In the Matter of the Complaint Against

PROJECT PRAYER
336 Haddon Avenue
at Westmont, New Jersey 08108

P.S. Docket No. 8/68;

Cohen, James A.

APPEARANCE FOR COMPLAINANT:
SandraC. McFeeley, Esq.
Christopher T. Klepac, Esq.
Consumer Protection Division
Law Department
United States Postal Service
Washington, D.C. 20260

APPEARANCE FOR RESPONDENT:
James Buckley Ostmann, Esq.
Ogden and Coyle
1820 Jefferson Place, N.W.
Washington, DC 20036

POSTAL SERVICE DECISION

Complainant has appealed from an Initial Decision of an Administrative Law Judge, which holds that Respondent was not offered the opportunity to confront and cross-examine its accusers and therefore the hearing held on this matter was defective and violative of Respondent's due process rights.

BACKGROUND

On May 2, 1980, the Consumer Protection Division, Law Department, United States Postal Service, filed a complaint alleging that Respondent, Project Prayer, 336 Haddon Avenue, Westmont, New Jersey, is engaged in a scheme or device for obtaining money or property through the mails by means of false representations in violation of 39 U.S.C. § 3005. Specifically, in paragraphs I, II, III and IV, the Complaint alleges:

I

Attention is attracted to said schemes by means of telephone solicitations by Respondent, followed by letters and statements of payment due sent by Respondent, all of which are calculated to induce the recipients to remit money or property through the mails.

II

Attached hereto as Exhibit 1 is a copy of a recent solicitation letter used by Respondent which is typical of those referred to in paragraph I. In addition, a copy of an invoice sent out by Respondent is attached as Exhibit 2.

III

By means of such materials and others similar thereto, including personal telephone calls to victims, Respondent represents, directly or indirectly, in substance and effect, whether by affirmative statements, omissions or implication that

(a) Project Prayer of Westmont, New Jersey is affiliated with Project Prayer of Las Vegas, Nevada, a national organization chaired by entertainer Pat Boone;

(b) Project Prayer of Westmont, New Jersey is a non-profit organization which seeks the return of voluntary prayer to the classroom by means of securing passage of appropriate federal legislation;

(c) Money received as a result of solicitations by Project Prayer of New Jersey will be used to lobby for the return of voluntary prayer to the classroom;

(d) Respondent is John Williams of the Ann Arbor, Michigan YMCA.

The aforesaid representations are false as a matter of fact.

In its Answer Respondent denied all of the allegations of the Complaint. Thereafter, a hearing was held before an Administrative Law Judge at which Complainant called as witness Timothy J. Mahoney, a Postal Inspector, and Mr. Randall R. Rader, Legislative Director for Representative Philip M. Crane. Respondent presented no witnesses, although one exhibit was offered and received into evidence. On the basis of the testimony received and the exhibits in the record, the presiding Administrative Law Judge concluded that Respondent had not been afforded the opportunity to confront and cross-examine its accusers and therefore the hearing was defective and Respondent was denied due process (I.D. p. 27). Accordingly, the Administrative Law Judge dismissed the Complaint.

COMPLAINANT'S EXCEPTIONS

Complainant has stated four exceptions to the Findings of Fact and Conclusions of Law contained in the Initial Decision. Each exception is stated in terms of the finding or conclusion with which Complainant disagrees. These exceptions are discussed below.

EXCEPTION I
RESPONDENT WAS DENIED DUE PROCESS BY NOT
BEING AFFORDED THE OPPORTUNITY TO CONFRONT AND
CROSS-EXAMINE HIS ACCUSERS

Complainant argues that due process does not require confrontation and cross-examination under the circumstances in this case. Respondent counters by arguing that where, as here, the case is built upon hearsay, the hearing is fatally defective. Both arguments address the reliability of hearsay evidence and the merits of deciding a case on the basis of hearsay alone. While the Administrative Law Judge couched his holding in the Initial Decision in terms of an "improper and totally defective" hearing, the defects on which his holding are based are in essence evidentiary in nature and principally relate to the testimony of Inspector Mahoney and the absence of testimony of persons Inspector Mahoney interviewed.

A portion of the testimony of Inspector Mahoney was based on statements made to him by a Mr. Abrams. Those statements identified Mr.Abrams as the operator of Project Prayer and established its address as that stated in the caption of the proceeding (Tr. 25-26). Mr. Abrams admitted to the Inspector that in the past he had solicited contributions (Tr. 71). He represented that Project Prayer existed to send petitions to congressmen (Tr. 63-64, 71) and was operated voluntarily and apart from his business (Tr. 61).

The testimony of Inspector Mahoney regarding his conversation with Mr. Abrams was properly admitted into evidence inasmuch as such evidence is not hearsay nor inadmissable under any other rule of evidence. Under § 801(d)(2) of the Federal Rules of Evidence^1/ admissions by a party opponent are not hearsay. See United States v. Matlock, 415 U.S. 164, 172 (1974). Section 801(d)(2) codified what was the well established rule of evidence prior to adoption of the Federal Rules:

"...it is too obvious for comment that the party whose declarations are offered against him is in no position to object on the score of lack of confrontation or lack of opportunity for cross-examination. It seems quite as clear that he ought not be heard to complain that he was not under oath. Morgan, Admissions As An Exception To The Hearsay Rule, 30 YALE L.J. 355 (1921)."

Thus, the testimony of Inspector Mahoney reciting statements made to him by Mr. Abrams was properly admitted into the record.

Other testimony was also properly admitted into the record and did not deprive Respondent of the opportunity to confront and cross-examine adverse witnesses. Inspector Mahoney investigated and concluded that Project Prayer was not registered as a charity or corporation in New Jersey, or as a lobbyist before the House of Representatives. This was corroborated by Mr. Abrams admission that he did not realize that he had to be registered (Tr. 22-24, 60, 122-23). Mr. Rader, who, as Congressman Crane's Legislative Director, is actively involved in school prayer legislation, testified that he had not heard of Project Prayer and that he most likely would have if it were active in matters affecting school prayer legislation (Tr. 30-32). With respect to the foregoing matters, Respondent did "confront" and in fact cross-examine these witnesses.

Respondent also was afforded full opportunity to examine Inspector Mahoney with regard to telephone conversations he had with various parties concerning their contacts with Project Prayer. While these conversations are hearsay, they are corroborated by the exhibits, in evidence (CX-1-CX-6). Cf. Willapoint Oysters, Inc. v. Ewing, 174 F.2d 676, 690 (9th Cir. 1949) cited by Respondent (Appeal Brief, p. 4).

Even if the evidence relied upon had been hearsay it has been held on numerous occasions that hearsay evidence may be admissible in administrative proceedings, see e.g., Morelli v. United States, 116 Ct. Cl. 44 (1963), Jacobowitz v. United States, 424 F.2d 555 (Ct. Cl. 1970); Reil v. United States, 456 F.2d 777 (Ct. Cl. 1972); and can constitute substantial evidence if sufficiently convincing to a reasonable mind. McKay v. United States, 500 F.2d 525 (Ct. Cl. 1974).

Accordingly, the hearing was not fatally defective and Respondent was not denied due process of law. Therefore, Exception No. 1 is sustained.

EXCEPTION 2
COMPLAINANT DID NOT SUPPORT ITS COMPLAINT
WITH THE BEST EVIDENCE AVAILABLE.

In dictum in the Initial Decision, the Administrative Law Judge noted "The Postal Service is obligated to its citizens --even to Respondents --to support its complaints with the best evidence available, and that may not have been done in this case." (I.D. p. 32) Complainant agrees it could have presented a stronger case but argues that the evidence it presented was probative and substantial. While the presentation of additional evidence could have been to Complainant's advantage, and, in the case of the people interviewed by telephone may have been within its control, it nonetheless is required to present only a preponderance of the reliable and probative evidence, not the "best evidence available." Michigan Bulb Company, P.S. Docket No. 7/43 (P.S.D. 1979). Whether Complainant has presented such evidence to support the allegations of the Complaint is addressed under Complainant's other exceptions.

EXCEPTION 3
IN USING THE MAILS RESPONDENT WAS EXERCISING A
RIGHT BY WHICH HE OBTAINED AT LEAST PART OF HIS
LIVELIHOOD

In the Initial Decision, the Administrative Law Judge found "In the instant case, the Respondent in using the mails was exercising a right by means of which he obtained at least a part of his livelihood." (I.D., p. 26) Complainant argues that no evidence was presented at the hearing from which such a conclusion could be reached. Respondent argues that it would lose the valuable property right of using the mails to conduct its business activities if the Complaint were sustained.

The record in this case discloses little evidence about Respondent's livelihood except that Mr. Abrams ran other businesses and that Project Prayer was a voluntary sideline (Tr. 25, 61). There is no reference to the record in the Initial Decision from which it can be ascertained what the Administrative Law Judge relied upon to make the disputed finding. Complainant's argument that there is no evidence upon which to base such a finding is therefore persuasive. Accordingly, Exception 3 has merit and therefore is sustained.

EXCEPTION 4
COMPLAINANT PROVED THAT RESPONDENT MADE FALSE
REPRESENTATIONS TO SOLICIT MONEY OR PROPERTY.

Complainant argues that although the Initial Decision did not reach the question of whether Complainant's case had been proven on the merits, since virtually no evidence was presented by Respondent, the record is sufficient to establish Respondent's violation of 39 U.S.C. § 3005. Respondent argues in effect, that the probative value, trustworthiness and usefulness of the evidence upon which Complainant's case is based is insufficient to support the Complaint.

At the outset, it should be noted that Respondent makes frequent reference to "fraud" in its arguments regarding 39

U.S.S. § 3005. Respondent's arguments are addressed accordingly and therefore in error since the statute refers to false representations, not fraud, and the proof of false representations varies substantially from that required to establish fraud. Lynch v. Blount, 330 F.Supp. 689 (D.C. N.Y. 1971), aff'd 404 U.S. 1007 (1972).

While the Initial Decision makes no findings on the representations alleged in the Complaint, nevertheless before addressing each specific allegation of the Complaint, there are two matters addressed in the Initial Decision which are of significance to such a determination. The first is the Administrative Law Judge's comment upon the cross-examination of Inspector Mahoney. He stated that the cross-examination addressed the specific subjects about which Inspector Mahoney was examined, and that the witness's direct testimony was not changed or negated (I.D. pp. 12-13). On the basis of these comments, the Initial Decision raises no grounds for questioning the credibility of Inspector Mahoney and none is found in reviewing the record. Secondly, while the Administrative Law Judge was critical of relying on information obtained in long distance telephone calls, he quoted liberally from § 226, McCORMACK ON EVIDENCE (2d Ed. 1972), with regard to the appropriate method of authentication of telephone messages and other oral communcations. Following the quote, the Administrative Law Judge noted:

The testimony indicates that Inspector Mahoney in each instance in which he placed a call having an important bearing on the case, obtained proper identification of the person with whom he spoke. (I.D., 28).

Therefore, while the probative weight to be afforded the evidence obtained by these procedures is at issue, the authenticity and admissibility of the evidence was properly established.

Allegations Of Paragraph III Of The Complaint

Each of the Complaint allegations, and the arguments raised by Respondent and Complainant with regard thereto, are addressed below.

(a) Respondent is affiliated with Project Prayer of Las Vegas, Nevada, a national organization chaired by entertainer Pat Boone.

Complainant supports its position solely by inference, i.e., the use of the name "Project Prayer" and the common cause of both organizations. There is no statement attributed to anyone that the New Jersey Project Prayer represented that it was connected with the Las Vegas Project. Such a representation was not made to Inspector Mahoney during a telephone conversation he had with Mr. Abrams in which the Inspector had represented himself to be an interested private citizen (Tr. 70-71).

Accordingly, weighing the evidence in the case, it is concluded that it has not been established that Respondent makes the representation alleged in paragraph III (a) of the Complaint.

(b) Respondent is a non-profit organization which seeks the return of voluntary prayer to the classroom by means of securing Federal legislation.

Complainant argues that the representation was made impliedly or directly on three different occasions by Mr. Abrams to Inspector Mahoney. The thrust of Respondent's arguments to the contrary are based upon the inadmissibility and lack of probative value of the hearsay evidence upon which, it is argued, Complainant's case rests.

The characterization of the organization as "voluntary" by Mr. Abrams (Tr. 610, which strongly implies that it is "non-profit", that it existed to influence legislation by petitioning members of Congress in order to get prayers back in the schools (Tr. 21, 61, 71), and that donations were solicited for this purpose (Tr. 71) constitutes sufficient non-hearsay evidence to find that the cited representation is made. See p. 5, supra. This is supported by the exhibits which include a letter from Project Prayer indicating it was working to support legislation to return voluntary prayer to the public schools and copies of invoices which were sent to various people (CX-1B, 1C, CX-4B, CX-6F & CX-6G).

With respect to the falsity of the representation, Mr. Rader's testimony establishes that he was in an excellent position to know about such groups and had never heard of Project Prayer of New Jersey (Tr. 30-32). The evidence showing that Project Prayer was not registered as a corporation or charity in New Jersey, or as a lobbyist with the House of Representatives casts further doubt on the truthfulness of the representation (Tr. 23, 122; CX-2). Moreover it is proper to draw an adverse inference from Mr. Abrams' failure to appear and testify at the hearing and Respondent was so warned at the hearing (Tr. 163-65). See Bilokumsky v. Tod, 263, U.S. 149, 153-54 (1923).

Respondent did submit a letter from Congressman Crane's office which acknowledged that Project Prayer had sent a petition to the Congressman's office (RX-1). However, this action was taken after the litigation was instituted, on or about the date when the original hearing was scheduled in this case (Tr. 51).

The untimeliness of the submission of this petition to Congressman Crane (RX-1) makes it highly suspect. Self-serving evidence, created to prove facts that favor the party creating it, is of no probative value. Leach and Co., Inc. v. Peirson, 275 U.S. 120 (1927). Respondent was either unable or unwilling to present evidence to indicate that it had actually taken any timely action to further the cause it purported to represent.

Respondent's failure to produce evidence concerning the activities it had or was taking to support the legislation in question, which should have been readily available, tends to establish that it does not exist. United States v. Rio Grande RR Co., 191 U.S. 84, 92 (1903). Standard Research Laboratories, P.S. Docket No. 7/48 (PSD 1980). This is particularly true of the failure of Mr. Abrams to testify, Bilokumsky v. Tod, supra.

The record establishes that Respondent makes the representation alleged in paragraph III(b) of the Complaint and that it is false. Accordingly, Complainant's arguments under this Exception are meritorious.

(c) Money received by Respondent as a result of solicitation would be used to lobby for the return of prayer to the classroom.

The testimony relied upon by Complainant to support this representation is the statement by Mr. Abrams that the headquarters of the group is being moved to Washington. This was in response to a question about whether or not the group had a lobbyist (Tr. 161). The inferential nature of this remark is not sufficient to establish that Respondent makes this representation. However, the evidence cited above in connection with the representation alleged in paragraph III(b) of the

Complaint i.e., that Respondent solicits money for the alleged purpose of securing Federal legislation to obtain the return of voluntary prayer to the classrooms also establishes that this representation is made and that it is false. Accordingly, Complainant's position with respect to paragraph III(c) of the Complaint is sustained.

(d) Respondent is John Williams of the Ann Arbor, Michigan, YMCA.

There is no persuasive evidence in the record that anyone from Project Prayer represented that he was John Williams of the Ann Arbor, Michigan, YMCA. There is a letter in the file (CX-1A) which indicates that a Mrs. Beach was approached by someone she believed to be calling from the local YMCA who purported to have the name of John Williams. However, that letter does not state that the caller represented that he was John Williams of the Ann Arbor YMCA. Mrs. Beach apparently reached that conclusion on her own. Accordingly, Complainant's contention with regard to paragraph III(d) of the Complaint is without merit.

CONCLUSION

After consideration of the entire record, Complainant's Exceptions, and Respondent's arguments and opposition thereto, it is concluded that Complainant's exceptions 1, 2, 3, 4(b) and (c) have merit and that Respondent is engaged in a scheme or device for obtaining money through the mail by means of materially false representations. For the foregoing reasons, Complainant's appeal is sustained and the Initial Decision reversed. Accordingly, a remedial order under 39 U.S.C. § 3005 is being issued contemporaneously with this decision.

1/ Under the Rules of Practice in Proceedings Relative to False Representation and Lottery Orders, 39 C.F.R. § 952.18, the Federal Rules of Evidence govern the admission of evidence except to the extent they may be relaxed in order to assure a fair hearing.