UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
FEDERAL TRADE COMMISSION,
Plaintiff,
v.
HART MARKETING ENTERPRISES LTD., INC., a Florida corporation, INTERNET
SPACE STATION, INC., a Florida corporation, FOUR SEASONS DISTRIBUTING, INC., a
Florida corporation, JAMES WEEMS, ROBERT LEMCKE, aka MARK WALKER, EDWARD PATRICK
EVANS, aka PATRICK EVANS aka EDWARD ADAMS, and BRUCE BLAIR,
Defendants.
-CIV- Case No.
COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF
Plaintiff, the Federal Trade Commission ("FTC" or "the
Commission"), for its complaint alleges:
1. The FTC brings this action under Sections 13(b) and 19 of the Federal Trade
Commission Act ("FTC Act"), 15 U.S.C. �� 53(b) and 57b, to secure preliminary
and permanent injunctive relief, rescission of contracts, restitution, disgorgement, and
other equitable relief for defendants' violations of Section 5(a) of the FTC Act, 15
U.S.C. � 45(a), and the FTC's Trade Regulation Rule entitled "Disclosure
Requirements and Prohibitions Concerning Franchising and Business Opportunity
Ventures" ("Franchise Rule"), 16 C.F.R. Part 436.
JURISDICTION AND VENUE
2. This Court has jurisdiction over this matter pursuant to 28 U.S.C. �� 1331,
1337(a) and 1345, and 15 U.S.C. �� 53(b) and 57b.
3. Venue in the United States District Court for the Middle District of Florida is
proper under 28 U.S.C. �� 1391(b) and (c), and 15 U.S.C. � 53(b).
PLAINTIFF
4. Plaintiff, FTC, is an independent agency of the United States Government created by
statute. 15 U.S.C. �� 41 et seq. The FTC is charged, inter alia, with enforcement of
Section 5(a) of the FTC Act, 15 U.S.C. � 45(a), which prohibits unfair or deceptive acts
or practices in or affecting commerce, as well as enforcement of the Franchise Rule, 16
C.F.R. Part 436. The FTC is authorized to initiate federal district court proceedings to
enjoin violations of the FTC Act in order to secure such equitable relief as may be
appropriate in each case, and to obtain consumer redress. 15 U.S.C. �� 53(b) and 57b.
DEFENDANTS
5. Defendant HART MARKETING ENTERPRISES LTD., INC., dba Hart Marketing Enterprises and
dba Fortune Marketing Intl, ("HART MARKETING"), is a Florida corporation
with its principal place of business at 4100 West Kennedy Blvd., Tampa, Florida. Defendant
HART MARKETING promotes and sells public access Internet kiosk business opportunities.
HART MARKETING transacts or has transacted business in the Middle District of Florida.
6. Defendant INTERNET SPACE STATION, INC. ("ISS"), is a Florida corporation
with its principal place of business at 4100 West Kennedy Blvd., Tampa, Florida or 2212 US
HWY 19, Holiday, Florida. Defendant ISS promotes and sells public access Internet kiosk
business opportunities. ISS transacts or has transacted business in the Middle District of
Florida. 7. Defendant FOUR SEASONS DISTRIBUTING, INC. ("FOUR SEASONS"), is a
Florida corporation with its principal place of business at 4100 West Kennedy Blvd.,
Tampa, Florida or 3970 Tampa Rd., Suite K, Oldsmar, Florida. Defendant FOUR SEASONS
promotes and sells air-freshener display-rack business opportunities. FOUR SEASONS
transacts or has transacted business in the Middle District of Florida.
8. At all times material to this complaint, the corporate defendants, HART MARKETING,
ISS, and FOUR SEASONS have acted as a common enterprise. The corporate defendants share
officers, employees, offices, and a common goal to deceive the public into purchasing
business opportunities.
9. Defendant JAMES WEEMS is an officer, director, manager, or principal owner of
corporate defendants HART MARKETING, and/or ISS. He has portrayed himself as the president
of corporate defendants HART MARKETING and FOUR SEASONS. At all times material to this
complaint, acting alone or in concert with others, he has formulated, directed, controlled
or participated in the deceptive acts and practices set forth in this complaint. He
resides and transacts business in the Middle District of Florida.
10. Defendant ROBERT LEMCKE, aka Mark Walker, is an officer, director, manager, or
principal owner of corporate defendants HART MARKETING and/or ISS. He has portrayed
himself as the national sales manager and marketing director of corporate defendant HART
MARKETING. At all times material to this complaint, acting alone or in concert with
others, he has formulated, directed, controlled or participated in the deceptive acts and
practices set forth in this complaint. He resides and transacts business in the Middle
District of Florida.
11. Defendant EDWARD PATRICK EVANS, aka Patrick Evans, aka Edward Adams, is an officer,
director, manager, or principal owner of corporate defendants HART MARKETING and/or ISS.
He has portrayed himself as the current president and owner of corporate defendant HART
MARKETING. At all times material to this complaint, acting alone or in concert with
others, he has formulated, directed, controlled or participated in the deceptive acts and
practices set forth in this complaint. He resides and transacts business in the Middle
District of Florida.
12. Defendant BRUCE BLAIR is an officer, director, manager, or principal owner of
corporate defendant FOUR SEASONS. He has portrayed himself as the current president of
corporate defendant FOUR SEASONS. At all times material to this complaint, acting alone or
in concert with others, he has formulated, directed, controlled or participated in the
deceptive acts and practices set forth in this complaint. He resides and transacts
business in the Middle District of Florida.
COMMERCE
13. At all times material to this complaint, the defendants have maintained a
substantial course of trade, in or affecting commerce, as "commerce" is defined
in Section 4 of the FTC Act, 15 U.S.C. � 44.
DEFENDANTS BUSINESS ACTIVITIES
14. Since at least September 1996, the defendants have engaged in a common course of
conduct to promote, offer to sell, and sell to consumers business opportunities for
substantial sums. These business opportunities include, but are not limited to,
free-standing kiosks that house a computer and a cash money acceptor and are designed to
allow customers to access the Internet, for a fee, from public locations such as hotels,
airports, coffee houses, and bookstores. They also include, but are not limited to,
display racks that contain consumer products, including air-fresheners, and are designed
to be placed in retail stores.
15. The defendants attract potential purchasers through newspaper advertisements, an
Internet web page, sales presentations at trade shows, telemarketing sales pitches, and/or
written marketing materials. Through one or more of these vehicles, the defendants lure
potential purchasers into buying a business opportunity by making representations as to
the amount of money the potential purchaser can reasonably expect to earn with the
business opportunity and the availability and profitability of locations for the kiosks
and/or display racks.
16. The defendants further lure potential purchasers into investing in the
defendants business opportunity by inducing them to call "references" who
purportedly are actual purchasers of the defendants business opportunity and who
tell potential purchasers about profits these "references" have purportedly made
by purchasing the defendants business opportunities.
VIOLATIONS OF SECTION 5 OF THE FTC ACT
COUNT ONE
17. In the course of offering and selling their business opportunities, the defendants
have represented, expressly or by implication:
A. that purchasers can reasonably expect to achieve a specific level of earnings,
including but not limited to gross revenues of between $500- $700 per week per kiosk, or
that such figures are average estimates of the sales or earnings purchasers can reasonably
expect, or that purchasers can reasonably expect to achieve substantial profits from the
display racks; and
B. that certain locators provided by or recommended by the defendants have already
found or will find profitable locations in which to place the purchasers kiosks or
display racks.
18. In truth and in fact:
A. few, if any, purchasers achieve the specific level of earnings claimed by the
defendants from the kiosks, and such figures are not average estimates of the sales or
earnings purchasers can reasonably expect, and few, if any, purchasers achieve substantial
profits from the display racks; and
B. in numerous instances, the locators provided by or recommended by the defendants
have not already found or do not find profitable locations in which to place the
purchasers kiosks and/or display racks, or fail to place the purchasers kiosks
and/or display racks in any locations at all.
19. Therefore, the defendants representations set forth in Paragraph 17 are false
and misleading and constitute deceptive acts or practices in violation of Section 5(a) of
the FTC Act, 15 U.S.C. � 45(a).
COUNT TWO
20. In the course of offering and selling their business opportunities, the defendants
have represented, expressly or by implication, that certain company-selected references
have purchased the defendants business venture and will provide reliable
descriptions of the references experiences with the defendants business
venture.
21. In truth and in fact, in numerous instances, the company-selected references have
not purchased the defendants business venture or do not provide reliable
descriptions of the references experiences with the defendants business
venture.
22. Therefore, the defendants representations set forth in Paragraph 20 are false
and misleading and constitute deceptive acts or practices in violation of Section 5(a) of
the FTC Act, 15 U.S.C. � 45(a).
THE FRANCHISE RULE
23. The business ventures sold by the defendants are franchises, as
"franchise" is defined in Section 436.2(a) of the Franchise Rule, 16 C.F.R. �
436.2(a).
24. The Franchise Rule requires a franchisor to provide prospective franchisees with a
complete and accurate basic disclosure statement containing 20 categories of information,
including information about the history of the franchisor and the names and addresses of
other franchisees. 16 C.F.R. �� 436.1(a)(1)-(20). Disclosure of this information enables
a prospective franchisee to assess any potential risks involved in the purchase of the
franchise.
25. The Franchise Rule additionally requires that: 1) the franchisor give prospective
franchisees a document disclosing the material basis (or the lack of such a basis) for any
oral written or visual earnings or profit representations it makes to a prospective
franchisee, 16 C.F.R. �� 436.1(b)-(e); and 2) the franchisor, in immediate conjunction
with any generally disseminated earnings claim, disclose the number and percentage of
prior purchasers known to have earned as much or more than the amount claimed, and include
a warning that the earnings claim is only an estimate. 16 C.F.R. �� 436.1(e)(3)-(4).
26. Pursuant to Section 18(d)(3) of the FTC Act, 15 U.S.C. � 57a(d)(3), and 16 C.F.R.
� 436.1, violations of the Franchise Rule constitute unfair or deceptive acts or
practices in or affecting commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C.
� 45(a).
27. In connection with the promotion of their franchises, the defendants have offered,
and in many instances have provided to franchisees, the services of locators that secure
sites for the franchisees kiosks and/or display racks.
28. In the course of offering for sale and selling business ventures, the defendants
have provided, or represented that they will provide, significant assistance to the
purchaser in the purchasers method of operation.
VIOLATIONS OF THE FRANCHISE RULE
COUNT THREE
29. In numerous instances, in connection with the offering and promotion of franchises,
as "franchise" is defined in the Franchise Rule, 16 C.F.R. � 436.2(a), the
defendants have failed to provide prospective franchisees with a basic disclosure
document, thereby violating Section 436.1(a) of the Rule, 16 C.F.R. � 436.1(a), and
Section 5(a) of the FTC Act, 15 U.S.C. � 45(a).
COUNT FOUR
30. In numerous instances, in connection with the offering and promotion of franchises,
as "franchise" is defined in the Franchise Rule, 16 C.F.R. � 436.2(a), the
defendants have made earnings claims within the meaning of the Franchise Rule, 16 C.F.R.
�� 436.1(b)-(e), but have failed to provide prospective franchisees with the earnings
claim document required by the Franchise Rule, thereby violating Sections 436.1(b)-(e) of
the Rule, 16 C.F.R. �� 436.1(b)-(e), and Section 5(a) of the FTC Act, 15 U.S.C. �
45(a).
CONSUMER INJURY
31. Consumers in many areas of the United States have suffered substantial monetary
loss as a result of the defendants' unlawful acts or practices. Absent injunctive relief
by this Court, the defendants are likely to continue to injure consumers and harm the
public interest.
THIS COURT'S POWER TO GRANT RELIEF
32. Section 13(b) of the FTC Act, 15 U.S.C. � 53(b), empowers this Court to grant
injunctive and other ancillary relief, including redress, disgorgement and restitution, to
prevent and remedy any violations of any provision of law enforced by the FTC.
33. Section 19 of the FTC Act, 15 U.S.C. � 57b, authorizes this Court to grant such
relief as the Court finds necessary to redress injury to consumers or other persons
resulting from the defendants' violations of the Franchise Rule, including the rescission
and reformation of contracts, and the refund of money.
34. This Court, in the exercise of its equitable jurisdiction, may award other
ancillary relief to remedy injury caused by the defendants' law violations.
PRAYER FOR RELIEF
WHEREFORE, plaintiff requests that this Court, as authorized by Sections 13(b) and 19
of the FTC Act, 15 U.S.C. �� 53(b) and 57b, and pursuant to its own equitable powers:
1. Award plaintiff such preliminary injunctive and ancillary relief as may be necessary
to avert the likelihood of consumer injury during the pendency of this action and to
preserve the possibility of effective final relief;
2. Permanently enjoin the defendants from violating the FTC Act and the Franchise Rule,
as alleged herein;
3. Award such relief as the Court finds necessary to redress injury to consumers
resulting from the defendants' violations of the FTC Act and the Franchise Rule, including
but not limited to, rescission of contracts, the refund of monies paid, and the
disgorgement of ill- gotten monies; and
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4. Award plaintiff the costs of bringing this action, as well as such other and
additional relief as the Court may determine to be just and proper.
Date:____________
Respectfully Submitted,
Debra A. Valentine
General Counsel
_______________________________
Mona Sedky Spivack
Richard A. Quaresima
Attorneys for the Plaintiff
Federal Trade Commission
Room 238
6th Street & Pennsylvania Avenue, N.W.
Washington, D.C. 20580
(202)326-3795 or 3130 (phone)
(202) 326-3395 (fax) |