In the Matter of the Complaint Against

KIMBERLY JEWELS, INC.
177 NE 166 Street

and

251 NE 166 Street
at Miami, FL 33162

P.S. Docket No. 9/65;

Cohen, James A.

APPEARANCE FOR COMPLAINANT:
Clark C. Evans, Esq.
Daniel E. Lewis, Esq.
Consumer Protection Division
U. S. Postal Service
Law Department
Washington, DC 20260-6100

APPEARANCE FOR RESPONDENT:
Alvin E. Entin, Esq.
2020 NE 163rd Street No.
Miami Beach, FL 33180

POSTAL SERVICE DECISION

Respondent has appealed from the Initial Decision of an Administrative Law Judge which recommends the issuance of an order under 39 U.S.C. § 3005 based on the conclusion that Respondent, by means of its envelope stuffing plan, is engaged in a scheme for obtaining money through the mail by means of materially false representations.

BACKGROUND

On September 12, 1980, the Consumer Protection Division, Law Department, United States Postal Service, filed a Complaint alleging in Count I, Paragraph 3, that Respondent, by means of advertisements calculated to induce readers to remit money through the mail, falsely represents that:

a) Work at home is available from Kimberly Jewels, Inc. at high rates.

b) The amount of money earned by the homeworker is determined by how much work is performed.

c) Kimberly Jewels, Inc. will employ homeworkers.

d) The work to be performed by the homeworker is stuffing envelopes.

e) The $20.00 fee is the sole expenditure to be paid by the homeworker to be completely involved in the program.

f) Advertising circulars furnished to homeworkers promote the sale of products of Kimberly Jewels, Inc.

g) Only a limited number of persons will be selected by Kimberly Jewels, Inc. to participate in the program.

h) The homeworker's name will not appear in any promotional literature.

Count II of the Complaint alleges that Respondent solicits persons to become mailers/dealers who falsely represent to the public that:

a) Work at home employment is available which solely involves preparation of circulars for mailing.

b) Attractive compensation will be made by homeworkers in the preparation of circulars for mailing.

In its Answer filed October 6, 1980, Respondent admitted that it makes the representations alleged in Count I, Paragraphs 3 (f), (g) and (h), denied that it makes the remainder of the representations alleged in the Complaint and denied that any of the representations are false. A hearing before an Administrative Law Judge was held on December 3, 1980. At the hearing Complainant presented two witnesses, Edward D. Gillaspy, a lay witness who responded to the advertisement and Judith K. Groome, a Postal Inspector. Respondent presented Kenneth L. Baroto, a publisher's representative who is responsible for placing advertising in certain publications and Joseph Ehrlich, Respondent's vice president. Both parties introduced documentary evidence and participated in the examination and cross-examination of the witnesses. On the basis of the testimony received and the exhibits in the record, the Administrative Law Judge concluded that except with respect to Count I, Paragraph 3 (c) Respondent makes the representations alleged in the Complaint. With the exception of Count I, Paragraphs 3 (a) and (h), the Administrative Law Judge found the representations to be materially false. Accordingly, he concluded that Respondent is engaged in activities which are in violation of 39 U.S.C. § 3005.

RESPONDENT'S EXCEPTION

Respondent argues that:

"The Administrative Law Judge Improperly Inferred the Existence of Material Misrepresentations in the Absence of any Evidence or Testimony in Support Thereof."

Respondent further contends that in order to prevail Complainant must present substantial evidence to establish the existence of materially false representations. Respondent cites cases relating to proof of mail fraud which for the propositions cited, are not applicable to violations of the existing false representation statute, 39 U.S. Code § 3005. While Complainant does have the burden of estabishing a prima facie case and the ultimate burden of perusasion, the standard of proof applied in an administrative proceeding under 39 U.S.C. § 3005 is the preponderance of evidence test. See Contemporary Mission, Inc., P.S. Docket No. 8/159 (P.S.D. 1981); United States/Great Lakes Federal Surplus Depository, P.S. Docket No. 7/136 (P.S.D. 1981) and cases cited therein. The substantial evidence test is the standard applied by a court reviewing an administrative decision, M.K.S. Enterprises, Inc. v. United States Postal Service, 459 F.Supp. 1180 (E.D. N.Y. 1978) and requires something less than a preponderance of the evidence. See Diamond Drilling Co. v. Marshall, 577 F.2d 1003 (5th Cir. 1978); Brennan v. National Hotel Co., 476 F.2d 17 (5th Cir. 1973).

Lay or expert testimony is not necessary to establish whether representations are made, their effect on the ordinary mind or their materiality. Standard Research Labs, P.S. Docket Nos. 7/78 and 7/86 (P.S.D. 1980); see Peak Laboratories, Inc. v. United States Postal Service, 556 F.2d 1387, 1389 (5th Cir. 1977). While such determinations may be made by the Administrative Law Judges and the Judicial Officer without the assistance of testimony, nonetheless there is testimony in the record in this case which, along with the documentary evidence, establishes by a preponderance of the evidence the existence of false representations which would induce the reader of Respondent's advertising to remit money or property through the mail (see I.D., pp. 5-10). Thus, the Administrative Law Judge properly found Respondent in violation of 39 U.S.C. § 3005.

Respondent disagrees with the findings and conclusion of the Initial Decision and argues that the falsity of each of the representations found to have been made has not been established. Its position is not supported by the record. The findings and conclusions of the Initial Decision are supported by the record and are affirmed.

Based on a review of the record it is concluded that Respondent is engaged in a scheme for obtaining money or property through the mail by means of materially false representations. Accordingly, Respondent's appeal is denied and a remedial order under 39 U.S.C. § 3005 is being issued contemporaneously with this decision.