P.S. Docket No. FR 96-136
March 31, 2005
In the Matter of the Complaint Against
FLOYD L. PRESIDENT II
12803 Twinbrook Parkway, Apt. T2
Building No. 19
Rockville, MD 20851-2446
and
VINCENT SANSALONE
2200 Wilson Blvd., Nos. 102-315
Arlington, VA 22201-3324
both d/b/a
MENLAR PROCESSING SYSTEMS, LTD.
and
MENLAR PROCESSING
both at
2200 Wilson Blvd., Nos. 102-315
Arlington, VA 22201-3324
and at
2020 Pennsylvania Avenue, N.W.
#325
Washington, DC 20006-1846
P.S. Docket No. FR 96-136
APPEARANCE FOR COMPLAINANT:
Catherine A. Green, Esq.
Ofice of the General Counsel
United States Postal Service
475 L’Enfant Plaza, SW, Room 6112
Washington, DC 20260-1135
APPEARANCE FOR RESPONDENT:
Floyd L. President, II
2020 Pennsylvania Avenue, NW
PMB 325
Washngton, DC 20006-1811
POSTAL SERVICE DECISION ON BREACH OF CONSENT AGREEMENT
On September 22, 2000, Complainant, United States Postal Service, filed a Petition for Orders Based on Breach of a Consent Agreement (Petition) alleging that Floyd L. President, II (Respondent), doing business as Menlar Processing Systems and SP Resources, had violated the terms of an Agreement Containing Consent Order to Cease and Desist (Agreement) executed on October 10, 1996, by Respondent, individually, and doing business as Menlar Processing Systems, Ltd. and Menlar Processing. According to Complainant, the Postal Inspection Service began an investigation into Respondent’s activities in April 2000 after receiving complaints that Respondent had resumed seeking remittances through the mail using the false or misleading representations which he agreed to permanently discontinue.
On September 29, 2000, an interim detention order, as authorized by paragraphs 9 and 10 of the Agreement, was issued directing the detention of mail to the names and addresses to which Respondent was then seeking remittances. The interim detention order granted Respondent a period of ten days in which to file a reply to the Petition. Respondent filed a timely reply denying the allegations of the Petition. Thereafter, further proceedings were suspended while a related criminal investigation was being conducted and the parties discussed the possibility of settlement. The parties have been unable to reach a settlement and the Petition is now ready for decision.[1] As neither party has shown good cause for the Judicial Officer to hold an evidentiary hearing,[2] the Petition is being decided on the record.
Findings of Fact
1. Complainant initiated this proceeding by filing a Complaint alleging that Respondent[3] was engaged in conducting a scheme or device to obtain money or property through the mail by means of materially false representations within the meaning of 39 U.S.C. §3005. More specifically, Complainant alleged in the Complaint, as subsequently amended,[4] that Respondent solicited remittances through the mail by means of postcards and a 24-hour recorded message which falsely represented that those responding to Respondent’s solicitation would receive loans, lines of credit, and other financial services with no up-front fees.
2. The postcard solicitation referred to in the Complaint contained the headline “NEED QUICK CASH” in bold capital letters followed by the text “No Collateral, No credit check, No Up-front Fees...Guaranteed Credit line…Personal and Business Signature. Loans and Credit.” (Petition, Attach. C, Exs. 1 & 2). The solicitation also included a “24 Hour Information Hotline,” which played a recorded message requiring the remittance of a processing fee in order to obtain further information (id.).
3. On October 10, 1996, Respondent entered into the Agreement which Complainant contends he has breached. In the Agreement, Respondent conceded that “[t]he postcard attached as Exhibit 1 to the Complaint, and the transcribed telephone solicitation message attached as Exhibit 2, have been employed by Respondent in seeking the remittance of money or property through the mail, and may reasonably be construed as making the representations alleged in the Complaint.” (Agreement, ¶ 3). Respondent also agreed “to immediately and permanently discontinue using the mail solicitation attached to the Complaint as Exhibit 1, or any substantially similar solicitations, and agree[d] not to use any other materials, or conduct or participate in any activities in the future related to a financial services business, under any name or names, or through any corporate or other device, that violate in any way the Order to Cease and Desist,” which Respondent agreed could be issued (Agreement, ¶¶ 4 & 8).
4. In paragraph 5 of the Agreement, Respondent also agreed “to immediately discontinue and not resume…the use of the telephone recording solicitation message as transcribed at Exhibit 2 to the Complaint, or any substantially similar recorded or live message in connection with a financial services business, that violate in any way the Order to Cease and Desist.” (Agreement, ¶¶ 5 & 8).
5. Paragraphs 8 and 9 of the Agreement provide that the Judicial Officer may issue a false representation order, a civil monetary penalties order and/or a supplemental cease and desist order in the event of a breach of the Agreement or any provision of the Cease and Desist Order (Agreement, ¶¶ 8 & 9).
6. On October 15, 1996, the Cease and Desist Order Respondent agreed could be issued was issued as Cease and Desist Order No. CD-3977. Paragraph III of the Cease and Desist Order prohibited Respondent from falsely representing that:
a. Individuals who pay Respondent’s requested fee will receive financial services, including loans of money and credit, from Respondent;
b. Individuals who remit the requested fee will obtain cash, loans, and/or credit quickly and easily through Respondent;
c. Respondent does not charge any advance fee;
d. There are no outstanding complaints involving Respondent with any local, state, or federal governmental agency, or consumer protection entity;
e. Individuals who remit the requested fee to Respondent will receive the materials referenced in Respondent’s solicitations and/or recorded messages;
f. Respondent is a bona fide agent or representative of third party financial service sources, and as such is authorized to solicit business from consumers for financial services that must be obtained from the third party sources. (Petition, Attach. B).
7. Subsequent to the execution of the Agreement and the issuance of the Cease and Desist Order, Respondent, using the names Menlar Processing Systems and SP Resources, began distributing a new solicitation seeking remittances through the mail using four new addresses (Petition, Attach. E; Petition, Attach. E, Exs. 1, 2 & 3A-D).
8. Respondent’s new solicitation consists of two circulars. The first circular offers an American Express credit card to the recipient “REGARDLESS OF CREDIT HISTORY” with “INSTANT APPROVAL” and no credit check or co-signers and a Visa credit card with “[n]o security deposit, no credit check, no collateral and no income verification…IN LESS THAN 10 MINUTES AFTER YOU CALL THE BANK FOR YOUR VISA INSTANT APPROVAL” (Petition, Attach. E, Ex. 1). The circular states that “IT IS IMPOSSIBLE TO BE TURNED DOWN WITH THESE PROGRAMS” and has a “Pre-Approved” number which appears in small print in two places on the circular. “Processing fees” of $25.00 for the American Express card and $15.00 for the Visa card “must be included” in order to take advantage of the offered programs. (Id.).
9. The second circular contains the headline “DO YOU NEED QUICK CASH?” and lists seven loan, money for rent and credit card programs, which are stated to be “SPONSORED BY: MENLAR PROCESSING SYSTEMS.” One of the offered programs states in bold, capital letters that Respondent has “INCLUDED A CREDIT APPLICATION FOR THOSE THAT NEED IMMEDIATE SERVICE ($500.00 up to $50,000.00). NO CREDIT, BAD CREDIT, GUARANTEED INSTANT APPROVAL, THIS IS WITH OUR COMPANY.” (Petition, Attach. E, Ex. 2).
10. The second circular includes the same “Pre-Approved” number printed on the first circular and requires the inclusion of a processing fee in the amount of $63.95 plus shipping and handling charges with any application for the services being offered (Petition, Attach. E., Ex. 2). In addition, this circular includes a “24 HRS-7 DAYS A WEEK” telephone number, which, when called, plays a recorded message that is almost identical to the recorded message used in Respondent’s original promotion (Petition, Attach. E). The recorded message guarantees access to a line of credit, loans, credit cards and a money for rent program. The recorded message specifically states “we are not an information service…we are the source affiliated high risk lenders…we will wire money into your bank in as little as 48 hours.” The recorded message thereafter repeats “we are not an information service.” (Petition, Attach. E, Exs. 8A-C). Although the recorded message states there are “no up-front fees”, it specifically requires the payment of fees and states that “mail without fees will not be reviewed” (Petition, Attach. E, Ex. 8C).
12. Recipients of the current solicitation who pay the required fee receive either a list of banks and credit companies, which the recipient can contact to receive a loan or credit application, or an application for a credit card directly from Respondent or a credit provider (Petition, Attach. E; Petition, Attach. E, Exs. 7A & B). The majority of the listed credit providers require an application fee and some of the listed “GUARANTEED UNSECURED VISA/MASTERCARDS” providers require a bank processing fee (id.).
13. In response to an attempt by a Postal Inspector to purchase an American Express credit card through Respondent’s program, Respondent forwarded an application for an American Express Optima Card, which is available free of charge from American Express (Petition, Attach. E; Petition, Attach. E, Ex. 5).
14. Respondent does not have any type of a business relationship with American Express that permits him to distribute its credit card applications for a fee (Petition, Attach. E; Petition, Attach. E, Ex. 5). An American Express Optima card is required to be secured by a savings account deposit and would not be issued regardless of an applicant’s credit history (Petition, Attach. E., Ex. 5).
DISCUSSION
Complainant alleges that Respondent has breached the terms of the Agreement by distributing a new solicitation in violation of the provisions of paragraphs III (a), (b), (e) and (f) of the Cease and Desist Order. Complainant contends that Respondent’s circulars and recorded message falsely represent that (a) individuals who pay Respondent’s requested fee will receive financial services, including loans of money and credit, from Respondent; (b) individuals who remit the requested fee will obtain cash, loans, and/or credit quickly and easily through Respondent; (e) individuals who remit the requested fee to Respondent will receive the materials referenced in Respondent’s solicitations and/or recorded messages; and (f) Respondent is a bona fide agent or representative of third party financial service sources, and as such is authorized to solicit business from consumers for financial services that must be obtained from the third party sources.[5]
Respondent argues that his new promotion does not violate the terms of the cease and desist order because he only represents that he is a referral agent for lending institutions and credit card companies. According to Respondent, his current business operation researches, collects and publishes information on services and programs that are available to the public from financial institutions, including credit card companies, and he has business relationships with those financial institutions which entitle him to act as their agent, offer their extended services and refer individuals to them. Furthermore, Respondent asserts that the fee he charges is for processing and mailing applications for the programs and services he offers and is not an advance fee in violation of the Cease and Desist Order.
It is not disputed that subsequent to the execution of the Agreement Respondent distributed circulars and used a recorded message to solicit remittances through the mail for a new loan and credit card promotion. Although Respondent insists that the fees he charges are for processing and have nothing to do with the receipt of a credit card, his circulars and recorded message clearly require the payment of an up-front fee[6] in order to take advantage of the services he represents will be provided. Regardless of what Respondent chooses to call these fees, they are advance fees prohibited by the terms of the Cease and Desist Order Respondent agreed could be issued.
Moreover, like Respondent’s original postcard solicitation, which Respondent agreed could reasonably be construed as making the representations alleged in the Complaint,[7] Respondent’s current circulars and recorded message can reasonably be construed as making the representations prohibited by the Cease and Desist Order.[8] The language used in Respondent’s circulars and recorded message would
most probably lead the ordinary reader[9] to believe they were applying for a credit card, loan or line of credit to be provided by Respondent. While there are indications in the solicitation and the recorded message that additional applications may have to be filed and that the credit cards or loans may be supplied by third parties, they are not sufficient to overcome the overall impression[10] that those responding to Respondent’s promotional materials “will receive financial services, including loans of money and credit, from Respondent” or “will obtain cash, loans, and/or credit quickly and easily through Respondent.”[11] Persons who respond to Respondent’s solicitation, however, are sent either an application for a credit card to be provided by a third party financial service provider or a list of institutions the recipient can contact to apply for a loan or a bank card,[12] which may require an additional up-front fee, rather than the promised loan or credit card in violation of paragraphs III (a), (b) and (e) of the Cease and Desist Order.
Although Respondent’s solicitation represents the availability of an American Express card and Respondent furnishes an application for an American Express Optima card to individuals who respond to his solicitation, Respondent does not have a business relationship with American Express nor is he authorized to solicit business on American Express’ behalf.[13] Therefore, Respondent is in violation of paragraph III (f) of the Cease and Desist Order even though Respondent asserts that he no longer distributes the American Express card application.[14]
Accordingly, the allegations of the Petition, supported by the attachments thereto, establish that Respondent has breached the terms of the Agreement in the manner alleged in the Petition.
Pursuant to the terms of Paragraphs 9 and 10 of the Agreement, the cease and desist order requested in the Petition and a false representation order as described in 39 U.S.C. §3005 (a)[15] are issued with this Decision.
James A. Cohen
Judicial Officer
[1] The parties disagree as to whether the criminal investigation has been concluded, but agree the processing of the Petition should proceed.
[2] Under paragraph 10(b) of the Agreement, “[n]o hearing on the Petition will be held except for good cause shown as ordered by the Judicial Officer.”
[3] The original Complaint named Gary L. Stiles as an individual respondent in addition to Respondent President. Respondent Stiles separately settled this matter by entering into an Agreement Containing Consent Order to Cease and Desist dated July 19, 1996, and further proceedings against him were suspended indefinitely. Complainant has not alleged that Respondent Stiles is involved in the current promotion.
[4] On July 25, 1996, Complainant moved to amend the Complaint to add Vincent Sansalone as an individual respondent and to add an additional alleged false representation. The motion was granted by Order dated August 26, 1996. Respondent Sansalone did not file an Answer to the Complaint and therefore, was found to be in default by Order dated October 17, 1996. The Petition does not request the issuance of any orders against Respondent Sansalone.
[5] See Finding of Fact (FOF) 6.
[8] See Donaldson v. Read Magazine, Inc., 333 U.S. 178, 189 (1948) (stating that “[q]uestions of fraud may be determined in the light of the effect advertisements would most probably produce on ordinary minds”). See also G.J. Howard Co. v. Cassidy, 162 F. Supp. 568, 572 (E.D.N.Y. 1958); Dennis Ward, et al., P.S. Docket No. 37/118 (P.S.D. Oct. 16, 1991).
[9] The ordinary reader is the class of readers to whom the solicitation is directed. See Donaldson v. Read Magazine, Inc., 333 U. S. 178 (1948); Vibra Brush Corp. v. Schaffer, 152 F. Supp. 461, 468 (S.D.N.Y. 1957), rev'd on other grounds, 256 F.2d 681 (2d Cir. 1958); Gottlieb v. Schaffer, 141 F. Supp. 7, 15 (S.D.N.Y. 1956). See also Charles Smith, et al., P.S. Docket No. 37/180 (P.S.D. Jan. 31, 1994) and cases cited therein.
[10] A solicitation as a whole may be misleading even though every sentence separately considered is literally true. Donaldson v. Read Magazine, Inc., 333 U.S. 178, 188-89 (1948); Allen Glazer d/b/a Poster Distribution Center, P.S. Docket No. 40/59 (P.S.D. Jan. 27, 1994); Com-Tel Directories, et al., P.S. Docket No. FR 95-276 (P.S.D. July 27, 2001).
[14] Modification or discontinuance of a particular promotion does not render a proceeding under 39 U.S.C. §3005 moot. See United States v. W. T. Grant, Co., 345 U.S. 629, 632 (1953) (stating that “voluntary cessation of allegedly illegal conduct does not deprive the tribunal of power to hear and determine the case, i. e., does not make the case moot”) and United States v. Concentrated Phosphate Export Association, 393 U.S. 199, 203 (1968); see also Arthur Mourad, P.S. Docket No. 37/177 (P.S.D. June 28, 1993); Paul W. Schuette, et al., P.S. Docket No. 29/117 (P.S.D. March 16, 1989); CM/NA Commission Mailers of North America, et al., P.S. Docket No. 20/33 (P.S.D. Aug. 29, 1986).
[15] Although Complainant did not request the issuance of a false representation order, such an order is authorized by paragraph 9 of the Agreement (FOF 5) and appropriate for issuance in accordance with this decision.