In the Matter of the Complaint Against

GLORIANNA R. GIUMARRA a/k/a STEPHEN R. EUBANKS
d/b/a INTERTRUST ASSOCIATION
2552 Royal Lane, Suite 305
at Dallas, TX 75229-9990

P.S. Docket No. 19/36;

Duvall, William A.

APPEARANCES FOR COMPLAINANT:
H. Ric hard Hefner, Esq.
Alan B. Ostroff, Esq.
Law Department United States Postal Service
Washington, DC 20260-1112

APPEARANCES FOR RESPONDENT:
D. Mark Elliston, Esq.
Glorianna R. Giumarra, only:
Don G. Horton, Esq.
2000 Americas Tower,
LB 130 2323 Bryan Street
Dallas, TX 75201-2628

INITIAL DECISION

In a Complaint filed on April 5, 1984, the General Counsel for the United States Postal Service, Complainant, filed a Complaint in which it is charged that Stephen R. Eubanks doing business as InterTrust Association, Dallas, Texas, is engaged in conducting a scheme or device for obtaining money or property through the mail by means of false representations within the meaning of Section 3005 of Title 39, United States Code.

Complainant charges that in advertisements in nationally distributed periodicals Respondent solicits remittances of money through the mails; and that there are sent to persons who respond to the advertisement, among other things, a form letter bearing the salutation "Dear Future Cardholder" Complainant's Exhibit 2 (attached hereto as App. A), and a color brochure depicting various credit cards in a billfold over which is the caption "An opportunity for the good life" and under which are the logo and name of "InterTrust Association" followed by the words "Extending you the privilege of credit", Complainant's Exhibit 3 (copy attached as App. B). In these forms, also, the Respondent asks for the remittance of money through the mail.

The Complainant alleges that in these forms, as well as other materials similar thereto, the Respondent expressly or impliedly makes the following representations:

(a) Persons sending the required remittance through the mails to Respondent and furnishing the information required on the credit card application are assured of receiving valid credit cards, particularly Visa and Mastercard.

(b) Respondent will furnish all applicants with valid credit cards --particularly Visa and Mastercard --irrespective of the applicants' credit experience, credit history or income.

(c) All applicants who fill out the credit card application and make the required remittance to Respondent will be accepted by member banks as valid Visa and Mastercard credit card holders.

Complainant alleges that these representations are materially false, as a matter of fact, and asks for the issuance of a mail-stop order and a Cease and Desist Order, suggested forms of both of which are attached to the Complaint.

Service of the Complaint and Notice of Answer and Hearing was accepted on April 13, 1984 by Johanna Giumarra, 7341 Glendora Avenue, Dallas, TX 75230. On May 9, 1984, Mr. Hefner, one of the attorneys for Complainant in this case, called the undersigned to say that he had been authorized by Mark Elliston, Esq., Counsel for Respondent in P.S. Docket No. 19/43, In the Matter of the Complaint Against Glorianna Giumarra, to say that Mr. Elliston accepted service of the Complaint, Notice of Answer and Hearing, and accompanying papers on behalf of the Respondent in the instant case.

On May 10, 1984, Complainant filed a Motion to Amend Complaint, accompanied by the Amended Complaint which, it is stated in the Motion, was being filed with the concurrence of Mr. Elliston. It was repeated in the Motion that Mr. Elliston "has orally indicated that he will serve as counsel for Respondent in this matter."

Two facts are noted:

1. In the original Complaint two names are listed as Respondents in the caption, whereas there are three names listed in the Complaint, as amended.

2. The second Complaint is identical to the first one, with the following exceptions: (a) the addition of the name Glorianna R. Giumarra as a Respondent in the caption of the second Complaint and in the proposed orders, and (b) the Zip Code appearing in last line of the last paragraph of the Amended Complaint is 75321-9990, whereas the Zip Code appearing in the corresponding location in the original Complaint is 75229-9990. (The change in the Zip Code numbers is unexplained and may be the result of an inadvertence since it has not been discovered at any other place in the file. It is, therefore, being ignored.)

On May 11, 1984, under the caption

"IN THE MATTER OF THE COMPLAINT AGAINST

GLORIANNA GIUMARRA

d/b/a/ INTERTRUST ASSOCIATION," there was filed a document identified as "RESPONDENT'S ORIGINAL ANSWER."

In this Answer, which was the only Answer to the Complaint that was filed in this proceeding, it was pleaded as follows:

"NOW COMES, GLORIANNA GIUMARRA, Respondent in the above styled cause and denies each every, all and singular the allegations contained in the Complaint filed in this action. Specifically, Respondent denies the alleged facts and allegations in the Complaint as follows:" (There follows a special denial of each separate paragraph of the Complaint, and a request that the relief sought by the Complainant be denied.) The Answer is signed "Glorianna Giumarra."

The Witnesses and Their Testimony

Complainant called three witnesses. The first witness was Ms. Ann Williams of Chicago, Illinois. Ms. Williams is a case worker with the Circuit Court of Cook County.

Ms. Williams became aware of InterTrust Association through an advertisement that appeared in The National Enquirer in about June 1983. In essence, the advertisement asked if the readers were encountering financial problems because of "Bankruptcy? Bad Credit?" If so, the readers were advised to "Get Mastercard or Visa. Call the toll-free number."

Ms. Williams called the toll-free number. Within a few weeks she received by mail (Ex. C-1) a form letter bearing the salutation "Dear Future Cardholder", signed "Stephen R. Eubanks" of "InterTrust Association" (App. A), and the original of the brochure which is Appendix B. Part of Appendix B consists of a form entitled "Credit Information" by which pertinent information is to be supplied to Respondent.

After reading Appendices A and B, and based on certain language in the pieces (Tr. 18, 19), she believed that she would get the Visa, Mastercard, Carte Blanche, Diners Club International, department store, and gasoline credit cards that she ordered. (Tr. 24) Ms. Williams immediately filled out the

Credit Information blank, which she regarded as and referred to as the "application" and sent it with her check for $35 to Respondent. (Tr. 7, 24, 27; Ex. C-5)

Ms. Williams' check was mailed to Respondent in June 1983. (Tr. 31) Having received nor heard anything from Respondent, she wrote on August 22 telling Respondent that she was disappointed in her dealings with the concern. Not long afterward, she received a booklet, bearing Respondent's logo and name, which was entitled "The Complete Credit System." (CX-7)

Ms. Williams returned the booklet to Respondent and she enclosed a letter to Mr. Eubanks saying, in substance, that Respondent did not advertise a booklet, that she did not want the booklet, and that she wanted her money refunded. (Ex. C-8) Ms. Williams was not given what she was led to believe she would receive or what Respondent promised to deliver. (Tr. 35)

Ms. Williams has never met Glorianna Giumarra, she does not know what Ms. Giumarra looks like, they never had a telephone conversation and Ms. Williams has no knowledge as to whether or not Ms. Giumarra has anything at all to do with InterTrust. (Tr. 46)

Respondent's initital approach to the next witness, Paolo Rizzi, Stillwater, Oklahoma, was by the direct mail method. (Ex. C-9) By this means Respondent transmitted to Mr. Rizzi a "Dear Future Cardholder" letter identical to App. A except that the words "discounts on hotels and motels" have been inserted in line 3 of paragraph 5, and in line 4 of the 5th paragraph the word "Gold" has been inserted before the word "Courtesy" in the Rizzi letter. In addition, the following appear at the bottom of the letter beneath "Enclosures" --

"Notice: If applying for both Gold Courtesy Express Card and Bank Cards you must complete both applications and send separate fees." (Emphasis in original)

"FEES MUST ACCOMPANY ALL APPLICATIONS FOR PROCESSING"

(Ex. C-10)

There were also enclosed with App. A, a Credit Information blank (Ex. C-11) identical with Ex. C-4, and, according to the language of Ex. C-10, a postage-paid business reply envelope.

Mr. Rizzi, because of the assurance and guarantee stated in Ex. C-10, sent the $20 fee to Respondent required to obtain the Visa and Mastercard, since they were all he wanted. (Tr. 69) After reading both Ex. C-10 and C-11, Mr. Rizzi believed that he would receive the credit cards he asked for in the application. (Tr. 73) This remittance was by Postal Money Order dated 18 July 1983, a copy of the receipt for which is Ex. C-12.

In February or March, 1984, having received nothing from Respondent, Mr. Rizzi wrote to Respondent and asked for the credit cards he had ordered or the return of his money. (Tr. 75, 76, 77, 80, 84)

Mr. Rizzi has applied three or four times to banks for credit cards, but because he has no credit history, no past credit experience, his applications have been denied. He now has one or more credit cards with individual department stores and he has never been delinquent in any of them. (Tr. 82) When he applied to Respondent Mr. Rizzi did not really think that InterTrust would conduct much of an investigation. He so thought because the words "assure you" and "guarantee you" caused him to believe that he would receive his cards by mail soon after he sent his money and application to Respondent. He had no past credit history at the time of his application and because Respondent's sales literature indicated that cards could be obtained regardless of past credit he told himself "With these people, it's going to be easy to get it." (Tr. 86)

Norman Tate, Vice President of the Northpark National Bank, Dallas, Texas, in charge of the credit card division, specializing in personal lending, was the last witness called by Complainant. (Tr. 91) Mr. Tate has had a long and varied experience in the credit field. Prior to his present position, he was employed by Preston State Bank in Dallas in their credit card division for 15 years. He has been President of the Dallas Credit Manager's Association; he was credit manager of Volks Department Store for four years; and he was for six years collection manager of Neiman-Marcus in Dallas. Mr. Tate estimated that over 100,000 credit applications have been processed directly by him or under his supervision. (Tr. 93) He received a Bachelor of Science degree in textile engineering from North Carolina State College, Raleigh, North Carolina, in 1951. Mr. Tate was qualified as an expert witness in matters relating to retail credit and the process involved in granting and obtaining credit cards. (Tr. 91-93)

Mr. Tate stated that there is an inherent misrepresentation in the language used by Respondent in Appendices A and B. Both documents encourage - in fact, urge - readers to fill out and return the "Credit Information Application." ^1/ Persons who apply on the basis of Respondent's sales literature would expect to receive credit in the form of either check guarantee cards or credit cards. In fact, at the bottom of the page of Ex. C-3 opposite the "Credit Information application" there is the notice "Attention: Credit Card Division." Thus the reader is told that

Respondent does, in fact, have a credit card division. Moreover, these applicants have been told that "Regardless of past credit, we can assure you that you can have both a Visa and a Mastercard."

The misrepresentation consists of assuring the reader of App. A and B that Respondent assures him of the issuance to him, by Respondent or someone else, of one or more credit cards regardless of his credit history. This statement is simply a commitment which can not be kept. Mr. Tate said that on the basis of his experience, to any prudent bank or any financial institution, the most important facet of a credit application is the credit history of the individual applicant. (Tr. 98)

Mr. Tate stated that he is unfamiliar with Stephen R. Eubanks and InterTrust Association, and that he does not know Glorianna Giumarra.

The Complaint Against Glorianna R. Giumarra

Service of the Complaint in this case on behalf of Ms. Giumarra was accepted by Mr. Elliston. Ms. Giumarra thereby became subject to the Rules of Practice in proceedings brought under 39 U. S. Code § 3005, among which Rules are the following:

"?952.11 Default.

(a) If the Respondent fails to file an answer within the time specified in the notice of answer and hearing, he shall be deemed in default, and to have waived hearing and further procedural steps. The Judicial Officer shall thereafter issue orders without further notice to the Respondent.

(b) If the Respondent files an answer but fails to appear at the hearing, the Respondent may, unless timely indications to the contrary are received, be deemed to have abandoned the intention to present a defense to the charges of the complaint, and the Judicial Officer, without further notice to Respondent, may issue the orders sought in the complaint."

The Amended Complaint in which Ms. Giumarra was named a Respondent was filed on May 10, 1984. In view of the fact that the Answer to the Amended Complaint, signed by Ms. Giumarra, was filed on May 11, 1984, there can be no question regarding the timeliness of the filing of the Answer.

If no timely Answer had been filed by Ms. Giumarra, she would have been in default, the case against her could have been disposed of under subsection (a) of § 952.11, above, and the Judicial Officer could forthwith have issued the mail-stop order and the Cease and Desist Order against Ms. Giumarra which were sought by the Complainant.

Since Ms. Giumarra's Answer was timely filed, the burden then fell upon the Complainant to prove by the preponderance of competent, credible and probative evidence that Ms. Giumarra was, or had been engaged in conducting the scheme charged in the Complaint.

The alleged wrongdoing by Ms. Giumarra upon the basis of the requisite evidence was not established. There was no evidence of an interview of this Respondent, there was no evidence of an interview of this Respondent, there was no evidence of the existence of an assumed name certificate under which this Respondent was doing business. Two witnesses (Ms. Williams (Tr. 46) and Mr. Tate (Tr. 114)) said they did not know Ms. Giumarra or whether there was any connection between her and InterTrust Association, and the third witness was never asked any question, and never made any statement about Ms. Giumarra. Her name does not appear on any of Complainant's exhibits or elsewhere except in formal pleadings and in the arguments of counsel on the motion to dismiss the Complaint as to this Respondent.

The last-mentioned motion was granted at the hearing because of the want of proof, and that ruling is hereby iterated.

The foregoing ruling leaves Mr. Stephen R. Eubanks and InterTrust Association as the remaining Respondents. In Mr. Hefner's Motion to Amend Complaint filed on May 10, 1984, he states "Mr. Elliston has has orally indicated that he will serve as Counsel for Respondent in this matter." It is noted that the beneficiary of Mr. Elliston's advice is "Respondent" and not "Respondents". This apparent confusion is dispelled by Mr. Elliston's unequivocal statement at the hearing that "And as I say, we don't represent InterTrust. We don't represent Stephen R. Eubanks. Our client is Glorianna Giumarra." (Tr. 122)

Since the Complaint is still viable as to Stephen R. Eubanks d/b/a InterTrust Association, and because no answer has been filed on behalf of either of those named Respondents, this matter is referred to the Judicial Officer for such action as he may deem appropriate under § 952.11(a) of the Rules of Practice (39 CFR § 952.11(a)).

1/ This term is used in paragraph 4 of both App. A and Ex. C-10, and the word "applications" appears at the bottom of Exs. C-3 and 10.