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Federal Trade Commission v. Braswell

United States District Court, C.D. California, Western Division
Dec 28, 2005
CV 03-3700-DT (PJWx) (C.D. Cal. Dec. 28, 2005)

Opinion

CV 03-3700-DT (PJWx).

December 28, 2005

DICKRAN TEVRIZIAN, District Judge

DAVID P. FRANKEL ROSEMARY ROSSO MAMIE KRESSES THEODORE H. HOPPOCK CHRISTINE J. LEE DAVID K. KOEHLER ALYSA S. BERNSTEIN JAMES A. TRILLING Federal Trade Commission Washington, D.C.

KENNETH H. ABBE (Local Counsel) California Bar # 172416, Federal Trade Commission Los Angeles, CA, Attorneys for Plaintiff FEDERAL TRADE COMMISSION.

A. GLENN BRASWELL SHELDON S. LUSTIGMAN The Lustigman Firm, P.C. New York, NY, Attorney for Defendant Braswell.


[Proposed] STIPULATED FINAL ORDER FOR PERMANENT INJUNCTION AND SETTLEMENT OF CLAIMS FOR MONETARY RELIEF AS TO A. GLENN BRASWELL


Plaintiff, the Federal Trade Commission ("FTC" or "Commission") filed a Complaint and Second Corrected First Amended Complaint ("Complaint") for permanent injunction and other relief against A. Glenn Braswell, JOL Management Co., G.B. Data Systems, Inc., Gero Vita International, Inc., Theraceuticals, Inc., Halsey Holdings LLC, Health Quest Publications, Inc., G.B. Data Systems, Inc. (Canada), Ron Tepper, Ronald M. Lawrence, M.D., Ph.D., Hans Kugler, Ph.D., and Chase Revel, pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b). Defendant A. Glenn Braswell denies the allegations in the Complaint, except jurisdictional facts, and disputes the legal basis for the relief requested, but is willing to agree to the entry of the following Stipulated Final Order for Permanent Injunction and Settlement of Claims for Monetary Relief ("Order"), without adjudication of any issues of fact or law and without Defendant Braswell admitting liability for any of the matters alleged in the Complaint.

The Commission and Defendant Braswell have stipulated to the entry of the following Order in settlement of the Commission's Complaint against Defendant Braswell. The Court, being advised in the premises, finds:

FINDINGS

1. This Court has jurisdiction over the subject matter of this case and jurisdiction over Defendant Braswell. Venue in the Central District of California is proper.
2. The Complaint states a claim upon which relief can be granted and the Answer states multiple legal defenses. The Commission has the authority to seek the relief it has requested.
3. The activities of Defendant Braswell are or were in or affecting commerce, as defined in 15 U.S.C. § 44.
4. The parties waive all rights to seek judicial review or otherwise challenge or contest the validity of this Order. Defendant Braswell also waives any claims that he may have held under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action to the date of this Order.
5. Each party shall bear its own costs and attorneys' fees.

6. Entry of this Order is in the public interest.

7. Pursuant to Federal Rule of Civil Procedure 65(d), the provisions of this Order are binding upon Defendant Braswell, and his agents, servants, employees and all other persons or entities in active concert or participation with him, who receive actual notice of this Order by personal service or otherwise.
8. This Order resolves all claims that arose prior to the date of entry of this Order against Defendant Braswell with respect to any allegation that Defendant Braswell violated the Federal Trade Commission Act and the regulations promulgated thereunder, and all claims that arose prior to the date of entry of this Order against Defendant Braswell with respect to any allegation that Defendant Braswell violated the Final Judgment previously entered in the United States District Court for the Northern District of Georgia, Atlanta Division, Civil Action C81-558A, to the extent that such allegation is referred or initiated by the Commission.
9. Defendant Braswell's stipulation is for settlement purposes only; does not constitute an admission of facts, other than jurisdictional facts, or violations of law as alleged in the Complaint and in fact Defendant denies same; and may not be used against Defendant in any other proceeding, except in such proceedings as may be necessary to enforce the provisions of this Order.
10. This Order was drafted jointly by Plaintiff and Defendant Braswell and reflects the negotiated agreement among the parties.
11. The paragraphs of this Order shall be read as the necessary requirements for compliance and not as alternatives for compliance and no paragraph serves to modify another paragraph unless expressly so stated.

DEFINITIONS

For purposes of this Order, the following definitions shall apply:

1. Unless otherwise specified, Defendant shall mean A. Glenn Braswell ("Braswell"), individually and in his former capacity as a director or officer of JOL Management Co., G.B. Data Systems, Inc., Gero Vita International, Inc., Theraceuticals, Inc., Health Quest Publications, Inc., and G.B. Data Systems, Inc. (Canada).
2. "Competent and reliable scientific evidence" shall mean tests, analyses, research, studies, or other evidence based on the expertise of professionals in the relevant area, that has been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the relevant field to yield accurate and reliable results.
3. "Food" and "drug" shall mean "food" and "drug" as defined in Section 15 of the FTC Act, 15 U.S.C. § 55.
4. "Covered product or service" shall mean any food, drug, or dietary supplement, whether sold individually or as part of a program, or any health-related service.
5. "Commerce" shall mean "commerce" as defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. § 44.
6. "Endorsement" shall mean "endorsement" as defined in 16 C.F.R. § 255.0(b).
7. "Clear(ly) and prominent(ly)" shall mean as follows:
a. In an advertisement communicated through an electronic medium (such as television, video, radio, and interactive media including the Internet and online services), the disclosure shall be presented in either the audio or video portions of the advertisement, except that the Warning disclosure required by Paragraph VI., below, shall be presented simultaneously in both the audio and video portions of the advertisement. The audio disclosure shall be delivered in a volume and cadence sufficient for an ordinary consumer to hear and comprehend it. The video disclosure shall be of a size and shade, and shall appear on the screen for a duration, sufficient for an ordinary consumer to read and comprehend it. In addition to the foregoing, in interactive media the disclosure shall also be unavoidable and shall be presented prior to the consumer incurring any financial obligation.
b. In a print advertisement, promotional material, or instructional manual, the disclosure shall be in a type size and location sufficiently noticeable for an ordinary consumer to read and comprehend it, in print that contrasts with the background in which it appears.
Nothing contrary to, inconsistent with, or in mitigation of the disclosure shall be used in any advertisement or on any label.
8. The term "direct response marketing" shall mean any commercial message, in any medium of electronic or print dissemination, including, but not limited to, television, radio, product packaging, labeling, print advertising, online marketing, telemarketing, and direct mail, in which consumers may place an order for a product through the mail or any means of electronic device such as a telephone number, e-mail, or online request. The term "direct response marketing" shall not include such commercial messages for products sold exclusively through retail stores or medical offices with a physical location where customers can purchase such products only at such locations, and not through means of the mail or electronic means such as a telephone number, e-mail, or online.

BAN AGAINST DEFENDANT A. GLENN BRASWELL I.

IT IS HEREBY ORDERED that Defendant Braswell, whether directly, or in concert with others, or through any business, entity, corporation, subsidiary, division or other device, is hereby permanently restrained and enjoined from participating or assisting others in the direct response marketing of any food, dietary supplement, or drug, for which a health benefit is claimed directly or by implication. Provided, however, this Part I ban does not include claims made in the advertising, promotion, manufacturing, labeling, offering for sale, sale, or distribution of any drug for which there is an approval by the Food and Drug Administration ("FDA") and such claims are permitted by the FDA in labeling for such drug under any tentative final or final standard by the FDA. Provided further, however, this Part I ban does not prohibit Defendant from including in a publication that he distributes, advertisements placed by third parties or other entities in which Defendant has no direct or indirect ownership, interest, or control so long as Defendant's remuneration for such advertisements is made by means of a flat fee for placement and is not tied in any respect to sales of the advertised product. For purposes of this Paragraph, "assisting others" means knowingly providing any of the following services to any person or entity: (a) performing customer service functions for any such person or entity, including, but not limited to, outbound or inbound telemarketing, upselling, cross-selling, handling customer complaints, credit card or debit account processing, refund processing, web design and marketing, continuity program development or implementation, or designing or preparing or assisting in the preparation of product labeling or packaging; (b) formulating or providing, or arranging for the formulation or provision of, any sales script or any other advertising or marketing material for any such person or entity; (c) leasing, renting, selling, or servicing customer lists, except as permitted in this Order, or (d) performing advertising or marketing services or consulting services of any kind for any such person or entity.

CONDUCT PROHIBITIONS AND REQUIRED DISCLOSURES Representations Regarding Respiratory Products II.

IT IS FURTHER ORDERED that Defendant, directly or through any corporation, partnership, subsidiary, division, trade name, or other device, and his agents, representatives, employees, and all persons or entities in active concert or participation with him who receive actual notice of this Order, by personal service or otherwise, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of Lung Support Formula, or any other respiratory product, are hereby permanently restrained and enjoined from making any representation, in any manner, expressly or by implication, including through the use of trade names or endorsements, that such product:

A. Cures or treats lung diseases or respiratory problems, including allergies, asthma, colds, influenza, bronchitis, sinus problems, chest congestion, emphysema, smoking damage, or shortness of breath;
B. Reverses existing lung damage in persons with emphysema or significantly improves their breathing;
C. Prevents breathing problems for persons who do not have existing respiratory problems; or
D. Is clinically proven to eliminate or cure allergies related to respiratory problems, asthma, colds, influenza, bronchitis, sinus problems, chest congestion, emphysema, smoking damage, or shortness of breath;

unless the representation is true, non-misleading, and, at the time it is made, Defendant possesses and relies upon competent and reliable scientific evidence that substantiates the representation.

Representations Regarding Diabetes and Blood Sugar Products III.

IT IS FURTHER ORDERED that Defendant, directly or through any corporation, partnership, subsidiary, division, trade name, or other device, and his agents, representatives, employees, and all persons or entities in active concert or participation with him who receive actual notice of this Order, by personal service or otherwise, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of AntiBetic Pancreas Tonic or any other diabetes or blood sugar product, are hereby permanently restrained and enjoined from making any representation, in any manner, expressly or by implication, including through the use of trade names or endorsements, that such product:

A. Can cure Type I or Type II diabetes;

B. Is an effective or superior alternative to insulin or other diabetes medications for the treatment of Type I or Type II diabetes;
C. Lowers blood sugar levels in persons with diabetes or regenerates or repairs the pancreatic beta cells that produce insulin; or
D. Is clinically proven to lower blood sugar levels in persons with diabetes or to regenerate or repair the pancreatic beta cells that produce insulin;

unless the representation is true, non-misleading, and, at the time it is made, Defendant possesses and relies upon competent and reliable scientific evidence that substantiates the representation.

Representations Regarding Anti-Aging Products IV.

IT IS FURTHER ORDERED that Defendant, directly or through any corporation, partnership, subsidiary, division, trade name, or other device, and his agents, representatives, employees, and all persons or entities in active concert or participation with him who receive actual notice of this Order, by personal service or otherwise, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of Gero Vita G.H.3, Theraceuticals GH3 Romanian Youth Formula, or any other anti-aging product, are hereby permanently restrained and enjoined from making any representation in any manner, expressly or by implication, including through the use of trade names or endorsements, that such product:

A. Prevents or reverses age-related memory loss, dementia, or Alzheimer's disease;

B. Enables persons to live longer; or

C. Is clinically proven to prevent or reverse age-related memory loss, dementia, or Alzheimer's disease;

unless the representation is true, non-misleading, and, at the time it is made, Defendant possesses and relies upon competent and reliable scientific evidence that substantiates the representation.

Representations Regarding Weight Loss Products V.

IT IS FURTHER ORDERED that Defendant, directly or through any corporation, partnership, subsidiary, division, trade name, or other device, and his agents, representatives, employees, and all persons or entities in active concert or participation with him who receive actual notice of this Order, by personal service or otherwise, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of ChitoPlex or any other weight loss product, are hereby permanently restrained and enjoined from making any representation, in any manner, expressly or by implication, including through the use of trade names or endorsements, that any such product:

A. Enables consumers to lose weight, maintain weight, or prevent weight gain;

B. Enables consumers to reverse obesity; or

C. Is proven to cause weight loss;

unless the representation is true, non-misleading, and, at the time it is made, Defendant possesses and relies upon competent and reliable scientific evidence that substantiates the representation.

Representations Regarding Sexual Enhancement Products VI.

IT IS FURTHER ORDERED that Defendant, directly or through any corporation, partnership, subsidiary, division, trade name, or other device, and his agents, representatives, employees, and all persons or entities in active concert or participation with him who receive actual notice of this Order, by personal service or otherwise, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of Testerex, or any other sexual enhancement product, are hereby permanently restrained and enjoined from making any representation, in any manner, expressly or by implication, including through the use of trade names or endorsements, that such product:

A. Is effective in treating impotence or erectile dysfunction; or

B. Has no harmful side effects;

unless the representation is true, non-misleading, and, at the time it is made, Defendant possesses and relies upon competent and reliable scientific evidence that substantiates the representation.

Provided further that in any advertisement, promotional material or product label for any male sexual enhancement product containing yohimbine, yohimbe bark, or yohimbe bark extract, that contains any representation about the efficacy, benefits, performance, safety or side effects of such product, Defendant, his officers, agents, representatives, employees, and all persons or entities in active concert or participation with him who receives actual notice of this Order, by personal service or otherwise, shall make clearly and prominently, and in close proximity to such representation, the following disclosure:

WARNING: This product can raise blood pressure and interfere with other drugs you may be taking. Talk to your doctor before taking this product.

On a product label, the disclosure shall be in a type size and location sufficiently noticeable for an ordinary consumer to read and comprehend it and in print that contrasts with the background against which it appears. Provided, if a disclosure on a bottle label or package label is made in a location other than the principal display panel, the bottle label or package label shall: (i) include the statement " See important warning on [insert disclosure location]" in a type size and location on the principal display panel sufficiently noticeable for an ordinary consumer to read and comprehend it and in print that contrasts with the background against which it appears; and (ii) the disclosure shall be placed on the bottle label and, if applicable, the package label, within a border that is a color or shade that contrasts with the background against which it appears. Provided further, that, in a multi-page insert, the disclosure shall appear on the cover page or first page. Nothing contrary to, inconsistent with, or in mitigation of the disclosure shall be used in any advertisement or on any label.

Representations Regarding Covered Products and Services VII.

IT IS FURTHER ORDERED that Defendant, directly or through any corporation, partnership, subsidiary, division, trade name, or other device, and his agents, servants, employees, and all persons or entities in active concert or participation with him who receive actual notice of this Order, by personal service or otherwise, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any covered product or service are hereby permanently restrained and enjoined from misrepresenting that any product or treatment has been tested by scientists, researchers, or other medical professionals and found to be effective.

VIII.

IT IS FURTHER ORDERED that Defendant, directly or through any corporation, partnership, subsidiary, division, trade name, or other device, and his agents, servants, employees and all persons or entities in active concert or participation with him who receive actual notice of this Order, by personal service or otherwise, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any covered product or service are hereby permanently restrained and enjoined from making any representation, in any manner, expressly or by implication, including through the use of trade names or endorsements, about the absolute or comparative health benefits, efficacy, safety, or side effects of such product or service unless the claim is true, non-misleading, and, at the time it is made, Defendant possesses and relies upon competent and reliable scientific evidence that substantiates the representation.

Representations Regarding Tests or Studies IX.

IT IS FURTHER ORDERED that Defendant, directly or through any corporation, partnership, subsidiary, division, trade name, or other device, and his agents, servants, employees and all persons or entities in active concert or participation with them who receive actual notice of this Order, by personal service or otherwise, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any covered product or service, are hereby permanently restrained and enjoined from misrepresenting, in any manner, expressly or by implication, the existence, contents, validity, results, conclusions, or interpretations of any test or study.

Advertising Formats X.

IT IS FURTHER ORDERED that Defendant, directly or through any corporation, partnership, subsidiary, division, trade name, or other device, and his agents, servants, employees and all persons or entities in active concert or participation with him who receive actual notice of this Order, by personal service or otherwise, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any covered product or service, are hereby permanently restrained and enjoined from misrepresenting, in any manner, expressly or by implication, that:

A. The product or service has been independently reviewed or evaluated; or
B. Any advertisement for the product or service is not a paid advertisement.

Use of Endorsements XI.

IT IS FURTHER ORDERED that Defendant, directly or through any corporation, partnership, subsidiary, division, trade name, or other device, and his agents, servants, employees and all persons or entities in active concert or participation with him who receive actual notice of this Order, by personal service or otherwise, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any covered product or service, are hereby permanently restrained and enjoined from representing, in any manner, expressly or by implication, that such product or service has been endorsed by any person, organization or group that is an expert with respect to the endorsement message unless:

A. The endorser is an existing person, organization, or group whose qualifications give it the expertise that the endorser is represented as having with respect to the endorsement;
B. The endorsement is substantiated by an objective and valid evaluation or test using procedures generally accepted by experts in the relevant science or profession to yield accurate and reliable results; and
C. The endorser has a reasonable basis for the endorsement.

For purposes of a criminal contempt proceeding, it shall be a defense hereunder that Defendant neither knew nor had reason to know of the inadequacy of the substantiation claimed by the endorser for the representation.

XII.

IT IS FURTHER ORDERED that Defendant, directly or through any corporation, partnership, subsidiary, division, trade name, or other device, and his agents, servants, employees and all persons or entities in active concert or participation with him who receive actual notice of this Order, by personal service or otherwise, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any covered product or service, are hereby permanently restrained and enjoined from:

A. Misrepresenting that any endorser of the product or service is not affiliated with or is independent from Defendant; and
B. Failing to disclose, clearly and prominently, any material connection, where one exists, between Defendant and any endorser of the product or service. For purposes of this Paragraph, a "material connection" shall mean any relationship that may materially affect the weight or credibility of the endorsement, including, but not limited to: where the endorser has any direct or indirect ownership interest in any business Defendant owns or controls or its subsidiaries or affiliates, or receives a royalty or percentage of sales of the endorsed product; or the endorser is an employee, agent, representative, officer, director, or shareholder of any business Defendant owns or controls or its subsidiaries or affiliates.

FDA APPROVED CLAIMS XIII.

IT IS FURTHER ORDERED that:

A. Nothing in this Order shall prohibit Defendant from making any representation for any drug that is permitted in labeling for such drug under any tentative final or final standard promulgated by the Food and Drug Administration, or under any new drug application approved by the Food and Drug Administration; and
B. Except as provided for in Paragraph I of this Order, nothing in this Order shall prohibit Defendant from making any representation for any product that is specifically permitted in labeling for such product by regulations promulgated under the laws of the United States America.

MONETARY JUDGMENT AND CONSUMER REDRESS Judgment XIV.

IT IS FURTHER ORDERED that:

A. Judgment for equitable monetary relief is hereby entered against Defendant Braswell in the amount of Thirty Million Dollars ($30,000,000). Provided, however, that this amount shall not be binding in proceedings by the Commission against any non-settling Defendant. Provided further, that this judgment shall be suspended and, subject to the provisions of Paragraph XV, shall be deemed to be fully satisfied if Defendant timely and completely fulfills the payment and assignment of promissory note obligations set forth in Subparagraph XIV.B.
B. Defendant Braswell shall pay to the Commission the sum of Four Million Five Hundred Thousand Dollars ($4,500,000) as follows:
1. Defendant Braswell has placed the sum of One Million Dollars ($1,000,000) into a non-interest bearing trust account at the law firm of Defendant's counsel, The Lustigman Firm, P.C., which shall be held by Defendant's counsel in such trust account and transferred within five (5) business days after entry of this Order, by electronic funds transfer into an account to be designated by the Commission in accord with directions provided by the Commission; and
2. Defendant Braswell shall obtain from Perpetual Health, LLC an assignment to the Commission of all rights to a promissory note with LongLife Maxx dated February 28, 2005 in the amount of Three Million Five Hundred Thousand Dollars ($3,500,000.00). The assignment of such note to the Commission shall be without recourse. The promissory note and the assignment, along with any other documents necessary to perfect such assignment, shall be delivered to the Commission within fifteen (15) business days after entry of this Order. Defendant Braswell warrants and represents that all requirements under said note or applicable state law, including, but not limited to, notifications and filings, necessary to assign or transfer said note shall be completed at the time of delivery of said assignment to the Commission.
C. All funds paid pursuant to this Final Judgment shall be deposited into a fund administered by the Commission or its agent to be used for equitable relief, including but not limited to consumer redress and any attendant expenses for the administration of any redress fund. In the event that direct redress to consumers is wholly or partially impracticable or funds remain after redress is completed, the Commission may apply any remaining funds for such other equitable relief (including consumer information remedies) as it determines to be reasonably related to the Defendant's practices alleged in the Complaint. Any funds not used for such equitable relief shall be deposited in the United States Treasury as disgorgement. Defendant shall have no right to challenge the Commission's choice of remedies under this Paragraph or the manner of distribution chosen by the Commission.
D. All money paid pursuant to this Final Judgment is irrevocably paid to the Commission for purposes of settlement between the Commission and Defendant, and Defendant relinquishes all right, title, and interest to assets held by the Commission in connection with this case.
E. No portion of the payment as herein provided shall be deemed payment of any fine, penalty, forfeiture, or punitive assessment.
F. In the event of any default by Defendant of any obligation imposed on Defendant under this Paragraph, including but not limited to the failure to timely and completely fulfill the payment obligations set forth in Subparagraph B:
1. The suspension of the judgment amount set forth in Subparagraph A shall be vacated as to Defendant, and the full amount of that judgment shall immediately become due, plus interest from the date of entry of this Final Judgment pursuant to 28 U.S.C. § 1961, less any payments already made; and
2. The Commission shall be entitled to immediately exercise any and all rights and remedies against the Defendant and his property, to collect the full amount of the judgment amount set forth in Subparagraph A and interest thereon, less any payments already made.
G. Defendant agrees that, if he fails to timely and completely fulfill the payment and assignment of the promissory note obligation set forth in this Final Judgment, the facts as alleged in the Complaint filed in this matter shall be taken as true in any subsequent litigation filed by the Commission to enforce its rights pursuant to this Final Judgment, including but not limited to, a nondischargeability complaint in any bankruptcy case.
H. In accordance with 31 U.S.C. § 7701, Defendant is hereby required, unless he has done so already, to furnish to the Commission his taxpayer identifying numbers and/or social security numbers, which may be used for purposes of collecting and reporting on any delinquent amount arising out of Defendant's relationship with the government.

Right to Reopen XV.

IT IS FURTHER ORDERED that:

A. The Commission's agreement to this Order is expressly premised upon Defendant's financial condition as represented by the information Defendant provided to the Commission regarding his financial condition, to wit:
1. the sworn Financial Statement of A. Glenn Braswell, dated December 2, 2005.
These financial statements and supporting documents contain material information upon which the Commission relied in negotiating and agreeing to the terms of this Order. These financial statements and supporting documents contain confidential personal financial information. Such statements and supporting documents are subject to the protective order entitled, Joint Stipulated Protective Order Between Plaintiff Federal Trade Commission and Defendant Almon Glenn Braswell Concerning Confidential Settlement and Judgment Related Materials, entered in this matter, FTC v. Braswell, et al., No. CV 03-3700-DT (PJWx), on December 1, 2005, provided, however, that nothing in the protective order shall be deemed to preclude the Commission's use of such financial statements or supporting documents, or the use of such statements or documents in any investigations or proceedings that the Commission or the United States may initiate resulting from failure to comply with the payment and assignment provisions of this Final Judgment or in any proceeding initiated pursuant to Subparagraph XV.B. of this Order.
B. If, upon motion by the Commission, the Court finds that such financial statement of Defendant contains any material misrepresentation or omission, the suspended judgment entered pursuant to Paragraph XIV. A. of this Final Judgment, less any payments already made, shall become immediately due and payable by such Defendant, and interest computed at the rate prescribed under 28 U.S.C. § 1961, as amended, shall immediately begin to accrue on the unpaid balance; provided, however, that in all other respects this Final Judgment shall remain in full force and effect unless otherwise ordered by the Court; and, provided further that proceedings instituted under this provision would be in addition to, and not in lieu of, any other civil or criminal remedies as may be provided by law, including but not limited to contempt proceedings, or any other proceedings that the Commission or the United States may initiate to enforce this Final Judgment. For purposes of this Paragraph, and any subsequent proceedings to enforce payment, including but not limited to a non-dischargeability complaint filed in a bankruptcy proceeding, Defendant agrees not to contest any of the allegations in the Commission's Complaint.

COOPERATION WITH COMMISSION XVI.

IT IS FURTHER ORDERED that Defendant shall, in connection with this action or any subsequent investigations related to or associated with the transactions or occurrences that are the subject of the Commission's Complaint, cooperate reasonably and in good faith with the Commission and appear at such places and times as the Commission shall reasonably request, after written notice, for interviews, conferences, pretrial discovery, review of documents, and for such other matters as may be reasonably requested by the Commission, provided that, Defendant shall not be precluded from lawfully asserting his Fifth Amendment privilege against self-incrimination.

LIST OF CONSUMERS XVII.

Defendant Braswell, whether directly or through any corporation, partnership, subsidiary, division, trade name, or other device, and his agents, representatives, employees, and all persons or entities in active concert or participation with him who receive actual notice of this Order, by personal service or otherwise, are permanently restrained and enjoined from advertising or marketing any food, drug, dietary supplement, or other health-related product or service to any person whose name, address, telephone number, credit card number, bank account number, e-mail address, or other identifying information was obtained from any mailing list or customer database held by or on behalf of any former corporate defendant in this action or any entity that entered into and is subject to the Final Stipulated Order For Permanent Injunction and Settlement of Claims for Monetary Relief Re: Certain Corporate Defendants, entered by this Court on March 30, 2005, or from:

A. Directly or indirectly selling, renting, leasing, transferring or disclosing any such mailing list or customer database to any person or entity engaged in the marketing, or selling of any food, drug, dietary supplement, or other health-related product or service, or
B. Using such mailing list or customer database to distribute any publication that otherwise does not comply with Part I of this Order.
Provided, however, that Defendant may disclose such identifying information to any law enforcement agency, or as required by any law, regulation, or court order.

COMPLIANCE REQUIREMENTS Employees' Compliance with Order XVIII.

IT IS FURTHER ORDERED that Defendant Braswell, directly or through any corporation, partnership, subsidiary, division, trade name, or other device, shall:

A. Take reasonable steps sufficient to monitor and ensure that all employees and agents engaged in sales, marketing, advertising, promotion, or other customer service or policy functions comply with Paragraphs II through XII of this Order. Such steps shall include adequate monitoring of all advertisements, promotions, sales presentations, and other oral and written communication with customers regarding such products or services. Defendant Braswell, at a minimum, shall:
1. Conduct periodic monitoring of representations concerning any product or services made by persons engaged in sales or other customer service functions, including any representations made orally or through electronic communications;
2. Conduct periodic monitoring of representations made in advertising for the product or services;
3. Maintain a procedure for receiving, maintaining, and responding to consumer complaints; and
4. Maintain a procedure for taking action against any employee or agent who engages in any conduct prohibited by Paragraphs II through XII of this Order, including, but not limited to, warning each such employee or agent upon the first instance of non-compliance and termination, as specified below in Subparagraph B of this Paragraph.
B. Terminate the employment of any employee or agent who engages in any conduct prohibited by Paragraphs II through XII of this Order once Defendant Braswell knows or should know that such person is or has been engaged in such conduct after having been warned of a previous instance of non-compliance.

Compliance Reporting XIX.

IT IS FURTHER ORDERED that, in order that compliance with the provisions of this Order may be monitored:

A. For a period of five (5) years from the date of entry of this Order, Defendant shall notify the Commission of the following:
1. Any changes in residence(s), mailing address(es), and telephone number(s) of the Defendant, within ten (10) days of the date of such change;
2. Any changes in Defendant's employment status (including self-employment), and any change in the ownership of the Defendant in any business entity within ten (10) days of such change. Such notice shall include the name and address of each business that the Defendant is affiliated with, employed by, creates or forms, or performs services for; a statement of the nature of the business; and a statement of the Defendant's duties and responsibilities in connection with the business or employment, and

3. Any changes in the Defendant's name; and

B. Defendant shall notify the Commission of any proposed change in any business entity that Defendant Braswell directly or indirectly controls, or has an ownership interest in, that may affect compliance obligations arising under this Order, including but not limited to a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor corporation; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order; the filing of a bankruptcy petition; or a change in the corporate name or address, at least thirty (30) days prior to such change, provided that, with respect to any proposed change in the corporation about which Defendant learns less than thirty (30) days prior to the date such action is to take place, the Defendant shall notify the Commission as soon as is practicable after obtaining such knowledge.
C. Sixty (60) days after the date of entry of this Order, Defendant Braswell shall provide a written report to the Commission, sworn to under penalty of perjury, setting forth in detail the manner and form in which he has complied and is complying with this Order. This report shall include, but not be limited to:
1. The then-current residence addresses, mailing addresses, and telephone numbers of the Defendant;
2. The then-current employment and business addresses and telephone numbers of the Defendant, a description of the business activities of each such employer or business, and the title and responsibilities of the Defendant, for each such employer or business;
3. The full name, address, telephone number, and state of incorporation of each corporation for which the Defendant is an officer or director or in which he holds more than five (5) percent of the shares of the corporation;
4. A copy of each acknowledgment of receipt of this Order obtained by Defendant pursuant to Paragraph XXII; and
5. Any other changes required to be reported under subparagraph A of this Paragraph.
For purposes of this Paragraph, "employment" includes the performance of services as an employee, consultant, or independent contractor; and "employers" include any individual or entity for whom Defendant Braswell performs services as an employee, consultant, or independent contractor.
D. For purposes of this Order, Defendant shall, unless otherwise directed by the Commission's authorized representatives, mail all written notifications to the Commission to:
Associate Director for Enforcement Federal Trade Commission 600 Pennsylvania Avenue, N.W., Rm. NJ-2122 Washington, D.C. 20580 Re: FTC v. Braswell et al., No. CV 03-3700-DT (PJWx)
E. For purposes of the compliance reporting required by this Paragraph, the Commission is authorized to communicate in writing directly with Defendant, with a copy to Defendant's counsel of record herein, or such substitute counsel as Defendant may advise Plaintiff. Defendant shall be given the opportunity to have counsel present for any oral communications.

Compliance Monitoring XX.

IT IS FURTHER ORDERED that, for the purpose of monitoring and investigating compliance with any provision of this Order,

A. Within ten (10) days, or such longer period as may be reasonable but not to exceed thirty (30) days, of receipt of written notice from a representative of the Commission, Defendant Braswell shall submit additional written reports, sworn to under penalty of perjury; produce documents for inspection and copying; appear for deposition, provided that, Defendant shall not be precluded from lawfully asserting his Fifth Amendment privilege against self-incrimination; and/or provide entry during normal business hours to any business location in Defendant's possession or direct or indirect control to inspect the business operation;
B. In addition, the Commission is authorized to monitor compliance with this Order by all other lawful means, including but not limited to the following:
1. obtaining discovery from any person, without further leave of court, using the procedures prescribed by Fed.R.Civ.P. 30, 31, 33, 34, 36, and 45;
2. posing as consumers or suppliers to Defendant Braswell, employees of Defendant Braswell, or any other entity managed or controlled in whole or in part by Defendant Braswell, without the necessity of identification or prior notice; and
C. Defendant Braswell shall permit representatives of the Commission to interview any employer, consultant, independent contractor, representative, agent, or employee who has agreed to such an interview, relating in any way to any conduct subject to this Order. The person interviewed may have counsel present.
Provided, however, that nothing in this Order shall limit the Commission's lawful use of compulsory process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49, 57b-1, to obtain any documentary material, tangible things, testimony, or information relevant to unfair or deceptive acts or practices in or affecting commerce (within the meaning of 15 U.S.C. § 45(a)(1)).

RECORD KEEPING PROVISIONS XXI.

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, Defendant Braswell and his agents, employees, officers, corporations, successors, and assigns, and those persons in active concert or participation with him who receive actual notice of this Order by personal service or otherwise, are hereby restrained and enjoined from failing to continue to create and retain the following records regarding covered products or services:

A. Accounting records that reflect the cost of any covered products or services sold, revenues generated, and disbursement of such revenues;
B. Personnel records accurately reflecting: the name, address, and telephone number of each person employed in any capacity by such business, including as an independent contractor; that person's job title or position; the date upon which the person commenced work; and the date and reason for the person's termination, if applicable;
C. Customer files containing the names, addresses, telephone numbers, dollar amounts paid, quantity of items or services purchased, and description of items or services purchased, to the extent such information is obtained in the ordinary course of business;
D. Complaints and refund requests (whether received directly, indirectly, or though any third party) and all records showing any responses to those complaints or requests;
E. Copies of all advertisements, promotional materials, sales scripts, training materials, or other marketing materials utilized in the advertising, marketing, promotion, offering for sale, distribution or sale of any covered product or service;
F. All materials that were relied upon in making any representations contained in the materials identified in Subparagraph E above, including all documents evidencing or referring to the accuracy of any claim therein or to the efficacy of any covered product or service, including, but not limited to, all tests, reports, studies, demonstrations, as well as all evidence in Defendant's possession that confirms, contradicts, qualifies, or calls into question the accuracy of such claims regarding the efficacy of such covered product or service;
G. Records accurately reflecting the name, address, and telephone number of each manufacturer or laboratory engaged in the development or creation of any testing obtained for the purpose of advertising, marketing, promoting, offering for sale, distributing, or selling any covered product or service; and
H. All records and documents necessary to demonstrate full compliance with each provision of this Order, including but not limited to, copies of acknowledgments of receipt of this Order and all reports submitted to the FTC pursuant to this Order.

DISTRIBUTION OF ORDER XXII.

IT IS FURTHER ORDERED that Defendant Braswell for a period of five (5) years shall deliver copies of the Order as directed below:

A. Defendant as Control Person: For any business engaged in the advertising, promotion, marketing, offering for sale, or sale of any covered product or service, that Defendant Braswell controls, directly or indirectly, or in which he has a majority ownership interest, the Defendant must deliver a copy of this Order to all principals, officers, directors, and managers of that business. For current principals, officers, directors, and managers, delivery shall be within five (5) days of service of this Order upon Defendant. For new principals, officers, directors, and managers, delivery shall occur prior to them assuming their position or responsibilities.
B. Defendant as Employee or Non-Control Person: For any business engaged in the advertising, promotion, marketing, offering for sale, or sale of any covered product or service where Defendant Braswell is not a controlling person of a business but otherwise engages in conduct related to the subject matter of this Order, the Defendant must deliver a copy of this Order to all principals and managers of such business before engaging in such conduct.
C. Defendant shall make a good faith effort to secure a signed and dated statement acknowledging receipt of the Order, within thirty (30) days of delivery, from all persons receiving a copy of the Order pursuant to this Part.

ACKNOWLEDGMENT OF RECEIPT OF ORDER XXIV.

IT IS FURTHER ORDERED that Defendant, within five (5) business days of receipt of this Order as entered by the Court, must execute and submit to the Commission a sworn statement acknowledging receipt of this Order.

COURT'S RETENTION OF JURISDICTION XXV.

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for purposes of construction, modification, and enforcement of this Order. SO STIPULATED:
SO ORDERED


Summaries of

Federal Trade Commission v. Braswell

United States District Court, C.D. California, Western Division
Dec 28, 2005
CV 03-3700-DT (PJWx) (C.D. Cal. Dec. 28, 2005)
Case details for

Federal Trade Commission v. Braswell

Case Details

Full title:FEDERAL TRADE COMMISSION, Plaintiff, v. A. GLENN BRASWELL, et al.…

Court:United States District Court, C.D. California, Western Division

Date published: Dec 28, 2005

Citations

CV 03-3700-DT (PJWx) (C.D. Cal. Dec. 28, 2005)