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FTC Files Joint Amicus Brief in Matter of American Needle, Inc. v. National Football League; FTC Approves Final Consent Order in Matter of Whole Foods Market

FTC Files Joint Amicus Brief in Matter of American Needle, Inc. v. National Football League

The Federal Trade Commission has joined the U.S. Department of Justice in filing an amicus brief in the U.S. Supreme Court in the matter of American Needle, Inc. v. National Football League, No. 08-661 (U.S. S. Ct.). The case involves allegations that the NFL’s exclusive licensing agreement restrained trade, in violation of Section 1 of the Sherman Act, and unlawfully monopolized trade, in violation of Section 2 of the Sherman Act.

The joint amicus brief, which can be found on the FTC’s Web site and as a link to this press release, urges the Supreme Court to deny certiorari in this case, in which the U.S. Court of Appeals for the Seventh Circuit upheld a district court’s summary judgment in favor of the NFL and its separately owned teams on the ground that they function as a “single entity” when licensing and marketing their logos and trademarks under an exclusive licensing agreement with Reebok International Ltd. The brief concludes that the case does not merit Supreme Court review because of an absence of a split among the courts of appeals and because it does not present an appropriate vehicle for ruling generally whether a sports league and its member teams should be deemed to function as “single entity.”

The vote approving joint filing of the amicus brief was 3-0, with Commissioner J. Thomas Rosch recused. It was filed on May 28, 2009. (FTC File No.P082105; the staff contact is John F. Daly, Office of General Counsel, 202-326-2244.)

FTC Approves Final Consent Order in Matter of Whole Foods Market

Following a public comment period, the Commission has approved a final consent order in the matter of Whole Foods Market and authorized the staff to send letters to the commenters of record. The vote approving the final order was 4-0. (FTC Docket No. D09324; the staff contact is Albert Y. Kim, Bureau of Competition, 202-326-2952; see press release dated March 6, 2009, at http://www.ftc.gov/opa/2009/03/wholefoods.shtm.)

Copies of the documents mentioned in this release are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

(FYI 25.2009.wpd)

FTC Chairman Jon Leibowitz, Commissioner William E. Kovacic to Participate in Eighth Annual International Competition Network Conference in Zurich, Switzerland

Federal Trade Commission Chairman Jon Leibowitz will participate in the eighth annual International Competition Network (ICN) conference in Zurich, Switzerland, from June 3-5, 2009. At the conference, senior government antitrust officials, private-sector antitrust experts from around the world, and representatives from intergovernmental organizations will meet to discuss competition issues.

The ICN conference will focus on the recent accomplishments of its five substantive working groups, which address: unilateral conduct, mergers, cartels, advocacy, and competition policy implementation. Conference panels will include discussions on proposed Recommended Practices for Substantive Merger Analysis and the analysis of tying and discounting arrangements, and will promote the general exchange of views regarding competition law and policy among the participants. Members also will finalize work programs for the coming year.

In October 2001, the FTC and the U.S. Department of Justice (DOJ) joined with antitrust agencies from 13 other jurisdictions around the world (Australia, Canada, the European Union, France, Germany, Israel, Italy, Japan, Korea, Mexico, South Africa, the United Kingdom and Zambia) to create the ICN. The ICN now includes 107 member agencies from 96 jurisdictions. The goal of the ICN is to provide a forum for antitrust agencies to address antitrust enforcement and policy issues of common interest and formulate proposals for procedural and substantive convergence through a results-oriented agenda and structure.

The following portions of this year’s conference will be open to the press:

WEDNESDAY, JUNE 3, 2009: 8th ANNUAL ICN CONFERENCE (DAY 1)

8:30 A.M. (Zurich), 2:30 A.M. (EDT) – Welcoming Remarks by Swiss and ICN Officials

9:30 A.M. (Zurich), 3:30 A.M. (EDT) – Advocacy Session
John Fingleton, CEO of the U.K.’s Office of Fair Trading will moderate the plenary session on market studies and competition advocacy. Panelists will include Melanie L. Aitkin, Interim Commissioner of Competition, Canadian Competition Bureau and HackHyun Kim, Director of the Korea Fair Trading Commission. Delegates will discuss these topics in breakout sessions.

1:30 P.M. (Zurich), 7:30 A.M. (EDT) – Merger Session
Christine Varney, Assistant Attorney General of the DOJ’s Antitrust Division, will moderate a panel on “Merger Analysis in Troubled Times.” J. Robert Kramer II, the DOJ Antitrust Division’s Director of Operations and Civil Enforcement will present Recommended Practices for Merger Analysis on competitive effects. Delegates will discuss these topics in breakout sessions.

4:15 P.M. (Zurich), 10:15 A.M. (EDT) – Special Project (Competition Law in Small Economies)
This session will be moderated by Walter A. Stoffel, Chairman of the Swiss Competition Commission.

THURSDAY, JUNE 4, 2009: 8th ANNUAL ICN CONFERENCE (DAY 2)

9:00 A.M. (Zurich), 3:00 A.M. (EDT) – Cartel Session
A plenary session, moderated by Scott D. Hammond, Deputy Assistant Attorney General for Criminal Enforcement of the DOJ’s Antitrust Division, will examine “Transitioning From an Administrative to a Criminal Regime.” Panelists will include Graeme Samuel, Chairman of the Australian Competition and Consumer Commission and Ana Paul Martinez, Head of the Competition Division of Brazil’s Secretariat of Economic Law of the Ministry of Justice. Delegates will discuss criminalization of cartel conduct and investigative strategy in breakout sessions.

11:45 A.M. (Zurich), 5:45 A.M. (EDT) – Unilateral Conduct Session
FTC Chairman Jon Leibowitz will provide introductory remarks, to the plenary session focusing on “Distinguishing Pro From Anticompetitive Conduct: The Fine Line Between Aggressive Competition and Anticompetitive Foreclosure in Tying and Discounting Cases.” The panel discussion will be moderated by Markus Lange, Head of the International Section of Germany’s Bundeskartellamt, with participants including Damien Neven, Chief Economist of the EC’s DG Comp, and chief economists from the competition authorities of Israel and South Africa. Delegates will discuss these topics in breakout sessions.

4:15 P.M. (Zurich), 10:15 A.M. (EDT) – Competition Policy Implementation Session
Maria Coppola Tineo, Counsel for International Antitrust at the FTC’s Office of International Affairs, is a panelist for a discussion of agency effectiveness. Russell Damtoft, Associate Director of the FTC’s Office of International Affairs, will present a summary of ICN activities this past year on its experience sharing teleconferences and on-line discussion forum. Delegates will discuss these topics in breakout sessions.

FRIDAY, JUNE 5, 2009: 8th ANNUAL ICN CONFERENCE (DAY 3)

9:00 A.M. (Zurich), 3:00 A.M. (EDT) – Interactive ICN – Maximizing Network Effects
This session will focus on the three ICN vice chairs’ present and future work, including Vice Chair for Outreach, FTC Commissioner William E. Kovacic. Commissioner Kovacic will join other ICN members in discussing how the ICN can address better the needs of its members.

1:15 P.M. (Zurich), 7:15 A.M. (EDT) – Closing

Complete information about the conference is available at http://www.icn-zurich.org/. The 2009 ICN conference will be held at the Kongresshaus Zürich, Gotthardstrasse 5, Postfach 2523
CH-8022 in Zurich, Switzerland.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to [email protected], or write to the Office of Policy and Coordination, Room 383, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(ICN Advisory 2009.final)

FTC Authorizes Suit To Stop CSLs Proposed $3.1 Billion Acquisition of Talecris Biotherapeutics

The Federal Trade Commission has authorized a lawsuit to block CSL Limited’s proposed $3.1 billion acquisition of Talecris Biotherapeutics Holdings Corporation, charging that the deal would be illegal and would substantially reduce competition in the U.S. markets for four plasma-derivative protein therapies – Immune globulin (Ig), Albumin, Rho-D, and Alpha-1. These therapies are used to treat patients suffering from illnesses such as primary immunodeficiency diseases, chronic inflammatory demyelinating polyneuropathy, alpha-1 antitrypsin disease, and hemolytic disease of the newborn.

In approving the administrative complaint seeking to block the deal, the Commission also authorized the staff to seek a preliminary injunction in federal district court in Washington, D.C., to stop the transaction pending completion of the administrative trial.

“Now more than ever, it is critical that consumers benefit from vigorous competition in the health care sector – both to ensure competitive prices and to drive further innovation,” said Richard Feinstein, Director of the FTC’s Bureau of Competition. “Substantial consolidation has already occurred in the plasma protein industry, and these highly concentrated markets are already exhibiting troubling signs of coordinated behavior. The proposed acquisition would further consolidate the industry and increase the likelihood of collusion.”

CSL, based in Victoria, Australia, is the world’s second-largest supplier of plasma-derivative protein therapies. It produces and sells biotherapies used to treat several rare primary immune deficiency diseases, coagulation disorders, and inherited respiratory disease. CSL’s wholly owned U.S. subsidiary, CSL Behring, is headquartered in King of Prussia, Pennsylvania. CSL Behring owns and operates more than 70 plasma collection facilities in the United States and Germany, and three manufacturing centers in Switzerland, Germany, and Illinois.

Talecris, a wholly owned subsidiary of defendant Cerberus-Plasma Holdings, LLC, is headquartered in New York, New York. The world’s third-largest producer of plasma- derivative protein therapies, it began U.S. operations in 2005, when it acquired Bayer’s worldwide plasma business. Like CSL, Talecris owns a number of plasma collection centers in the U.S., as well as manufacturing facilities in North Carolina and New York. Under an agreement and plan of merger dated August 12, 2008, CSL proposes to acquire all the outstanding voting securities of Talecris in a transaction valued at approximately $3.1 billion.

According to the Commission’s administrative complaint, CSL’s proposed acquisition of Talecris would be anticompetitive and violate federal antitrust laws. The proposed acquisition would reduce the number of competitors in the U.S. markets for Ig and Albumin from five to four, leaving the top two remaining competitors – CSL and Baxter – accounting for more than 80 percent of each market. In addition, in the U.S. markets for Rho-D and Alpha-1, the proposed transaction would reduce the number of competitors from three to two.

This consolidation would continue the reduction in competition that has occurred over the past 19 years. In 1990, there were 13 plasma-derivative protein product competitors. This number was reduced to nine in 2003, and only five competitors remain today – CSL, Talecris, Baxter, Grifols, and Octapharma. The Commission’s administrative complaint alleged that firms in the plasma industry have used this consolidation as a tool to limit supply and drive higher prices, rather than to provide benefits for consumers. The proposed acquisition of Talecris is particularly concerning because Talecris was undergoing substantial expansion that – absent the acquisition – would have increased availability and lowered prices of these life saving drugs. The complaint also charges that by reducing the number of competitors, and eliminating this ongoing expansion, the acquisition will make anticompetitive harm through coordinated interaction even more likely and more successful.

Finally, the complaint states that there are significant barriers to entry and expansion in these markets, including regulatory, intellectual property, and capital requirements, that make entry or expansion unlikely to occur to a degree that is sufficient to offset the alleged anticompetitive effects of the proposed transaction.

The Commission vote approving the filing of the administrative and federal district court complaints was 2-0, with Commissioners Pamela Jones Harbour and William E. Kovacic recused. The administrative complaint was issued on May 27, 2009. The complaint for preliminary injunction will be filed under seal in the U.S. District Court for the District of Columbia.

NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has or is being violated, and it appears to the Commission that a proceeding is in the public interest. A complaint is not a finding or ruling that the defendants have actually violated the law.

Copies of the public versions of the Commission’s complaints will be available soon from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to [email protected], or write to the Office of Policy and Coordination, Room 383, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(FTC File No. 081-2255)
(CSL-Talecris.final.wpd)

FTC Sues Mortgage Foreclosure ‘Rescue’ Operation That Targeted Spanish-Speaking Consumers

The Federal Trade Commission has charged a mortgage foreclosure “rescue” operation with falsely promising Spanish-speaking consumers who are behind on their mortgage payments that it would stop foreclosure. Many people who paid the defendants ultimately lost their homes, and others avoided foreclosure only through their own efforts. At the FTC’s request, a federal court temporarily halted the defendants’ practices and froze their assets. The FTC seeks to stop the deceptive claims and obtain consumer redress from the defendants, whom consumers have paid at least $3.3 million.

According to the FTC’s complaint, the defendants enticed consumers with false claims in Spanish-language radio and magazine ads, and during in-person consultations. The defendants charged consumers an up-front fee equivalent to each consumer’s monthly mortgage payment, which was typically in the thousands of dollars. In numerous instances, however, the defendants did not stop foreclosure or obtain mortgage loan modifications.

The Commission charged the defendants with violating the FTC Act by falsely representing that they would obtain mortgage loan modifications or stop foreclosure in all or virtually all instances. The defendants are Dinamica Financiera LLC, Soluciones Dinamicas Inc., Jose Mario Esquer, and Valentin Benitez.

The Commission vote to authorize staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Central District of California on May 19, 2009. The court entered a temporary restraining order on May 20, 2009, halting the defendants’ practices and freezing their assets pending a hearing on whether a preliminary injunction should be entered against the defendants.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. A complaint is not a finding or ruling that the defendants have actually violated the law.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(FTC File No. 0823103)
(Dinamica)

FTC Approves Final Consent Order in Matter of BASF and Ciba Specialty Chemicals

For Your Information

May 26, 2009

Following a public comment period, the Commission has approved a final consent order in the matter of BASF and Ciba Specialty Chemicals. The vote approving the final order was 4-0. (FTC File No. 081-0265; the staff contact is Wallace W. Easterling, Bureau of Competition, 202-326-2936; see press release dated March 2, 2009, at http://www.ftc.gov/opa/2009/04/basf.shtm.)

(FYI 24.2009.wpd)

Contact Information

MEDIA CONTACT:

Office of Public Affairs
202-326-2180

FTC Approves Final Consent Order in Matter of BASF and Ciba Specialty Chemicals

For Your Information

May 26, 2009

(FYI 24.2009.wpd)

Contact Information

MEDIA CONTACT:

Office of Public Affairs
202-326-2180

FTC Staff Advises Louisiana Legislature That Amended Bill Would Further Restrict Competition to Provide Dental Care to States Most Vulnerable Children

Federal Trade Commission staff have filed a comment stating that the amended version of proposed Louisiana House Bill 687, if enacted, would further restrict competition to provide dental care to underserved children in the state, without providing any countervailing benefits to consumers. The staff believes that recent amendments to the bill would restrict the market to dentists already providing in-school services and would raise additional competition concerns. Accordingly, in the comment to State Representative Sam Jones, the FTC staff urges the Louisiana Legislature to reject the bill.

On May 1, 2009, FTC staff submitted a similar comment to State Representative Tim Burns (which can be found on the Commission’s Web site at: http://www.ftc.gov/opa/2009/05/ladentistry.shtm). The additional staff comment sent today specifically addresses amendments to the bill that were made after May 1, 2009. Staff is concerned that the bill with the new amendments will impose new restraints on competition by restricting the provision of in-school dental services within the state. For example, with a limited exception, the bill would prohibit dentists from offering in-schools services unless they have provided services for at least six months during the past five years even though such services would expand and improve dental care.

Under the amended bill, dentists who have not previously offered in-school care may do so only in communities that are “underserved” by dentists. The State Board of Dentistry, however, determines whether an area is “underserved.” As the Board is composed mainly of dentists, the bill would therefore authorize competitors to determine whether or not other in-school dentists could compete in the market. By regulating the entry of in-school dentistry under these conditions, the bill would likely prevent many children from receiving the benefits of in-school dental care, according to the comment.

Finally, the comment states that a proposed amendment by Rep. Rickey L. Nowlin that would allow dentists anywhere in the state to examine the records of any patient who receives in-school dental services raises privacy concerns with respect to these types of health care records, and also raises competition concerns because as dentists would have the ability to impose higher operating costs on competing in-school providers. The FTC comment provides suggested modifications that may alleviate these privacy and competition concerns.

The Commission vote authorizing the staff to file the comment was 4-0. A copy of the comment can be found on the FTC’s Web site at XX and as a link to this press release. (FTC File No. X090009; the staff contact is Gustav P. Chiarello, Office of Policy Planning, 202-326-2633.)

Copies of the document mentioned in this release are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

(FYI 23.5.2009.wpd)

FTC Chairman Appoints Willard Tom as General Counsel and Announces Four Other Senior Appointments

Federal Trade Commission Chairman Jon Leibowitz announced the appointment of Willard K. “Will” Tom as General Counsel for the agency, and the appointment of Peter J. Levitas, Mark W. Frankena, Howard Shelanski, and Judith Bailey to senior positions in the agency’s Competition and Economics Bureaus and the Office of Congressional Relations.

“We’re very pleased to welcome, and in two instances to welcome back, this group of extraordinarily talented professionals who will help ensure the continued effectiveness of this agency in protecting American consumers,” Leibowitz said. “With these appointments, we have a very deep bench.”

Will Tom, who has been practicing antitrust law as a partner in Morgan Lewis’s Washington, D.C. office, is rejoining the Commission, where he was Deputy Director of the Bureau of Competition and led the Bureau’s policy office under former Chairman Robert Pitofsky. He previously served as counselor to the head of the U.S. Department of Justice’s Antitrust Division, responsible for intellectual property, vertical restraints, and telecommunications matters. As the Commission’s chief legal officer and adviser, the General Counsel represents the agency in court and provides legal counsel to the Commission and its bureaus and offices. He graduated, cum laude, from Harvard College and Harvard Law School.

Pete Levitas, who will be a Deputy Director of the Bureau of Competition, joins the agency from Dickstein Shapiro, LLP in Washington, DC. He formerly was Staff Director and Chief Counsel for the U.S. Senate Judiciary Committee’s Antitrust, Competition Policy & Consumer Rights Subcommittee, and he was Antitrust Counsel to the Subcommittee Chairman, former U.S. Senator Mike DeWine. Levitas also worked in the Justice Department’s Antitrust Division, and as a Special Assistant U.S. Attorney in the U.S. Attorney’s Office in Washington, D.C. He received his B.A., summa cum laude, from the University of Pennsylvania, and his J.D., cum laude, from Harvard Law School.

Mark Frankena, who will become Associate Director for Competition Policy of the Bureau of Economics, has been Deputy Director for Antitrust in the Bureau for the past five years. He formerly served as Associate Professor of Economics at the University of Western Ontario, and as a principal at Economists Inc., an economics consulting firm where he specialized in antitrust litigation and the electric power industry. Frankena earned a Ph.D. from the Massachusetts Institute of Technology and a bachelor degree with Highest Honors from Swarthmore College.

Howard Shelanski will become Deputy Director for Antitrust of the Bureau of Economics. Since 1997 he has been a law professor at the University of California at Berkeley, where he co-directed the Berkeley Center for Law and Technology and was an affiliated professor at the Haas School of Business. He recently joined the Georgetown University Law Center faculty. Shelanski has served as chief economist for the Federal Communications Commission and as a senior economist for the President’s Council of Economic Advisers. Shelanski has a J.D. and a Ph.D. in Economics from the University of California at Berkeley, and graduated Phi Beta Kappa from Haverford College. He served as a law clerk for U.S. Supreme Court Justice Antonin Scalia, U.S. District Court Judge Louis H. Pollak, and D.C. Circuit Court of Appeals Judge Stephen F. Williams.

Judy Bailey, who was appointed as Deputy Director of the Office of Congressional Relations, returns to the FTC after serving as Consumer Protection Counsel for the House Energy and Commerce Committee’s Commerce, Trade, and Consumer Protection Subcommittee. She also was counsel to the House Judiciary Committee’s former Monopolies and Commercial Law Subcommittee, and she worked for the FTC, including service in the Bureau of Competition as Assistant Director, and as Deputy Executive Director and Acting Executive Director. She has worked at the Federal Deposit Insurance Corporation and in private practice at Wilmer, Cutler & Pickering and Debevoise & Plimpton. Bailey is an honors graduate of UCLA Law School and did her undergraduate work at the University of Michigan; she also holds Master’s degrees from the University of Chicago and the University of London.

FTC Chairman Appoints Willard Tom as General Counsel and Announces Four Other Senior Appointments

FTC Announces Operation False Charity Law Enforcement Sweep

In a nationwide, federal-state crackdown on fraudulent telemarketers claiming to help police, firefighters, and veterans, the Federal Trade Commission, together with 61 Attorneys General, Secretaries of State, and other law enforcers of 49 states and the District of Columbia, today announced “Operation False Charity.” Federal and state enforcers announced 76 law enforcement actions against 32 fundraising companies, 22 non-profits or purported non-profits on whose behalf funds were solicited, and 31 individuals. These include two FTC actions against alleged sham non-profits and the telemarketers who made deceptive claims about these so-called charities. The FTC and state agencies also released new education materials, in both English and Spanish, to help consumers recognize and avoid charitable solicitation fraud.

“In these difficult economic times, Americans want to make every contribution count,” said FTC Chairman Jon Leibowitz. “The good news is they’re still being generous and donating to charitable organizations, including those that support our police officers, firefighters, military families, and veterans. The bad news is that some unscrupulous operators have seized on this goodwill to make a quick buck. The actions we’re announcing today demonstrate that federal and state partners will find charity scammers and we will stop them.”

“All of us share a deep trust and respect for our law enforcement officers, firefighters, and military service members,” said Attorney General Chris Koster of Missouri. “The attorneys general across the country will not stand idly by while greedy telemarketers take advantage of that trust and respect.”

“I encourage all donors to maximize their charitable contributions by getting basic financial information about an organization before giving,” said Pennsylvania Secretary of State Pedro A. Cortés. “Trustworthy resources are available through your department of state or attorney general’s office. By doing research and asking questions of a charity or its professional fundraisers, consumers can help ensure their donations have the impact they expect.”

FTC Enforcement Actions

The two FTC cases announced today involve federal court complaints and proposed settlement orders against defendants who allegedly tricked consumers into giving by claiming that donations would support police or firefighters disabled in the line of duty, often in the donors’ communities, or that the donations would assist military families in need, and by misleading consumers about how much of the money would go to those causes. According to the FTC, the defendants used legitimate-sounding names and described sympathetic causes to give their sham organizations a veneer of credibility. Their real goal, however, was to dupe consumers into contributing money that the defendants used overwhelmingly just to support themselves and their fundraisers.

In the first case, the FTC alleged that three sham non-profit organizations, American Veterans Relief Foundation, Inc. (AVRF), Coalition of Police and Sheriffs, Inc. (COPS), and Disabled Firefighters Fund (DFF), all based at the same address in Santa Ana, California, were created almost entirely to provide profits for the individual defendants and the for-profit fundraisers they hired. One defendant, Jeffrey Dean Duncan, ran COPS and DFF, while another defendant, William Rose, ran AVRF. Another defendant, Kathy Clinkenbeard, managed the telemarketers with which the entities contracted. The FTC contends that solicitors calling on behalf of AVRF falsely claimed that the money they were raising would support the families of soldiers fighting overseas through a program it called “Operation Home Front.” In fact, AVRF spent virtually no money assisting military families. AVRF’s bogus “Operation Home Front” is not connected to the genuine non-profit Operation Homefront, Inc., a national organization with 30 chapters across the country that provides real support to the families of troops and gets high ratings from watchdog groups.

According to the FTC’s complaint, the defendants misrepresented that donations would go to a legitimate charity, that the organizations have programs that do not actually exist, and that those programs benefit the donors’ local communities. The complaint also alleges that COPS misrepresents its affiliation with police officers and sheriffs, and charges the defendants with assisting others to commit deceptive acts and practices.

The proposed order settles the FTC’s complaint by barring the defendants from making false claims, or assisting anyone else in making false claims, in connection with charitable solicitations, or in connection with telemarketing. It also prohibits the defendants from violating the Telemarketing Sales Rule, requires that they make certain disclosures when fundraising, and it requires that they monitor any fundraisers that solicit on their behalf. Finally, the order imposes on defendants COPS, DFF, Duncan, and Clinkenbeard a judgment of $13.1 million and against defendants AVRF, Rose, and Clinkenbeard a judgment of $6 million. These judgments are suspended based on defendants’ documented inability to pay.

In the second case, the FTC alleged that defendant David Scott Marleau ran several for-profit fundraisers that solicited money on behalf of sham police, fire, and veterans non-profit charitable organizations. The FTC charged that Marleau and his companies, Jedi Investments, LLC, Impact Fundraising, LLC, Millenium Fundraising, LLC, and PC Marl, Inc., misrepresented the programs for which funds were solicited, misrepresented that donations would benefit the donor’s local community, mailed notices to consumers stating they had made a pledge when they had not even been called, and misrepresented their affiliation with sheriffs and police. Six additional counts in the complaint charged the defendants with multiple violations of the FTC’s Telemarketing Sales Rule, including ignoring company-specific do-not-call requests. The Commission also alleged that their operations often targeted seniors, sometimes debiting their accounts for donations without permission.

The proposed order settling the charges requires the defendants to stop misrepresenting facts, make certain disclosures when soliciting money from consumers, and stop violating the Telemarketing Sales Rule. The order also requires that the defendants substantiate any claims they make about a nonprofit or its programs prior to soliciting consumers, and requires that they train and monitor their telemarketers. Finally, the order imposes a monetary judgment of nearly $1.7 million against the corporate entities Jedi Investments, LLC, Impact Fundraising, LLC, Millenium Fundraising, LLC, and PC Marl, Inc. That judgment is suspended based on these defendants’ documented inability to pay.

The FTC would like to thank the Attorneys General of California, Idaho, Oregon, and Washington and the Secretary of State of Washington for their invaluable assistance with these cases.

State Law Enforcement and Public Education

Law enforcement and public education efforts by the states are integral components of “Operation False Charity.” The FTC would like to acknowledge the following state officials for their participation in Operation False Charity, either by taking enforcement action or initiating consumer education efforts: the Attorneys General of Alabama, Alaska, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Virginia, Washington, West Virginia, Wisconsin, and Wyoming; and other state agencies including the Secretaries of State of Colorado, Georgia, Maryland, Mississippi, North Carolina, Pennsylvania, South Carolina, Tennessee, West Virginia, and Washington, and the Georgia Governor’s Office of Consumer Affairs, the New York State Consumer Protection Board, the Rhode Island Department of Business Regulation, the Utah Division of Consumer Protection, the Virginia Department of Agriculture and Consumer Services, and the Eu Claire County (Wisconsin) District Attorney.

Information about these agencies’ participation is summarized on the FTC’s Web site at www.ftc.gov/os/2009/05/090520charitychart.pdf

Private-sector partners included AARP, the Better Business Bureau Wise Giving Alliance, the American Institute of Philanthropy, Guidestar, the National Association of State Charities Officials, and Charity Navigator.

Consumer Education

The FTC today issued a new consumer alert providing tips about charities that solicit donations on behalf of veterans and military families. According to the alert, which can be found on the agency’s Web site at www.ftc.gov/charityfraud/, while many legitimate charities are soliciting donations to support the nation’s military veterans, not all “charities” are legitimate – some are operators whose only purpose is to make money for themselves. Others are paid fundraisers whose fees can use up most of your donation.

The new alert, “Supporting the Troops: When Charities Solicit Donations on Behalf of Vets and Military Families,” offers the following tips to help consumers ensure that their donations go to a legitimate charity. Many of these tips apply to charitable giving to other types of organizations, as well.

Recognize that the words “veterans” or “military families” in an organization’s name don’t necessarily mean that veterans or the families of active-duty personnel will benefit from your donation.
Check out an organization before donating. Some phony charities use names, seals, and logos that look or sound like those of respected, legitimate organizations.
Donate to charities with a track record and a history. Charities that spring up overnight may disappear just as quickly.
If you have any doubt about whether you’ve made a pledge or a contribution, check your records. If you don’t remember making the donation or pledge, resist the pressure to give.
Call the office in your state that regulates charitable organizations to see whether the charity or fundraising organization has to be registered.
Do not send or give cash donations. For security and tax-record purposes, it’s best to pay with a check made payable to the charity.
Ask for a receipt showing the amount of your contribution.
Be wary of promises of guaranteed sweepstakes winnings in exchange for a contribution. You never have to give a donation to be eligible to win a sweepstakes.

Some sites where consumers can check out a charity include:

*www.nasconet.org – National Association of State Charity Officials, where you can look up and contact your state’s charities regulator for more information.

*www.guidestar.org – Guidestar

*www.bbb.org/charity – Better Business Bureau Wise Giving Alliance

*www.charitynavigator.org – CharityNavigator

*www.charitywatch.org – American Institute of Philanthropy

The Commission vote approving each complaint and proposed court order was 4-0. The complaint and proposed order against David Scott Marleau, et al. were filed in the U.S. District Court for the Western District of Washington on May 19, 2009. The complaint and proposed order against American Veterans Relief Foundation, Inc., et al. were filed in the U.S. District Court of the Central District of California on May 18, 2009.

The proposed orders announced today settle the FTC’s charges against the following defendants: 1) American Veterans Relief Foundation, Inc.; Coalition of Police and Sheriffs, Inc.; Disabled Firefighters Fund; Jeffrey Dean Duncan, individually and as an officer or director of Coalition of Police and Sheriffs, Inc., and Disabled Firefighters Fund; Kathy Clinkenbeard, individually; and William Rose, individually and as an officer or director of American Veterans Relief Foundation, Inc.; and 2) David Scott Marleau, individually and as an officer or director of Jedi Investments, LLC, Impact Fundraising, LLC, Millenium Fundraising, LLC, and PC Marl, Inc.; Jedi Investments, LLC; Impact Fundraising, LLC; Millenium Fundraising, LLC; and PC Marl, Inc.

NOTE: The Commission authorizes the filing of complaints when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaints are not a finding or ruling that the defendants actually have violated the law.

NOTE: Stipulated court orders are for settlement purposes only and do not necessarily constitute an admission by the defendants of a law violation. Stipulated orders have the force of law when signed by the judge.

Copies of the complaints and proposed court orders are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(FTC File Nos. 092-3065 and 092-3064)
(FalseCharitySweep.wpd)

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