In the Matter of the Complaint Against

SALES UNLIMITED
P. O. Box 8129
at Mobile, AL 36689

and
6805 Stinson Court
at Mobile, AL 36608

P.S. Docket No. 12/147;

05/20/82

Bernstein, Edwin S.

APPEARANCE FOR COMPLAINANT:
H. Richard Hefner, Esq.
Consumer Protection Division
Law Department
United States Postal Service
Washington, DC 20260

APPEARANCE FOR RESPONDENT:
Robert E. McDonald, Jr., Esq.
Suite 100 Downtowner Boulevard
Mobile, Alabama 36606

BEFORE: Judge Edwin S. Bernstein

INITIAL DECISION

Complainant alleged and Respondent denied that Respondent was engaged in conducting a scheme or device for obtaining money or property through the mails by means of false representations in violation of 39 United States Code § 3005. The hearing was held in Mobile, Alabama, on February 24, l982. Postal Inspector Jane T. Schoefer and Mr. Billy W. Barron testified for Complainant while Mr. Bennie Hicks testified for Respondent. Complainant filed proposed findings of fact, proposed conclusions of law and memoranda on April 22, l982. These have been considered. To the extent indicated, they have been adopted. Otherwise, they have been rejected as irrelevant or not supported by the evidence.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

I. The Use of the Mails

Respondent solicits remittances of money through the mails in connection with its Sales Unlimited business. The testimony of Postal Inspector Schoefer and Complainant's Exhibits (CX) 1-7, 9-11a support this conclusion.

II. The Advertising Representations

In subparagraphs (a) through (f) of Paragraph III of the Complaint, Complainant alleged that Respondent made various reprsentations in its advertisements. My findings with respect to each subparagraph and reasons follow.

(a) It is mathematically possible for all distributor participants to recoup their $50.00 initial investment through the sale of distributorships to others.

Respondent's advertisements make this representation. CX-3 contains an example of how a distributor can make $80.00, if 15 people buy subscriptions as a result of his efforts, and how as much as $6,820.00 can be earned, if many others buy subscriptions.

(b) It is mathematically possible for all distributor participants to earn $6,820.

(c) Market saturation will not occur through over-sales of distributorships.

(d) Sufficient numbers of non-participants are continually available to provide an opportunity for profit.

Although Respondent's advertisements do not expressly make these representations, the representations are implied by the word "unlimited" in Respondent's name. Also, the example in CX-3 is given without any indication that the potential number of persons who can reach that level has any limit.

(e) The $50.00 fee is charged for subscribing to a newsletter.

Respondent's advertising does not represent this. Paragraph one of CX-3 reads, "We are in the business of publishing a newsletter and are offering you the opportunity to become a distributor. . ." emphasis added At other places, CX-3 also indicates that for $50.00 one receives the newsletter together with the opportunity to be a distributor.

(f) Respondent's scheme "meets all State and Federal requirements."

The exhibits in evidence do not represent this. Rejected Exhibit 11b makes the representation. However, that exhibit was not received in evidence because it was not shown that that paper was printed or distributed by Respondent or with its authorization (Tr. 22-27, 92-94). Therefore, Complainant has not proven this represen tation.

III. The Truth or Falsity of the Representations

As previously found, Respondent's advertisements that were received in evidence did not make the representations alleged in subparagraphs (e) and (f) of Paragraph III of the Complaint. I further find that Complainant's evidence has not shown that the representations in subparagraphs (a), (b), (c) and (d) are false. These subparagraphs read:

(a) It is mathematically possible for all distributor participants to recoup their $50.00 initial investment through the sale of distributorships to others.

(b) It is mathematically possible for all distributor/participants to earn $6,820.

(c) Market saturation will not occur through over-sales of distributorships.

(d) Sufficient numbers of nonparticipants are continually available to provide the opportunity for profit.

Complainant's only evidence regarding this issue was the testimony of Billy Barron. Mr. Barron is a management employee of the Postal Service who was a postal inspector for fifteen years.(Tr. 42A, 75). His areas of expertise include plans like Respon dent's. (Tr. 42A).

Mr. Barron's testimony did not show that any of these allega tions were false. He stated that it was possible, but not probable, that all of Respondent's distributors could recoup their $50.00 investment (Tr. 54); for a distributor participants to earn $6,820.00 (Tr. 78); and for all distributor participants to earn $6,820.00 (Tr. 55). If, as Mr. Barron testified, it is possible for all distributor participants to earn $6,820.00, Mr. Barron's testimony does not show that the allegations in subparagraphs (c) and (d) are false.

Complainant's findings cited no transcript pages and no specific evidence to support its contentions. Complainant's posthearing submission cited cases in support of its contention that "such programs possess the elements of a fraud or lottery" (Page 5). However, the issue of a lottery was not raised in this case and the cases did not support Complainant's false representation allega tions.

As Mr. Bennie Hicks, Respondent's owner, testified, and as Exhibits CX 3, 6 and 10 indicate, in return for paying Respondent $50.00, one receives seven monthly Sales Unlimited newsletters (Tr. 104); the right to place two advertisements per month in the newsletter for six months (Tr. 103); and 200 promotional letters and materials which can be used to distribute newsletters and earn commissions. (Tr. 89). Mr. Hicks stated that about 30 percent of Sales Unlimited's participants merely subscribe to and advertise in the newsletters. (Tr. 91). Assuming that one advertises in 12 newsletters for the $50.00 cost, that would amount to $4.17 per advertisement, not an exhorbitant advertising fee.

Because Complainant failed to prove that Respondent made the representations alleged in subparagraphs (e) and (f) of Paragraph III of the Complaint and failed to prove that the representations in subparagraphs (a), (b), (c) and (d) are false, the Complaint is dismissed.