In the Matter of the Complaint Against

IAAIC (International American Arab Investment Corporation)
8306 Wilshire Boulevard Suite 198 and 8383
Wilshire Boulevard Suite 1001
at Beverly Hills, CA 90211

P.S. Docket No. 13/173;

12/29/82

Cohen, James A.

APPEARANCES FOR COMPLAINANT:
HildaRosenberg, Esq.
James A. Harbin, Esq.
Consumer Protection Division
Law Department
United States Postal Service
Washington, DC 20260-1112

APPEARANCE FOR RESPONDENT:
Roy Moore
8306 Wilshire Boulevard Suite 198
Beverly Hills, CA 90211

POSTAL SERVICE DECISION

Respondent has appealed from the Initial Decision of an Administrative Law Judge which holds that, with regard to the advertising and sale of a list of potential investors, Respondent is engaged in a scheme for obtaining money through the mail by means of materially false representations in violation of 39 U.S.C. § 3005.

BACKGROUND

On June 17, 1982, the Consumer Protection Division, Law Department, United States Postal Service (Complainant), filed a Complaint alleging that Respondent falsely represents that:

"a. Respondent will provide a full and unconditional refund to dissatisfied customers.

b. All 'investors' named have authorized the inclusion of their firm in the IAAIC list."

In a timely filed Answer Respondent denied that it makes the representations alleged in the Complaint or that such representations are false. Respondent did not deny that the advertisements attached to the Complaint are typical of those used in its business. At a hearing conducted by the Administrative Law Judge, Complainant presented the testimony of Postal Inspector Lewis L. Kinzler and Robert Gary Machala, an investment advisor who had responded to one of Respondent's advertisements. Respondent was represented by, and presented the testimony of, Roy Moore. Documentary evidence was submitted by both parties. On the basis of the evidence presented, the Administrative Law Judge concluded that Respondent makes the representations alleged in the Complaint and that those representations are materially false, in violation of 39 U.S.C. § 3005.

RESPONDENT'S EXCEPTIONS TO THE INITIAL DECISION

Much of Respondent's appeal consists of broad-brush accusations of discrimination, harassment and intimidation which have no support in the record. However, it also makes more specific contentions which to the extent they are understandable are discussed below.

Respondent appears to contend that the Postal Service has no jurisdiction over this action because Complainant did not prove that letters were sent through the United States mail and because there are "alternative private companies all over the Globe" to carry Respondent's mail. The evidence does establish the United States mail was used to transmit remittances to Respondent (I.D. FOF 3, 7, and 9). Moreover, while it is possible that responses to its advertising will be delivered to Respondent by means other than the United States mail, nonetheless, Respondent's advertisements give an address with a zip code to which it seeks, and the ordinary reader would send, remittances. This is sufficient to establish the jurisdiction of the Postal Service under 39 U.S.C. § 3005.

Respondent contends Complainant has no jurisdiction over mail or persons outside the United States and its territories. Contrary to Respondent's contention, Complainant is not attempting to assert jurisdiction over mail or persons outside the United States. Rather, Complainant has alleged that Respondent, at addresses within the United States, is engaged in conducting a scheme or device for obtaining money or property through the mail by means of false representations in violation of 39 U.S.C. § 3005. The determination of this allegation falls within the jurisdiction of the Postal Service. Furthermore, 39 U.S.C. § 3005 applies to, and the Postal Service would have jurisdiction over, mail addressed to persons outside the United States to the extent the United States postal system was being used to transmit such mail.

Respondent also objects to evidence of responses received by a Postal Inspector to inquiries he sent to persons or companies on Respondent's list of clients who reside outside the United States. The fact that some of the evidence in this case, including correspondence received by the Inspector, came from individuals and companies outside the United States establishes no error. In a proceeding under 39 U.S.C. § 3005 the presiding officer has discretion to relax the rules of evidence to insure a fair hearing (39 C.F.R. § 952.18(a)). The presiding officer did not abuse his discretion in this case. Moreover, Respondent was also permitted to present correspondence from persons outside the United States to support its position. Although it contends it evidence was properly admitted, whereas Complainant's evidence should have been excluded, there is no basis for making this distinction.

Respondent also contends that the portion of 39 C.F.R. § 952.21(f) which relates to the taking of depositions and interrogatories in a foreign country was not followed. The record does not reflect that depositions or interrogatories were taken. Thus there was no necessity to follow the provisions of 39 C.F.R. § 952.21(f).

Respondent asserts that it does not make the representations alleged in the Complaint and that the representations it makes are true. With respect to the representation alleged in paragraph 3b of the Complaint it contends that it only advertises a "list of potential clients, who have shown" an interest in investing and that this representation is true. However, as found in the Initial Decision, Respondent's advertisements construed as a whole reasonably imply "that the persons and concerns named on Respondent's 'list of potential clients' have authorized the inclusion of their names on the list" (I.D. COL 3). The representation alleged in paragraph 3a of the Complaint is explicitly made in certain of Respondent's advertisements even though it may not be made in others (CX-1; RX-1). The conclusion that both representations are false (I.D. COL 5) is supported by the record.

Respondent refers to a Dunn and Bradstreet report (CX-27A), apparently contending that the report should not have been received in evidence because it states it is confidential and that "reproduction is unauthorized." Inspector Kinzler testified that the copy of the Dunn and Bradstreet report was obtained from Respondent (Tr. 97). Also, Respondent did not object to the introduction of the report into evidence (id). Thus, any inference Respondent is attempting to have drawn from the use of the report is without merit.

Respondent contends that Complainant's witness, Mr. Machala, "lied" on the witness stand when he testified that he obtained Respondent's advertisement from Newsweek magazine. Respondent also contends that this witness incorrectly described the contents of the list of investors received in response to Respondent's advertisements. There are some minor inconsistencies in Mr. Machala's testimony and it is possible he was mistaken in his testimony that the advertisement he saw appeared in Newsweek magazine. Even if he was mistaken, it is evident that the advertisement appeared in some publication and was similar to others produced at the hearing. Further, the minor inconsistencies do not detract from the total import of his testimony concerning his impression of the advertisement, his expectations of the type of list he would receive, and his opinion that the list he received was worthless and contrary to the representations made in the advertisement. Thus, it was not improper to rely on Mr. Machala's testimony.

Additional arguments presented by Respondent constitute a further attack on the jurisdiction of the Postal Service to issue false representation orders. The authority of the Postal Service to institute proceedings under 39 U.S.C. § 3005 and to issue the order provided therein is well established. E.g., Donaldson v. Read Magazine, 333 U.S. 178 (1948); United States Postal Service v. Athena Products, Ltd., 654 F.2d 362 (5th Cir. 1981); Hollywood House Int'l., Inc. v. Klassen, 508 F.2d 1276 (9th Cir. 1974).

CONCLUSION

The record supports the findings and conclusions of the Initial Decision that an ordinary reader would conclude from Respondent's advertisements that the representations charged in the Complaint were made. Complainant has established by a preponderance of the evidence that the representations are false. Accordingly, it is concluded that Respondent is engaged in a scheme to obtain money through the mail by means of materially false representations. Respondent's appeal is therefore denied and a remedial order under 39 U.S.C. § 3005 is being issued with this decision.