10 (P.S.D. Dec. 9, 1993); Mid-American Marketing, Inc., P.S. Docket No. 24/12 at 7 (P.S.D. Jan. 5, 1987), aff'd, (May 7, 1987).
9. See, FOF 5 & 6.