In the Matter of the Complaint Against

MORRIS JAMES
d/b/a
NATIONAL RESOURCE INFORMATION CENTER, INC.
at
P.O. Box 760
Montezuma, GA 31063-0760
and at
207 South Dooly Street

Montezuma, GA 31063-1605
and at
206 South Dooly Street
Montezuma, GA 31063-1606
P.S. Docket No. FR 02-243

APPEARANCE FOR COMPLAINANT:
Catherine A. Green, Esq.
G. Scott Morrell, Esq.
Corporate Law Section
United States Postal Service
475 L'Enfant Plaza SW, Room 6112
Washington, DC 20260-1135

APPEARANCE FOR RESPONDENT:
Jerome E. Clair, Esq.
McGraw Hill Building
1200 G Street NW, Suite 800
Washington, DC  20005-6705

INITIAL DECISION

            This proceeding was initiated on May 13, 2002, when the General Counsel for the United States Postal Service filed a Complaint alleging that Respondent Morris James, doing business as National Resource Information Center, Inc., violated 39 U.S.C. §3005 by engaging in a scheme or device for obtaining money or property through the mail by means of false representations.[1]  Specifically, paragraph 7 of the Complaint alleges that Respondent makes the following representations:

a.  American black persons filing a tax return are entitled to a monetary payment from the government;

b.  Legislation was enacted to confer a monetary payment to American black persons; and

c.  American black persons remitting the required payment to Respondent will receive papers from the Internal Revenue Service to sign and return in order to receive a monetary payment from the government.

            Paragraph 9 of the Complaint alleges that Respondent makes the following representations: 

a.  He has the ability to re-open the Pigford v. Glickman case; and

b.  Any African-American is entitled to money from this class action lawsuit.

            Paragraph 10 of the Complaint alleges that all of the above representations are false and material.

            In a timely filed Answer, Respondent denied making any false representations.  A hearing was held in Arlington, Virginia on January 22, 2004.  Both parties appeared and were represented by counsel.  The Postal Service presented testimony from a postal inspector who investigated this case, one consumer witness, and the postmaster from Montezuma, Georgia.  The Postal Service also presented a transcript of prior sworn testimony from two Internal Revenue Service employees, Mr. Dejournett and Ms. Thurell, given in a preliminary injunction hearing before the U.S. District Court for the Middle District of Georgia.[2]  Respondent did not testify and presented no evidence.

            Complainant filed a post-hearing brief, in the form of proposed findings of fact and conclusions of law.  Respondent did not.  To the extent indicated below, proposed findings and conclusions have been adopted; otherwise, they have rejected as irrelevant or contrary to the evidence.  The following findings of fact and conclusions of law are based on the entire record, included all testimony and documentary evidence introduced at the hearing, and observation of the witnesses and their demeanor.

FINDINGS OF FACT

            1.  National Resource Information Center, Inc., (NRIC) is a Georgia corporation.  Respondent Morris James is the incorporator and the chief executive officer of NRIC, and receives mail for NRIC at P.O. Box 760, Montezuma, GA 31063, and at 206 and 207 South Dooly Street, Montezuma, GA 31063.  (Cmplt. and Ans. ¶¶ 2-4; Tr. 8-9).[3]

            2.  Respondent solicits money or property through the United States mail.  (Cmplt. and Ans. ¶ 1).

            3.  By means of personal presentations to groups, and through packages of information mailed to individuals, Respondent tells black Americans that they are entitled to payment of money from the Federal Government, approximately $43,000 per person, as part of an “African American Tax Reparation,” based on the years black people were subjected to slavery.  This is also referred to as the “black tax rebellion,” or the “black inheritance tax.”  (Tr. 10-11, 39, 42-43; Cx-24; Cx-5A).

            4.  In his oral presentation, and in printed material, Respondent James informs potential applicants that they must pay a monetary fee ($50) to NRIC in order for NRIC to process the application and send it to the Internal Revenue Service.  In his oral presentation, Respondent tells his audience that many post offices already have checks made payable to potential applicants, but are holding those checks on direction from the IRS.   Applicants are directed to mail the fee and application forms to NRIC at 207 South Dooly Street and/or P.O. Box 760, Montezuma, GA 31063.  (Tr. 11-13; Exhibit 1, attached to Complaint; Cx-2, Cx-3, Cx-5A, Cx-6; transcript of Dejournett testimony at preliminary injunction hearing, pp. 37-38 (attached to Complainant’s December 9, 2003 motion)).

            5.  By means of personal presentations to groups, and through packages of information mailed to individuals, Respondent tells people that all black Americans are entitled to payment of money, approximately $50,000-$62,500 per person, resulting from settlement of a class action lawsuit titled, Pigford v. Glickman.  This was a suit on behalf of African American farmers who were denied loans and grants by the U.S. Department of Agriculture.  Respondent tells people that they need not have been farmers and need not have been a part of the class that was a party to the lawsuit in order to collect.  He also tells his audience that they may collect for family members who are deceased.  Applicants are directed to mail the fee, $250 per person, or $125 per person for groups of ten or more, and application forms to NRIC at 207 South Dooly Street and/or P.O. Box 760, Montezuma, GA 31063.  (Tr. 15, 17-18, 46-47; Exhibit 2, attached to Complaint; Cx-2; Cx-5B).

            6.  On the NRIC internet website, Respondent urges “every African American who farms or attempted to own a farm in the United States between the years of 1910 thru 2000 to sign up for the re-opening of the black farmers settlement.”  Potential applicants are directed to print out forms from the website and return the completed forms to the NRIC office.  (Cx-13).   

            7.  Many people sent payments through the mail to NRIC in response to Respondent’s promotion of the tax reparations and the black farmers lawsuit settlement discussed above.  (Tr. 9, 20, 25, 37-39, 52-55; Cx-1; Cx-8).

The Alleged Misrepresentations (Complaint ¶ 7)

a. American black persons filing a tax return are entitled to a monetary payment from the government.

            8.  Respondent clearly makes this representation many times in his oral presentation, as well as on the application forms he provided to potential applicants.  Speaking of what he calls the “black tax rebellion” on the video tape of his presentation, Respondent states that “checks are out there in post offices,” (Cx-2 at 9:12), “the money is out there,” (Cx-2 at 15:13).  He also tells his audience that the IRS has told postmasters to hold the checks (Cx-2 at 11:39), but that he has seen a woman holding a check in her hand for $43,209 as one of the payments he describes (Cx-2 at 13:20).  A written notice from the Internal Revenue Service, and the prior sworn testimony of two IRS employees, as well as complaints filed by consumers, leaves no doubt that this representation is false.  The IRS has never had a program for paying refunds or giving tax credits for reparations for slavery.  (Tr. 10-11; testimony of Dejournet and Thurell at preliminary injunction hearing, pp. 36, 46-48; Cx-2; Cx-3; Cx-5A; Cx-6).

b. Legislation was enacted to confer a monetary payment to American black persons.

             9.  This representation is made on Respondent’s website, which states, in reference to slavery reparations, that “[L]awsuits and legislation have been dated back to the mid 1800’s.”  Also, the consumer witness testified that, during a tour of Respondent’s offices in Montezuma, Georgia, Respondent’s representative referred to statutes and amendments to the Constitution that dealt with slavery reparations.  As noted above, this representative is false, because there is no provision in the law for refunds or tax credits as reparations for slavery (Tr. 44; Cx-13).

c. American black persons remitting the required payment to Respondent will receive papers from the Internal Revenue Service to sign and return in order to receive a monetary payment from the government.

             10.  Although it is not entirely clear that applicants are told that they will receive additional papers from the IRS, rather than simply receiving a check, it is clear that applicants must make the required payment to Respondent in order to get the money from the IRS.  This representation is part of Respondent’s oral presentation and is implied as part of the instructions accompanying the application forms.  In response to a question at the close of his presentation, Respondent shows the audience a copy of the application forms, and later explains that a $50 application fee is required (Cx-2 at 55:40 and 113:17).  As noted above, this representation is false, because there is no provision in the law for refunds or tax credits as reparations for slavery, and the IRS rejected any such claims that were filed.  (Tr. 13-14, 16, 45; Cx-3; Cx-4; Cx-5; Cx-6).

            11.  All three of the above representations are material because they are likely to, and did, induce many people to submit fees and applications for the tax refund.  (Tr. 9, 20, 25, 37-39, 52-55; Cx-1; Cx-8).

The Alleged Misrepresentations (Complaint ¶ 9)

a. He [Respondent] has the ability to re-open the Pigford v. Glickman case.

            12.  Respondent makes this representation directly several times in his oral presentation, as well as on the NRIC website and on the application forms.  (Tr. 39-41; Cx-2; Cx-5B; Cx-13).  Speaking of the Pigford v. Glickman case on the video tape of his presentation, Respondent states that the Government has paid out only 30% of the money to which people are entitled, and that “we are going to reopen the case.”  (Cx-2 at 19:23-19:55).  He later refers to the lawsuit covering only the years 1982-1996, but that “we are going to take it back to 1910.”  (Cx-2 at 46:02).  Further, he states that the government owes black people 18 ½ trillion dollars (Cx-2 at 42:20), and asks his audience to “let us help you get paid.”  (Cx-2 at 44:44).  The representation is false because Respondent has no connection to the lawsuit and has no means to obtain money for people who are not members of the class covered by the lawsuit.  (Tr. 18-19; Exhibit 3, attached to Complaint).

b. Any African-American is entitled to money from this class action lawsuit.

             13.  In his oral presentation, Respondent tells his audience that the only requirement for obtaining money from the lawsuit is to be black and an American citizen (Cx-2 at 26:22).  He also states that an applicant should be eighteen years of age, but that this is not an absolute requirement.  He also states that people may also collect for deceased family members who were black and American citizens, and states that his wife collected $50,000 for herself and each of her deceased parents (Cx-2 at 28:11-29:19).  This representation is false, as documents attached to the Complaint show that to be members of the class covered by the settlement of the Pigford v. Glickman case, persons must have been discriminated against on an application for benefits by the Department of Agriculture between 1981 and 1997.  (Cx-2; Exhibit 3 (atch. 4), attached to Complaint).

            14.  Both of the above representations are material because they are likely to, and did, induce many people to submit fees and applications to obtain money through the Pigford v. Glickman settlement.  (Tr. 9, 20, 25, 37-39, 52-55; Cx-1; Cx-8).

CONCLUSIONS OF LAW
 

            1.  Respondent's solicitations must be considered as a whole and their meaning determined in light of the probable impact on the mind of the ordinary recipients to whom they are directed. Donaldson v. Read Magazine, 333 U.S. 178 (1948); Peak Laboratories v. U.S. Postal Service, 556 F.2d 1387 (5th Cir. 1977); Allen Glazer, P.S. Docket No. 40/59 (P.S.D. January 27, 1994); Charles Smith, P.S. Docket No. 37/180 at 14 (P.S.D. January 31, 1994); Building Trades Association, P.S. Docket No. 37/88 at 6 (P.S.D. August 2, 1993).

            2.  The statute (39 U.S.C. §3005) is intended to protect the gullible and less critical, as well as the sophisticated and the wary.  Fields v. Hannegan, 162 F.2d 17 (D.C. Cir. 1947), cert. denied, 332 U.S. 773 (1947); Leo Daboub, P.S. Docket No. 19/185 (P.S.D. July 10, 1986).  Representations may be false, within the meaning of §3005, even if many of the statements in a solicitation are literally true. Borg-Johnson Electronics, Inc. v. Christenberry, 169 F. Supp. 746, 750-51 (S.D.N.Y. 1959); Joseph N. Wilkinson, P.S. Docket No. 38/183 (I.D. June 2, 1992).  "This section forbids representations that are false or artfully designed to mislead." Dynaquest Corp. v. U.S. Postal Service, 12 F.3d 1144, 1146 (D.C. Cir. 1994).  It is the net impression likely to be made by the solicitation that determines whether false representations are made.  Donaldson, supra; G.J. Howard Co. v. Cassidy, 162 F. Supp. 568, 572 (E.D.N.Y. 1958); Vibra Brush Corp. v. Schaffer, 152 F. Supp. 461 (S.D.N.Y. 1957), rev’d on other grounds, 256 F.2d 681 (2d Cir. 1958); Charles Smith, supra at 15.  In this case, some of the background information presented by Respondent is true, but the overall impression created by his oral presentation and written material, including the application forms to be returned, is that any applicant who submits the required fee will receive a large amount of money.

            3.  Solicitations that are ambiguous or capable of more than one meaning are misleading if one of those meanings is false.  Rhodes Pharmacal Co. Inc. v. FTC, 208 F.2d 382,387 (7th Cir. 1953); Scott P. Cullinane, supra at 13; Directory Publishing Services, P.S. Docket No. 38/122 at 11 (P.S.D. February 28, 1994).  It is not difficult to select words that will not deceive.  United States v. 95 Barrels of Vinegar, 265 U.S. 438, 443 (1924); Oriental Nurseries, Inc., P.S. Docket No. 9/116 at 4 (P.S.D. May 19, 1981).

            4.  A solicitation may be deceptive because it makes statements that are untrue, or because it omits information that should be disclosed.  It is the total impression on the reader, or recipient, that must be judged.  Harold P. Weingold, P.S. Docket No. 41/23-30 at 63 (I.D. July 3, 1995); Michael C. Spence, P.S. Docket No. 40/143 at 19 (I.D. October 21, 1994); see also U.S. v. Keplinger, 776 F.2d 678,697 (7th Cir. 1985), cert. denied, 476 U.S. 1183 (1986).

            5.  A representation is material when it is calculated to cause the reader to do what the representor wants the reader to do, or causes the reader to do other than he or she would have done had the truth been told.  F.T.C. v. Colgate-Palmolive Co., 380 U.S. 374,387 (1965); Chaachou v. American Central Insurance Co., 241 F.2d 889, 893 (5th Cir. 1957); Charles Smith, supra at 30; Directory Publishing Services, supra at 16.  In this case, the evidence, including Respondent’s record log of payments received (Cx-1) and copies of numerous money orders (Cx-8), shows that many people were persuaded by Respondent to remit the fees that he charged, in pursuit of the money that he led them to believe would be paid to them.

            6.  Respondent implied during the hearing, and in some pleadings filed earlier, that he had discontinued the activities that are the subject of this case.  Proceedings under 35 U.S.C. §3005 are not rendered moot because a scheme has been voluntarily discontinued.  Dennis Smith, P. S. Docket No. FR 37/176 (P.S.D. June 23, 1993); Professional Opportunity Magazine, Inc., P. S. Docket No. FR 33/55 (P.S.D. September 14, 1990).

            7.  Applying the foregoing standards, I find that Respondent’s solicitations make the representations alleged in the Complaint, and that these representations are materially false.

            8.  Complainant has established its case by a preponderance of the reliable and probative evidence of record.  S.E.C. v. Savoy Industries, Inc., 587 F.2d 1149, 1168 (D.C. Cir. 1978).  Respondent is engaged in the conduct of a scheme for obtaining remittance of money through the mail by means of false representation, in violation of 39 U.S.C. §3005.

            9.  The attached False Representation Order and Cease and Desist Order should be issued.

                                                                                       Bruce R. Houston
                                                                                       Chief Administrative Law Judge

[1] 39 U.S.C. §3005 provides, in pertinent part, as follows:

            (a)  Upon evidence satisfactory to the Postal Service

            that any person is engaged in conducting a scheme

            or device for obtaining money or property through the

            mail by means of false representations, . . . the Postal

Service may issue an [appropriate] order. . . .

[2]  This testimony was admitted as part of the record in an Order dated December 15, 2003.  Respondent made no objection to the admission of this testimony, either when it was offered or at the hearing.

[3]  References are to the Complaint, Respondent’s Answer, and the hearing transcript.  References to documents filed by Complainant will be “Cx_.”

[4]  Cx-2 is a video tape of a presentation by Mr. James to a large audience of black persons, apparently at a church.