Case 2:11-cv-00419-RJS-DBP Document 304 Filed 07/08/16 Page 1 of 10

JOHN W. HUBER, United States Attorney (#7226)

JARED C. BENNETT, Assistant United States Attorney (#9097)
185 South Street, Suite 300
Salt Lake City, UT 84111
Phone: (801) 524-5682
MICHAEL S. BLUME
Director, Consumer Protection Branch
U.S. Department of Justice, Civil Division
DAVID A. FRANK
ARTURO DECASTRO
Trial Attorneys
P.O. Box 386
Washington, D.C. 20044
Phone: (202) 307-0061, (202) 353-3940

UNITED STATES DISTRICT COURT

DISTRICT OF UTAH, CENTRAL DIVISION

UNITED STATES OF AMERICA,

Plaintiff,

Case 2:11-cv-00419-RJS-DBP
Judge Robert J. Shelby

v.
CORPORATIONS FOR CHARACTER,
L.C., et al.,
Defendants.

United States of Americas Motion for

Entry of Permanent Injunction

Summary
The United States respectfully asks that the Court enter the attached proposed order
(Proposed Order) granting a permanent injunction and monetary judgment for disgorgement
against Feature Films for Families, Corporations for Character, Family Films of Utah, and

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Forrest S. Baker III (collectively Defendants). 1

The May 25, 2016, jury verdict and this Courts March 31, 2015, summary judgment
ruling resolved the issues of Defendants liability for engaging in widespread deceptive and
abusive telemarketing practices. The only remaining issues concern the remedy. The United
States seeks three forms of relief: (1) a permanent injunction, (2) an equitable monetary
judgment to disgorge Defendants gains from their misconduct, (3) and civil penalties.
Determining the amount of civil penalties involves the Court weighing multiple factors
under 15 U.S.C. 45(m), and proceedings for resolving factual issues relating to these factors
have not yet been scheduled. However, because Defendants have already been found liable for
their unlawful conduct, the Court may enter injunctive relief and an equitable monetary
judgement of disgorgement independent of further civil penalties proceedings. Further, because
evidence adduced at trial showed that Defendants illegal practices are apparently ongoing, the
Court should enter the Proposed Order without delay.
The Proposed Order permanently enjoins Defendants from engaging in the illegal
practices addressed by the verdict and summary judgment ruling. In addition, it directs
Defendants to disgorge their gross receipts from the deceptive Kids First campaign $487,735
as equitable monetary relief. The Proposed Order also includes ancillary injunctive relief
provisions to ensure Defendants compliance with the law.

This motion requests only equitable relief. Accordingly, the Proposed Order does not
include a proposed civil penalties provision.
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Background
In May 2011, the United States filed a seven-count Complaint alleging that, since 2007,
Defendants have engaged in deceptive and abusive practices in the course of telemarketing and
charitable solicitation call campaigns. (Dkt. No. 1). 2 Count 1 alleged that Defendants violated the
Federal Trade Commission (FTC) Act by making various deceptive claims, including
misrepresentations about the sales purpose of the Kids First campaign calls and the use of the
proceeds from DVD sales that Defendants made during those calls. (Id. at 21-23, 41-46, 5456). Count 2 alleged that those deceptive claims also violated the Telemarketing Sales Rule
(TSR). (Id. at 71, 72). Counts 3 through 7 alleged, respectively, that, during the Kids First,
Velveteen Rabbit, and DVD sales campaigns, Defendants called phone numbers on the National
Do Not Call (DNC) Registry, ignored consumers prior do-not-call requests, transmitted
inaccurate caller-identification information, failed to make required oral disclosures, and
abandoned calls. (Id. at 73-78). The Complaint sought injunctive relief (including ancillary
injunctive relief), disgorgement, and civil penalties as remedies for Defendants violations. (Id. at
80, 82, 83).
On March 31, 2015, following multiple partial summary judgment motions from the
parties, this Court ruled that, during the Kids First and Velveteen Rabbit campaigns, Defendants
violated the TSR provisions that prohibit placing calls to phone numbers on the DNC Registry,
transmitting inaccurate caller-identification information, and failing to make required oral

United States v. Feature Films for Families, Inc., Case 4:11-cv-00197-RH-WCS (N.D.
Fla. 2011).
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disclosures. United States v. Corporations for Character, L.C., 116 F. Supp. 3d 1258, 1275,
1276, 1278 (D. Utah 2015). The Court reserved for trial, however, fact issues concerning, among
other things, whether Defendants made deceptive claims, 3 ignored consumers prior do-not-call
requests, abandoned calls, and committed TSR violations with the requisite knowledge to
support a civil penalty award. (Id. at 1273, 1276-79).
A jury trial began on May 17, 2016. (Dkt. No. 292). During trial, the United States
presented evidence of each violation alleged in the Complaint, the number of violations,
Defendants knowledge of the violations, and Mr. Bakers authority to control or participation in
the business practices that gave rise to the violations. The evidence included data summaries of
Defendants violations, testimony from consumers who repeatedly received unsolicited calls
from Defendants after the United States filed its lawsuit (testimony of Deanna Brewer and
Suzanne Cridland), documents showing complaints and inquiries that Defendants received from
consumers and various state law enforcement agencies, and information about Defendants
earnings from the Kids First campaign. In addition, the jury heard testimony regarding
telemarketing campaigns that Defendants currently conduct that are similar to the campaigns
addressed in the Complaint.
On May 25, 2016, the jury returned a verdict finding that Defendants knowingly violated

The Court also found that Defendants were entitled to summary judgment on certain
alleged representations associated with solicitations for donations. 116 F. Supp. 3d at 1279. At
the Final Pretrial Conference, the Court entered judgment in favor of Defendants on the United
States allegations that Defendants made deceptive claims during charitable solicitation call
campaigns. (Dkt. No. 266).
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the TSR 4 by making deceptive claims during the Kids First campaign, calling phone numbers on
the DNC Registry, ignoring consumers prior do-not-call requests, repeatedly violating calleridentification and oral disclosure requirements, and abandoning calls. (Dkt. No. 300). In
addition, the jury determined that Forrest Baker had authority to control or participated in the
corporate business practices and had knowledge of the violations. 5 (Id.). Defendants committed a
total of more than 117 million TSR violations. (Id.). The verdict did not address the amount of
the civil penalty. 6 After the jury was dismissed, the Court indicated that it would schedule a
hearing for consideration of such relief.
Argument
I.

The Court Has The Authority To Enter The Proposed Injunctive Relief.
Section 13(b) of the FTC Act gives the Court broad authority to issue a permanent

injunction and fashion appropriate remedies for Defendants violations of the Act. 15 U.S.C.
53(b); FTC v. Freecom Commns, Inc., 401 F.3d 1192, 1202 n.6 (10th Cir. 2005). The
authority includes the authority to grant any ancillary relief necessary to accomplish complete
justice. FTC v. H.N. Singer, Inc., 668 F.2d 1107, 1113 (9th Cir.1982).
4

Because Count 1 of the complaint alleges a violation of the FTC Act and seeks
equitable relief, the Court reserved for itself the determination of whether Defendants deceptive
claims also violate the FTC Act.
5

An individual defendant is personally liable for injunctive relief if he has authority to

control the corporate defendants or participated in their acts or practices. FTC v. Freecom
Commns, Inc. 401 F.3d 1192, 1204 (10th Cir. 2005) (citation omitted). Further, an individual
defendant is personally liable for equitable monetary relief if he knew or should have known of
defendants material misrepresentations. Id. at 1207.
6

The Court, not the jury, has the authority to determine the appropriate amount of civil
penalties. Tull v. United States, 481 U.S. 412 (1987).
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Section I of the Proposed Order permanently enjoins Defendants from making material
misrepresentations or omissions in the course of marketing entertainment products or services,
audio recordings, or video recordings. The injunction prohibits misrepresentations concerning
the purpose for which Defendants contact consumers and Defendants use of proceeds from sales
to consumers. Thus, Section I addresses the misconduct in the Kids First campaign identified in
Count 1 of the Complaint, which seeks relief against deceptive practices that violate the FTC
Act. Dkt. No. 1, 21-23, 54-56.
Because the jury determined that Defendants representations in the Kids First campaign
were deceptive, and Count I is based on the same conduct, the jurys determination resolves
Count I against the Defendants. Ag Services of America, Inc. v. Nielsen, 231 F.3d 726, 730 (10th
Cir. 2000) (jury determination governs common factual questions when legal and equitable
claims are tried together). Consequently, the Court should enter the permanent injunction set
forth in Section I of the Proposed Order to enjoin Defendants from deceptive practices similar to
those that Defendants practiced in the Kids First calls.
Section II of the Proposed Order permanently enjoins Defendants from violating any
provision of the TSR, 7 including those prohibiting false or misleading statements, calls to
numbers on the DNC Registry and internal do-not-call lists, transmittal of inaccurate caller-

In accordance with Federal Rule of Civil Procedure 65(d), a copy of the TSR 16
C.F.R. Part 310 is appended to the Proposed Order.
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identification information, failure to make required oral disclosures, and abandoned calls. 8
Section III prohibits Defendants from failing to: (1) ensure that its telemarketers comply with
Sections I and II of the order, (2) investigate and respond to complaints regarding possible order
violations, (3) take corrective action against any agent not complying with the order, and (4)
review the accuracy of scripts or recordings relating to their call campaigns.
The injunctions in Sections II and III are proper because the jury and the Court have
found Defendants liable for violating multiple TSR provisions. See FTC v. Five-Star Auto Club,
Inc., 97 F. Supp. 2d 502, 536 (S.D.N.Y. 2000) (citations omitted) (the commission of past illegal
conduct is highly suggestive of the likelihood of future violations). Moreover, given the
egregiousness of Defendants violations and Defendants ongoing telemarketing practices, the
broad scope of the injunction is warranted to prevent future violations. See, e.g., FTC v. John
Beck Amazing Profits, LLC, 888 F. Supp. 2d 1006, 1011 (C.D.C.A. 2012) (finding fencing in
provisions are necessary to prevent similar and related violations from occurring in the future)
(citations omitted); FTC v. Kitco of Nevada, Inc., 612 F. Supp. 1282, 1296 (D. Minn. 1985)
([T]he egregious nature of past violations is a factor supporting the need for permanent
injunctive relief of a broad nature.).
The Proposed Order also includes several ancillary injunctive relief provisions. Section
VI requires Defendants to maintain certain types of business records. Sections V and VII
establish compliance and monitoring procedures that they must follow. And Section VIII directs
8

Section II expressly incorporates the TSRs language concerning prior consent, safe
harbor, and established business relationship requirements for do-not-call violations, and safe
harbor requirements for abandoned call violations.
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Defendants to acknowledge receipt of the order and distribute it to their agents. Courts have
repeatedly observed that such monitoring and reporting provisions are appropriate under the FTC
Act to ensure Defendants future compliance with the law. See, e.g., FTC v. Ideal Financial.
Solutions., Inc., No. 213CV00143JADGWF, 2016 WL 756527, at *6 (D. Nev. Feb. 23, 2016)
(Courts routinely order this kind of recordkeeping and compliance-reporting in FTC cases.);
FTC v. Pacific First Benefit, LLC, 472 F. Supp. 2d 981, 982 (N.D. Ill. 2007) (approving
monitoring and other ancillary relief for violations of TSR); FTC v. Direct Mktg. Concepts, Inc.,
648 F. Supp. 2d 202, 216-17 (D. Mass. 2009) (monitoring and ancillary provisions of injunction
are both reasonable and necessary); FTC v. SlimAmerica, Inc., 77 F. Supp. 2d 1263, 1276
(S.D. Fla. 1999) (record-keeping and monitoring provisions in the permanent injunction are also
appropriate to permit the Commission to police the defendants compliance with the order).
II.

The Court Has The Authority To Enter The Proposed Monetary Relief.
Included in the Courts authority to grant ancillary relief is the power to order

disgorgement of revenue Defendants received in the course of their unlawful conduct. See FTC
v. Gem Merch. Corp., 87 F.3d 466, 46869 (11th Cir.1996); FTC v. LoanPointe, LLC, 525 F.
Appx 696, 699 (10th Cir. 2013) (unpublished). Defendants gross receipts from their deceptive
telemarketing campaign is the proper measure for monetary relief. See FTC v. Washington Data
Res., Inc., 704 F.3d 1323, 1327 (11th Cir. 2013).
Section IV of the Proposed Order requires Defendants to disgorge $487,735 as equitable
monetary relief for the deceptive claims they made during the Kids First campaign. The
requested disgorgement amount represents the total fees that Defendants received for conducting
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the campaign. 9 See PX 269-002 (admitted on May 17, 2016). As explained above, the jurys
verdict establishes that Defendants engaged in deceptive conduct that violated both the FTC Act
and the TSR. Therefore, disgorgement of these fees is an appropriate remedy for these violations.
Conclusion
Defendants have been found liable for engaging in widespread deceptive and abusive
practices. The severity of their law violations necessitates the broad injunctive relief and the
equitable monetary relief proposed by the United States. Accordingly, the Court should grant the
United States motion and enter the Proposed Order.
Dated: July 8, 2016
Respectfully submitted,
/s/ David A. Frank
David A. Frank
/s/ Arturo DeCastro
Arturo DeCastro

The document identified as PX 269 was produced to the FTC during its investigation of
Defendants by the Coalition for Quality Childrens Media, the non-profit organization for whom
Defendants conducted the Kids First campaign.
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Certificate of Service
I, Arturo DeCastro, certify that on July 8, 2016, I served a true copy of the foregoing
document on all counsel of record via ECF.
/s/ Arturo DeCastro
Arturo DeCastro
U.S. Department of Justice

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Case 2:11-cv-00419-RJS-DBP Document 304-1 Filed 07/08/16 Page 1 of 17

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

UNITED STATES OF AMERICA,

Case No. 2:11-cv-419-RJS

Plaintiff,

Judge Robert J. Shelby

v.
[PROPOSED] ORDER AWARDING
INJUNCTIVE RELIEF AND
DISGORGEMENT

CORPORATION FOR CHARACTER,

L.C., et al.,
Defendants.

Upon consideration of the evidence presented at trial commencing on May 17, 2016 and
the jurys verdict, the Court hereby awards injunctive relief and equitable monetary relief to the
United States as set forth below.
FINDINGS
1.

This Court has jurisdiction over the subject matter and the parties pursuant to 28 U.S.C.
1331, 1337(a), 1345, and 1355, and 15 U.S.C. 45(m)(1)(A),53(b), 56(a), and 57b.

2.

The activities of Defendants are in or affecting commerce, as defined in Section 4 of the

FTC Act, 15 U.S.C. 44.

3.

Defendants violated the Telemarketing Sales Rule, 16 C.F.R. Part 310, in the course of
making telephone calls in the name of Kids First, and calls to promote the movie The
Velveteen Rabbit. The Court has ruled that in both of these telephone campaigns,
Defendants engaged in telemarketing under the Telemarketing Sales Rule, 16 C.F.R.
310.2(dd) (2016), and that Defendants conduct in these campaigns violated Sections
310.4(b)(1)(iii)(B), 310.4(a)(8), and 310.4(d) of the Telemarketing Sales Rule. United
States v. Corporations for Character, 116 F.Supp.3d 1258, 1279 (D. Utah 2015).

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4.

The verdict of the jury establishes that Defendants engaged in deceptive practices in the
course of making telephone calls in the name of Kids First. These practices violate
Sections 310.3(a)(4) of the Telemarketing Sales Rule. The verdict of the jury also
establishes that Defendants engaged in abusive telemarketing practices that violated the
Telemarketing Sales Rule in the course of making telephone calls in the name of Kids
First, calls to promote the movie The Velveteen Rabbit, and calls to sell DVDs on behalf
of Feature Films for Families, Inc., including violating sections 310.4(b)(1)(iii)(A), and
310.4(b)(1)(iv) of the Rule.

5.

Defendants deceptive practices in the course of making telephone calls in the name of
Kids First also violate Section 5 of the FTC Act. 15 U.S.C. 45(a).

6.

Defendant Feature Films for Families, Inc., received $487,735.05 as a result of telephone
calls made by Defendant Corporations for Character, L.C., under the name Kids First.

7.

The Corporate Defendants operated as a common enterprise and are jointly and severally
liable for the violations committed in the calls made by Defendants Feature Films for
Families, Inc., and Corporations for Character, LC. Defendant Family Films of Utah,
Inc., provided the management personnel that directed the sales and telemarketing
activities of Defendants Feature Films for Families, Inc., and Corporations for Character,
L.C. The Corporate Defendants shared personnel and resources, and were bound
together by common ownership through trusts that Defendant Forrest Baker, III, managed
as trustee.

8.

Defendant Baker exercised control over the Corporate Defendants, was aware of
theillegal telemarketing calls made by Defendants Feature Films for Families, Inc., and

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Corporations for Character, LC, and materially participated in shaping and approving
these telemarketing campaigns.
9.

Injunctive relief to prevent further violations of the law is warranted by Defendants past
conduct, ongoing telemarketing activity during the pendency of this action, and the risk
that Defendants will continue or resume their illegal practices.

10.

Entry of this Permanent Injunction (Order) is in the public interest.

DEFINITIONS

For the purpose of this Order, the following definitions shall apply:
1.

Abandoning outbound telephone call means failing to connect outbound telephone

call to a sales representative within two (2) seconds of the person's completed greeting.

2.

Caller identification service means a service that allows a telephone subscriber to

have the telephone number and, where available, name of the calling party transmitted
contemporaneously with the telephone call, and displayed on a device in or connected to
the subscribers telephone.

3.

Clear(ly) and conspicuous(ly) means that a required disclosure is difficult to miss

(i.e., easily noticeable) and easily understandable by ordinary consumers, including in all
of the following ways:
a. An audible disclosure, including by telephone or streaming video, must be delivered
in a volume, speed, and cadence sufficient for ordinary consumers to easily hear and
understand it.
b. The disclosure must use diction and syntax understandable to ordinary consumers and
must appear in each language in which the representation that requires the disclosure
appears.

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c. The disclosure must not be contradicted or mitigated by, or inconsistent with,

anything else in the communication.
d. In any communication using an interactive electronic medium, such as the Internet or
software, the disclosure must be unavoidable.
e. A visual disclosure, by its size, contrast, location, the length of time it appears, and
other characteristics, must stand out from any accompanying text or other visual
elements so that it is easily noticed, read, and understood.
4.

Corporate Defendants means Defendants Feature Films for Families, Inc.,

Corporations for Character, L.C., Family Films of Utah, Inc., and their successors and
assigns.

5.

Customer means any person who is or may be required to pay for goods or services
offered through telemarketing.

6.

Defendants means the Corporate Defendants and Forrest Sandusky Baker III,
individually, collectively, or in any combination.

7.

Donor means any person solicited to make a charitable contribution.

8.

Established business relationship means a relationship between the seller and a

person based on: (a) the persons purchase, rental, or lease of the sellers goods or
services or a financial transaction between the person and seller, within the eighteen (18)
months immediately preceding the date of the telemarketing call; or (b) the persons
inquiry or application regarding a product or service offered by the seller, within the three
(3) months immediately preceding the date of a telemarketing call.

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9.

National Do Not Call Registry means the National Do Not Call Registry, which is the
Do Not Call registry the Federal Trade Commission (Commission) maintains
pursuant to 16 C.F.R. 310.4(b)(1)(iii)(B).

10.

Outbound telephone call means a telephone call initiated by a telemarketer to induce

the purchase of goods or services or to solicit a charitable contribution.

11.

Person means any individual, group, unincorporated association, limited or general

partnership, corporation, or other business entity.

12.

Seller means any person who, in connection with a telemarketing transaction,

provides, offers to provide, or arranges for others to provide goods or services to the
customer in exchange for consideration whether or not such person is under the
jurisdiction of the Commission.

13.

Telemarketer means any person who, in connection with telemarketing, initiates or

receives telephone calls to or from a customer or donor.

14.

Telemarketing means a plan, program, or campaign which is conducted to induce a

charitable contribution, by use of one or more telephones and which involves more than
one interstate telephone call. The term does not include the solicitation of sales through
the mailing of a catalog which: contains a written description or illustration of the goods
or services offered for sale; includes the business address of the seller; includes multiple
pages of written material or illustrations; and has been issued not less frequently than
once a year, when the person making the solicitation does not solicit customers by
telephone but only receives calls initiated by customers in response to the catalog and
during those calls takes orders only without further solicitation. For purposes of the
previous sentence, the term further solicitation does not include providing the customer

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with information about, or attempting to sell, any other item included in the same catalog
which prompted the customers call or in a substantially similar catalog.
15.

Telemarketing Sales Rule or Rule means the Federal Trade Commission (FTC)
Rule entitled Telemarketing Sales Rule, 16 C.F.R. 310, attached hereto as Appendix
A or as it may be hereafter amended.

16.

Upsell means to solicit the purchase of goods or services following an initial

transaction during a single telephone call regardless of whether the upsell solicitation is
made on behalf of a seller different from the seller in the initial transaction or on behalf
of the same seller as in the initial transaction.
ORDER
I.

PROHIBITION ON DECEPTIVE PRACTICES

IT IS ORDERED that, in connection with advertising, promotion, offering for sale, or

sale of entertainment products or services, audio recordings, or video recordings, Defendants and
Defendants officers, agents, servants, employees, and attorneys, and all other persons in active
concert or participation with any of them who receive actual notice of this Order, whether acting
directly or through any corporation, subsidiary, division, or other device, are permanently
restrained and enjoined from:
A. Making, or assisting others to make, expressly or by implication, any representation
or omission of material fact that is false or misleading, including but not limited to,
any false or misleading representation:
1. That a prospective customer or donor has been contacted just for the purpose
of conducting a survey, poll, or other effort to request recommendations or
opinions;

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2. That proceeds from sales will be used to fund an organization, program, or

activity; or
3. That all or most of the proceeds from sales will be used to fund an
organization, program, or activity;
B. Failing to disclose clearly and conspicuously at the beginning of any telephone call or
other communication with a potential customer or donor, that the purpose of the
communication is to solicit the sale of goods or services when the individual making
the call plans to: (i) solicit the sale of goods or services, or arrange for a subsequent
telephone call or other communication that may involve such solicitation; (ii) offer a
prospective customer a credit, discount, guarantee, or other inducement to purchase;
or (iii) provide information about goods or services that are available for purchase;
C. Failing to disclose clearly and conspicuously at the beginning of a telephone call or
other communication conducted as part of a plan, program, or campaign to solicit
persons who accept complimentary merchandise or participate in a survey or poll,
that individuals who accept complimentary merchandise or participate in the survey
or poll may be solicited to purchase goods or services.
II.

COMPLIANCE WITH THE TELEMARKETING SALES RULE

IT IS FURTHER ORDERED that, in connection with telemarketing, Defendants and

Defendants officers, agents, servants, employees, and attorneys, and all other persons in active
concert or participation with any of them who receive actual notice of this Order, whether acting
directly or through any corporation, subsidiary, division, or other device, are permanently
restrained and enjoined from:

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A. Making a false or misleading statement to induce any person to pay for goods or
services, including misrepresenting the manner in which all or part of the proceeds of
a sale will be used;
B. Initiating any outbound telephone call to a person when that person has previously
stated that he or she does not wish to receive an outbound telephone call made by or
on behalf of the seller whose goods or services are being offered or made on behalf of
the charitable organization for which a charitable contribution is being solicited,
unless Defendants can demonstrate that:
1. the call was not the result of failure to obtain any information necessary to
comply with the persons previous request he or she not receive further
outbound telephone calls on behalf of the seller or charitable organization; and
2. the person or entity that initiated the call took the steps set forth in 16 C.F.R.
310.4(b)(3)(i) to (v) as part of its routine business practice, and the call was
the result of error that occurred despite these steps;
C. Initiating any outbound telephone call as part of a plan, program, or campaign to
induce the purchase of goods or services to any person at a telephone number on the
National Do Not Call Registry unless Defendants can demonstrate that:
1. the seller has obtained the express agreement, in writing, of such person to
place calls to that person. Such written agreement shall clearly evidence such
person's authorization that calls made by or on behalf of a specific party may
be placed to that person, and shall include the telephone number to which the
calls may be placed and the signature of that person; or

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2. the seller has an established business relationship with such person, and that
person has not previously stated that he or she does not wish to receive an
outbound telephone call made by or on behalf of either the seller whose goods
or services are being offered. Proof of an established business relationship
requires evidence that the person either (i) purchased, rented, or leased the
sellers goods or services or participated in a financial transaction between the
consumer and seller, within the eighteen (18) months immediately preceding
the date of a telemarketing call; or (ii) inquired or made an application
regarding a product or service offered by the seller, within the three (3)
months immediately preceding the date of a telemarketing call; or
3. the person or entity that initiated the call took the steps set forth in 16 C.F.R.
310.4(b)(3)(i) to (v) as part of its routine business practice, and the call was
the result of error that occurred despite these steps.
D. Failing to disclose truthfully, promptly, and in a clear and conspicuous manner the
following when making an outbound telephone call or upsell to induce the purchase
of goods or services or to induce a charitable contribution: (1) the identity of the
seller or charitable organization; (2) that the purpose of the call is to sell goods or
services or to solicit a contribution; and (3) if the call is to induce a purchase, the
nature of the goods or services; and
E. Initiating a outbound telephone call without making arrangements to transmit or
cause to be transmitted to any caller identification service in use by a recipient of the
call: (i) the telephone number of the telemarketer making the call and the name of the
telemarketer; (ii) the name and telephone number for customer service of the seller on

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behalf of which a telemarketing call is placed; or (iii) the name and donor service
number of the charitable organization on behalf of which a telemarketing call is
placed.
F. Abandoning, or causing others to abandon, any outbound telephone call to a person
by failing to connect the call to a live operator within two seconds of the persons
completed greeting, unless Defendants prove that the following four conditions are
met:
1. The person initiating the calls employ technology that ensures abandonment
of no more than three percent of all calls answered by a person, measured over
the duration of a single calling campaign, if less than thirty days, or separately
over each successive 30-day period or portion thereof that the campaign
continues;
2. The technology employed allows the telephone to ring for at least fifteen
seconds or four rings before disconnecting an unanswered call;
3. Whenever a live operator is not available to speak with the person answering
the call within two seconds after the persons completed greeting, the person
initiating the call promptly plays a recorded message that states the name and
telephone number of the seller or charitable organization on whose behalf the
call was placed;
4. Defendants retain records, in accordance with 16 C.F.R. 310.5(b)-(d),
establishing compliance with the preceding three conditions.
G. Violating the Telemarketing Sales Rule attached hereto as Appendix A.

10

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III.

TRAINING, MONITORING, AND REVIEWS OF ACCURACY

IT IS FURTHER ORDERED that Defendants and Defendants officers, agents, servants,

employees, and attorneys, and all other persons in active concert or participation with any of
them who receive actual notice of this Order, in connection with telemarketing, are permanently
restrained and enjoined from failing to:
A. Take steps sufficient to train and monitor each of their solicitors so that the solicitor
complies with the requirements of the Sections of this Order titled PROHIBITION
ON DECEPTIVE PRACTICES and COMPLIANCE WITH THE
TELEMARKETING SALES RULE. Such steps shall include, but not be limited to,
daily random monitoring of solicitation calls made by each solicitor;
C. Investigate promptly and fully any complaint or inquiry received about a solicitation
made by any employee or independent contractor and to create and maintain a written
record of the investigation and any results;
D. Take corrective action with respect to any employee or independent contractor that is
not complying with this Order, which may include training, disciplining, or
terminating such employee or independent contractor;
E. Review the accuracy of each script or recording that is used or is proposed for use in
contacting customers, and refrain from using any script or recording that
misrepresents, expressly or by implication, the programs, activities, services, if any,
that will be supported by payments from customers.
IV.

MONETARY RELIEF

IT IS FURTHER ORDERED that:

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Defendants are ordered to disgorge to the United States Four Hundred Eighty-Seven
Thousand, Seven Hundred Thirty-Five Dollars ($487,735), as equitable monetary relief, and
judgment is hereby entered against the Defendants, jointly and severally, in this amount.
V.

COMPLIANCE REPORTING

IT IS FURTHER ORDERED that Defendants make timely submissions to the

Commission:
A. One year after entry of this Order, each Defendant must submit a compliance report,
sworn under penalty of perjury:
1. Each Defendant must: (a) identify the primary physical, postal, and email address
and telephone number, as designated points of contact, which representatives of
the Commission and Plaintiff may use to communicate with Defendant; (b)
identify all of that Defendants businesses by all of their names, telephone
numbers, and physical, postal, email, and Internet addresses; (c) describe the
activities of each business, including the goods and services offered, the means of
advertising, marketing, and sales, and the involvement of any other Defendant
(which Defendant Forrest Sandusky Baker III must describe if he knows or should
know due to his own involvement); (d) describe in detail whether and how that
Defendant is in compliance with each Section of this Order; and (e) provide a
copy of each Order Acknowledgment obtained pursuant to this Order, unless
previously submitted to the Commission.
2. Additionally, each Individual Defendant must: (a) identify all telephone numbers
and all physical, postal, email and Internet addresses, including all residences; (b)
identify all business activities, including any business for which he performs

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services whether as an employee or otherwise and any entity in which such

Defendant has any ownership interest; and (c) describe in detail the involvement
in each such business, including title, role, responsibilities, participation,
authority, control, and any ownership.
B. For 20 years after entry of this Order, each Defendant must submit a compliance
notice, sworn under penalty of perjury, within 14 days of any change in the following:
1. Each Defendant must report any change in: (a) any designated point of contact;
or (b) the structure of any Corporate Defendant or any entity that Defendant has
any ownership interest in or controls directly or indirectly that may affect
compliance obligations arising under this Order, including: creation, merger, sale,
or dissolution of the entity or any subsidiary, parent, or affiliate that engages in
any acts or practices subject to this Order.
2. Additionally, Defendant Forrest Sandusky Baker III must report any change in:
(a) name, including aliases or fictitious name, or residence address; or (b) title or
role in any business activity, including any business for which such Defendant
performs services whether as an employee or otherwise and any entity in which
such Defendant has any ownership interest, and identify the name, physical
address, and any Internet address of the business or entity.
C. Each Defendant must submit to the Commission notice of the filing of any
bankruptcy petition, insolvency proceeding, or similar proceeding by or against such
Defendant within 14 days of its filing.
D. Any submission to the Commission required by this Order to be sworn under penalty
of perjury must be true and accurate and comply with 28 U.S.C. 1746, such as by

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concluding: I declare under penalty of perjury under the laws of the United States of
America that the foregoing is true and correct. Executed on: _____ and supplying
the date, signatorys full name, title (if applicable), and signature.
E. Unless otherwise directed by a Commission representative in writing, all submissions
to the Commission pursuant to this Order must be emailed to DEbrief@ftc.gov or
sent by overnight courier (not the U.S. Postal Service) to: Associate Director for
Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600
Pennsylvania Avenue NW, Washington, DC 20580. The subject line must begin:
United States v. Corporations for Character.
VI.

RECORDKEEPING

IT IS FURTHER ORDERED that, for a period of twenty (20) years from the date of
entry of this Order, Corporate Defendants and Defendant Forrest Sandusky Baker III, for any
business engaged in telemarketing activities for which he is majority owner or directly or
indirectly controls, must create and retain the following records:
A. accounting records that showing the revenues from all goods or services sold,
contributions collected, and the disbursement of revenues and contributions;
B. personnel records showing, for each person providing services, whether as an
employee or otherwise, that persons: name, address, telephone numbers; job title or
position; dates of service; and (if applicable) the reason for the termination;
C. records of all complaints regarding telemarketing activities, whether received directly
or indirectly, such as through a third party, and any responses to those complaints or
requests;
D. copies of all scripts and recordings used in making calls;

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E. training materials, advertisements or other marketing materials;

F. records of investigations of complaints and corrective action, and any financial
statements, budgets or other documents examined or created to comply with the
requirements of the Section of this Order titled TRAINING, MONITORING, AND
REVIEWS OF ACCURACY and
G. 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 required by the Section titled ORDER
ACKNOWLEDGMENTS and all reports submitted to the FTC pursuant to the
Section titled COMPLIANCE REPORTING.
VII.

COMPLIANCE MONITORING

IT IS FURTHER ORDERED that, for the purpose of monitoring Defendants

compliance with this Order:
A. Within 14 days of receipt of written notice from a representative of the Commission
or the Plaintiff, each Defendants must: submit additional written reports or other
requested information, which must be sworn under penalty of perjury; appear for
depositions; and produce documents for inspection and copying. The Commission
and Plaintiff are also authorized to obtain discovery, without further leave of court,
using any of the procedures prescribed by Federal Rules of Civil Procedure 29, 30
(including telephonic depositions), 31, 33, 34, 36, 45 and 69.
B. The Commission and Plaintiff may use all other lawful means, including posing,
through its representatives as consumers, suppliers, or other individuals or entities, to
Defendants or any individual or entity affiliated with Defendants, without the

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necessity of identification or prior notice. Nothing in this Order limits the

Commissions lawful use of compulsory process, pursuant to Sections 9 and 20 of the
FTC Act, 15 U.S.C. 49, 57b-1.
VIII. ORDER ACKNOWLEDGEMENTS
IT IS FURTHER ORDERED that Defendants distribute and obtain acknowledgements
of receipt of this Order:
A. Each Defendant, within seven (7) days of entry of this Order, must submit to the
Commission a truthful sworn statement acknowledging receipt of this Order under
penalty of perjury.
B. For five (5) years after entry of this Order, each Corporate Defendant and Defendant
Forrest Sandusky Baker III for any business that he, individually or collectively with
any Corporate Defendant or Defendants, is the majority owner or controls directly or
indirectly, must deliver a copy of this Order to: (1) all principals, officers, directors,
and managers; (2) all of its employees, agents, and representatives who participate in
conduct related to telemarketing or the sale of goods or services; and (3) any business
entity resulting from any change in structure set forth in the Section titled
COMPLIANCE REPORTING. For current personnel, delivery must occur within
five (5) days of entry of this Order. For all others, delivery must occur before they
assume their responsibilities.
C. From each individual or entity to which a Defendant delivered a copy of this Order,
that Defendant must obtain a signed and dated statement acknowledging receipt of the
Order.

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IX.

RETENTION OF JURISDICTION

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for
purposes of construction, modification and enforcement of this Order.
SO ORDERED this _____ day of _____________, 2016.
BY THE COURT:

_________________________
ROBERT J. SHELBY
United States District Judge

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