In the Matter of the Complaint    	)  April 29, 1998          
Against                           	)
                               		)
MICHAEL S. IOANE                  	)
         and                      	)
BRICK FUNDING, INC.               	)
        d/b/a                     	)
BRICK PROCESSING CENTER           	)
42 West Campbell Avenue,          	)
Suite 202                         	)
Campbell, CA  950081111          	)
         and                      	)
FIRST AMENDMENT PUBLISHERS        	)
2059 Camden Avenue, Suite 242     	)
San Jose, CA 951242024           	)  P.S. Docket No. FR 96-203 

APPEARANCES FOR COMPLAINANT: 		Thomas V. Sottile, Esq.
					Wendy A. Hocking, Esq.
					Consumer Protection Law
					United States Postal Service
					Washington, DC 20260-1147

APPEARANCE FOR RESPONDENTS: 		Michael S. Ioane
					2059 Camden Avenue, Suite 242
					San Jose, CA 95124-2024

Respondents, Michael S. Ioane and Brick Funding, Inc., doing business as Brick Processing Center and First Amendment Publishers, have filed an appeal from an Initial Decision of an Administrative Law Judge which holds that Respondents are engaged in conducting a scheme for obtaining money through the mail by means of materially false representations in violation of 39 U.S.C. §3005. Complainant, the General Counsel of the United States Post Service, opposes the appeal.

Complainant initiated this proceeding on June 18, 1996 by filing a Complaint¹ alleging that Respondents were engaged in a scheme or device to obtain remittances through the mail for work-at-home employment opportunities that Respondents' fulfillment materials did not provide. Specifically, the Complaint alleged that Respondents made the following materially false representations in violation of 39 U.S.C. §3005:

a. opportunities for employment working at home are available through Respondents;

b. Respondents are offering work-at-home opportunities consisting of processing mail;

c. the work to be performed (i.e. envelopes to be processed) will be delivered to the consumer;

d. the work to be performed is for local companies;

e. opportunities offered by Respondents will generate a significant income for consumers;

f. the business entities appearing in Respondents' referral list are seeking and/or will pay consumers for work done in the home.

Respondents filed a timely answer denying the allegations of the Complaint. At a hearing before the Administrative Law Judge, Complainant introduced into evidence several documents as well as the testimony of five witnesses to support its position. Respondents were duly notified of the time and place of the hearing, but did not attend² .

Following the filing of Complainant's proposed findings of fact and conclusions of law, the Administrative Law Judge issued an Initial Decision holding that Respondents make all of the representations alleged in the Complaint and that those representations are materially false. Thereafter, Respondents filed Exceptions to the Initial Decision.

During the pendency of the administrative proceeding, Respondents filed suit in the United States District Court for the Northern District of California alleging constitutional violations by a postal inspector and requesting removal of the proceeding to the District Court due to bias on the part of the Postal Service. The District Court dismissed Respondents' suit because Respondents had failed to exhaust their administrative remedies. Respondents appealed the dismissal to the Court of Appeals for the Ninth Circuit, which held that Respondents had failed to prove any administrative bias that would relieve them of the requirement to exhaust their administrative remedies.³

Respondents' exceptions do not address specific findings of fact or conclusions of law in the Initial Decision or claim that the Initial Decision is erroneous as a matter of fact or law.⁴ Instead, Respondents contend that the doctrines of primary jurisdiction and exhaustion of administrative remedies require that this matter be removed to a federal district court due to the bias of Postal Service officials. Neither doctrine provides a basis for granting Respondents the relief they are seeking. The exhaustion argument has already been addressed by the Court of Appeals and decided against Respondents. The doctrine of primary jurisdiction only applies when a claim is properly before a court, and the court determines that the parties should be given a reasonable opportunity to seek an administrative ruling on an issue within the special competence of an administrative agency.⁵ Since this case is already pending before this administrative agency and Respondents have had a reasonable opportunity to obtain an administrative ruling, the doctrine of primary jurisdiction does not apply.

The District Court and Court of Appeals have both determined that it was proper to adjudicate this matter in a Postal Service administrative proceeding. The administrative adjudication has taken place and the evidence establishes that Respondents are in violation of 39 U.S.C. §3005. Therefore, there is no basis for granting Respondents' appeal.⁶

Accordingly, the appeal is denied, the Initial Decision is affirmed and the orders recommended by the Administrative Law Judge and sought by Complainant in the Second Amended Complaint⁷ are issued herewith.

					James A. Cohen
					Judicial Officer

2. Respondents did not appear at the hearing even though they refused to have this matter decided on the record and the oral hearing was held at their request at a location reasonably convenient to Respondents’ place of business.

3. On February 19, 1997, the District Court also denied Respondents’ ex parte motion to lift the preliminary injunction issued on December 20, 1996 and their request for dismissal of the administrative case filed by the Postal Service.

4. See 39 C.F.R. §952.25(e)(3). Although Respondents do assert that the Initial Decision intentionally "misstates the facts and mischaracterizes the evidence," no support for this contention has been presented. Moreover, no such misstatements or mischaracterizations are apparent from a review of the record.

5. Reiter v. Cooper, 507 U.S. 258, 268-69 (1993).

6. On March 5, 1998, Respondent Ioane filed a copy of his Petition for Bankruptcy with the Judicial Officer. Thereafter, the parties were provided an opportunity to address the question of the effect of the petition for bankruptcy on the pending appeal. Based on a review of the parties’ submissions and the pertinent bankruptcy law, it does not appear that the automatic stay provisions of 11 U.S.C. §362 (a) preclude further action in this proceeding. See 11 U.S.C. §362 (b)(4).

7. Although the orders sought in the Second Amended Complaint have been issued with this decision, the return portion of the False Representation Order has been stayed (see Supplement A to False Representation Order No. 98-24) to assure that no irreparable harm accrues to the bankruptcy estate during the pendency of the bankruptcy proceeding.

CEASE AND DESIST ORDER NO. 4088   	April 29, 1998

		RE: MICHAEL S. IOANE and
		    BRICK FUNDING, INC. d/b/a
		    BRICK PROCESSING CENTER and
		    FIRST AMENDMENT PUBLISHERS
		    P. S. Docket No. FR 96-203

I. Authority and Scope:

This Order is issued pursuant to 39 U.S.C. §3005(a)(3) and extends to any use of promotional materials or other activities in which any person identified in Paragraph II, individually or through any corporate or other device, or under any name or names, seeks the remittance of money or property through the mail, directly or indirectly.

II. Persons Covered:

This Order binds MICHAEL S. IOANE, individually and doing business as BRICK FUNDING, INC., BRICK PROCESSING CENTER, or FIRST AMENDMENT PUBLISHERS, and anyone who would be bound by an injunction issued against any of them pursuant to Federal Rule of Civil Procedure 65 (hereinafter collectively referred to as "Respondents").

III. Conduct Prohibited:

Respondents are ordered to cease and desist immediately from falsely representing, directly or indirectly, in substance and effect, whether by affirmative statements, implications or omissions that:

a. opportunities for employment working at home are available through Respondents;

b. Respondents are offering work-at-home opportunities consisting of processing mail;

c. the work to be performed (i.e. envelopes to be processed) will be delivered to the consumer;

d. the work to be performed is for local companies;

e. opportunities offered by the Respondents will generate a significant income to consumers;

f. the business entities appearing in Respondents' referral list are seeking and/or will pay consumers for work done in the home.

					 James A. Cohen
					 Judicial Officer

April 29, 1998

FALSE REPRESENTATION ORDER NO. 98-24 (SUPPLEMENT A)

TO THE POSTMASTERS AT: 		SAN JOSE, CA  95124-9998
				CAMPBELL, CA  95008-9998
  
	    RE: MICHAEL S. IOANE and
		BRICK FUNDING, INC. d/b/a
		BRICK PROCESSING CENTER and
		FIRST AMENDMENT PUBLISHERS
		P. S. Docket No. FR 96-203

 Mail addressed to Brick Processing Center and/or First Amendment
Publishers is to detained in accordance with the terms of False
Representation Order No. 98-24.  However, that portion of False
Representation Order No. 98-24, requiring return of mail to senders
and advice to remitters of postal money orders about refunds is
hereby stayed temporarily, pending further order of the Judicial
Officer.
					James A. Cohen
					Judicial Officer