In the Matter of the Complaint Against

AMERICAN GENEALOGIES, INC., et. al.,
P. O. Box 1610 at
Plainfield, NJ 07061-1610

P.S. Docket No. 27/83

Cohen, James A. Judicial Officer

APPEARANCES FOR COMPLAINANT:
Sandra C. McFeeley, Esq.
W. Gary Claytor, Esq.
Consumer Protection Division
Law Department
United States Postal Service
Washington, DC 20260-1144

APPEARANCE FOR RESPONDENTS:
Edward L. Norwind, Esq.
Paulson, Nace and Norwind
1814 N Street, N. W.
Washington, DC 20036-2404

POSTAL SERVICE DECISION

Respondents have filed an appeal from an Initial Decision of an Administrative Law Judge which holds that Respondents are engaged in conducting a scheme to obtain money or property through the mail by means of materially false representations in violation of 39 U.S.C. 3005.

BACKGROUND

The Consumer Protection Division, Law Department, United States Postal Service, initiated this proceeding by filing a Complaint alleging in paragraph 7 that Respondents, by means of direct mail solicitations seeking remittances through the mail, falsely represent that:

"(a) Persons remitting money in response to American Genealogies, Inc. advertising materials will receive a document principally about the ancestry and family name of the addressee;

(b) The product offered contains the names and locations of almost every member of the addressee's family in the United States;

(c) The product offered contains information specifically about the origins of the addressee's family in the United States;

(d) The majority of the contents of the addressee's edition of the book will be substantially different from the contents of an edition of the book pertaining to a family surname different from that of the addressee;"

In paragraph 12 of the Complaint it is further alleged that Respondents seek remittances through the mail by means of direct mail solicitations which falsely represent that:

"(a) The addressee of the solicitation is related to the individual who purports to make or sign the solicitation;

(b) An individual who is making the solicitation has performed genealogical research that has specifically led to the addressee;

(c) Persons remitting money in response to American Genealogies, Inc.'s advertising materials will receive a document principally about the ancestry and family name of the addressee;

(d) The majority of the contents of the addressee's edition of the book will be substantially different from the contents of an edition of the book pertaining to a family surname different from that of the addressee; and

(e) Some of the family names in the title 'The (name of family) Family Album' are rare in the United States;"

With the exception of Respondent John Bedson,^1/ Respondents filed an Amended Answer denying that they make the false representations alleged in the Complaint. At a hearing before an Administrative Law Judge, Complainant presented numerous exhibits and the testimony of four witnesses. Respondents called no witnesses and introduced no exhibits.

Following the hearing and after the filing of Proposed Findings of Fact and Conclusions of Law, the Administrative Law Judge issued an Initial Decision in which he concluded that Respondents make the representations alleged in paragraphs 7(a)-(d) and 12(a)-(e) of the Complaint and that such representations are materially false in violation of 39 U.S.C. 3005. Based on these conclusions, the Administrative Law Judge recommended issuance of a False Representation Order and a Cease and Desist Order in the forms attached to the Initial Decision.

RESPONDENTS' EXCEPTIONS

Respondents have filed three general exceptions to the Initial Decision, which have been considered and are addressed below.

I. Exception to Findings of Fact

Respondents have taken a blanket exception to Findings of Fact 5 through 15. Respondents contend that these findings are not supported by substantial or probative evidence, are not supported by law or fact, and are arbitrary and capricious. Respondents

The arguments of Respondents, as well as the entire record in this matter, have been carefully reviewed and considered. Findings of Fact 5 through 15 are supported by a preponderance of the evidence and are neither arbitrary nor capricious. Further, no abuse of discretion on the part of the Administrative Law Judge has been found. Accordingly, Findings of Fact 5 through 15 are affirmed in their entirety.

II. Exception to Conclusions of Law

Respondents have taken exception to Conclusions of Law 2 through 6 on the same grounds that they took exception to Findings of Fact 5 through 15. Respondents apparently disagree with the Administrative Law Judge's conclusion that the evidence supports the allegations contained in the Complaint and that a violation of 39 U.S.C. 3005 has occurred.

The evidence of record has been fully reviewed and found to support the conclusions reached by the Administrative Law Judge. Respondents' solicitations make the representations alleged in paragraphs 7 and l2 of the Complaint and those representations are materially false. Thus, the Administrative Law Judge properly concluded that Respondents are engaged in the conduct of a scheme for obtaining money or property through the mail by means of materially false representations in violation of 39 U.S.C. 3005. Accordingly, Conclusions of Law 2 through 6 are affirmed.

III. Exception to Proposed Cease and Desist Order

Respondents take exception to the language and scope of the Cease and Desist Order recommended by the Administrative Law Judge, contending that it violates their due process and First Amendment rights and exceeds the jurisdiction and authority of the Postal Service. Respondents also contend that the Order is "unsupported by law or fact", that it encompasses activities unrelated to the issues of this case, and that it is unduly oppressive and burdensome. Finally, Respondents point out that the Administrative Law Judge failed to make specific findings in support of the Order.

Respondents' exception consists of broad conclusory statements which are not supported by argument and contain no reference to the record or citation to legal authority. While it appears that Respondents are primarily concerned with the recordkeeping requirement imposed by numbered paragraph (8) of the recommended Cease and Desist Order, it also appears they may be concerned with numbered paragraph (1) which prohibits Respondents from falsely representing the contents of any book.

Respondents object to the recordkeeping requirement of paragraph (8) of the recommended Order because it would have the effect of "(i) bringing many persons under the scrutiny of postal service authorities whether or not a publication is sold or sent by the mails and (ii) tracing the activities of persons who are not parties to this case and had no involvement in the family albums at issue." Respondents' interpretation of paragraph (8) is incorrect. Paragraph (8), when read with the introductory paragraph of the Order, requires records to be kept only "in connection with any enterprise by which Respondents seek to obtain money or property through the United States mail." In addition, the Order does not require the "tracing of activities of persons" since it only requires that records be kept for the purpose of identifying all writers of, and contributors to, the contents, form, production or distribution of any such books. These requirements are reasonable in view of the size of Respondents' operation and the corporate entities involved. Moreover, they are reasonably related to the mail order activities which are the subject of this proceeding and will facilitate enforcement and promote compliance with other provisions of the Order. Thus, Respondents' objection to the recordkeeping requirement is not well taken.

Respondents' assertion regarding the authority and jurisdiction of the Postal Service is also not well taken. Under 39 U.S.C. 3005(a)(3) the Postal Service is specifically authorized to issue a Cease and Desist Order when it determines that a person is engaged in conducting a scheme for obtaining money or property through the mail by means of materially false representations. Since Respondents seek remittances through the mail by means of materially false representations, there is a clear statutory basis for issuance of a Cease and Desist Order in this proceeding.

Respondents' promotion involves representations which have been found to be materially false with respect to the contents of family

album books. Paragraph (l) of the recommended Order in this matter prohibits prospective false representations with respect to the contents of any book. A provision such as paragraph (l) which pertains to activities similar to, but not precisely the same as, the activities which are the subject of the proceeding is known as a "fencing-in" provision.

"Fencing-in" provisions have been consistently upheld when (1) they are reasonably related to the unlawful act found to exist, Jacob Siegel Co. v. FTC, 327 U.S. 608, 611-14 (1946), and (2) there is a likelihood, based on the violator's past conduct, that he will commit additional violations, American Home Products Corp. v. FTC, 695 F.2d 681, 705-709 (3rd Cir. 1983). See e.g., FTC v. Mandel Bros., Inc., 359 U.S. 385, 392-93 (1959); FTC v. Ruberoid Co., 343 U.S. 470, 473 (1952); FTC v. National Lead Co., 352 U.S. 419 (1957); Leo Daboub, P.S. Docket No. 19/185 (P.S.D. July 10, 1986). Both conditions exist in this case.

There is clearly a reasonable relationship between the unlawful act involved in this proceeding and the prohibited future conduct. Both pertain to the mail order sale of books by means of false representations. While the promotion involved in this proceeding involves a specific book, it is not unreasonable to expand the scope of the prohibited future conduct to include false representations pertaining to the sale of any book through the mail.

The record also supports a finding that, in view of their past conduct, Respondents are likely to commit additional violations.^2/ Respondent Caputo's knowledge and prior involvement in a similar program establish past conduct which supports the likelihood of future additional violations. Although the Administrative Law Judge should have made specific findings and conclusions as to the basis for imposing the "fencing-in" provision, Leo Daboub, supra at 27, this failure does not constitute reversible error. The requisite findings and conclusions have been made on appeal. Accordingly, the "fencing-in" provision recommended by the Administrative Law Judge is appropriate for inclusion in the Cease and Desist Order issued in this proceeding.

Finally, contrary to Respondents' argument, the recommended Cease and Desist Order does not violate their due process or First Amendment rights. Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 771-72 (1976); Konigsberg v. State Bar of California, 366 U.S. 36, 49 (1961); United States Postal Service v. Athena Products, Ltd.,

654 F.2d 362 (5th Cir. 1981) cert. denied 456 U.S. 915 (1982); Leo Daboub, supra. Accordingly, the Cease and Desist Order recommended by the Administrative Law Judge will be issued against Respondents.

CONCLUSION

After consideration of the entire record and Respondents' exceptions to the Initial Decision, it is concluded that Respondents are engaged in a scheme to obtain money through the mail by means of materially false representations. Accordingly, Respondents' appeal is denied and the Orders authorized by 39 U.S.C. 3005 are issued herewith.

___________________

1/ Respondent Bedson was held to be in default for failure to file a timely Answer in the form prescribed by the Rules of Practice and a Cease and Desist Order was issued against him on June 19, 1987. also contend the Administrative Law Judge failed to consider substantial or probative evidence and that he abused his discretion. While Respondents have not pointed out any specific error in the findings of fact, they have incorporated by reference the arguments made in their Proposed Findings of Fact and Conclusions of Law submitted to, and considered by, the Administrative Law Judge.

2/ The Administrative Law Judge adopted the proposed Order, including the "fencing-in" provision, based on the evidence received at the hearing. At the hearing the presiding Admin- istrative Law Judge specifically rejected as irrelevant certain evidence, including admissions by Respondent Caputo which showed that Respondent Caputo and his companies have previously been involved in a substantially similar scheme in Beatrice Bayley, Inc., P.S. Docket No. 22/113 (P.S.D. Sept. 16, 1986) and that he knew a Cease and Desist Order had been issued in that proceeding. This evidence was relevant to the past conduct criteria to be examined in determining whether to include the "fencing-in" provision in the Cease and Desist Order. Accordingly, the evidentiary ruling of the Administrative Law Judge is reversed and the evidence has been considered on appeal.