JOHN C. HALLERUD (JH-7073)
RUSSELL W. DAMTOFT (RD-5241)
Federal Trade Commission
55 East Monroe St., Suite 1860
Chicago, IL 60603
(312) 960-5634 (voice)
(312) 960-5600 (facsimile)

FAITH S. HOCHBERG
United States Attorney

By:

MICHAEL A. CHAGARES (MC-5483)
Assistant United States Attorney
United States Attorney’s Office
970 Broad St., 7th Floor
Newark, NJ 07102
(973) 645-2700 (voice)
(973) 297-2010 (facsimile)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

In Re NATIONAL CREDIT MANAGEMENT GROUP, LLC; GLEN BUZZETTI, individually and as an officer of National Credit Management Group, LLC; and JOSEPH FERGUSON, individually and as an officer of National Credit Management Group, LLC

Civ. No. 98-936 (AJL)

Hon. Alfred J. Lechner, Jr.

STIPULATED SETTLEMENT AGREEMENT CONTAINING
ORDER FOR PERMANENT INJUNCTIVE RELIEF
WITH CONSUMER REDRESS AND OTHER EQUITABLE RELIEF

WHEREAS Plaintiff Federal Trade Commission (“FTC”), having filed its complaint for a permanent injunction and other relief in this matter, pursuant to the Credit Repair Organizations Act, 15 U.S.C. § 1679 et seq., (“CROA”); the Telemarketing and Consumer Fraud and Abuse Prevention Act (“TCFA”), 15 U.S.C. § 6101 et seq.; the FTC Telemarketing Sales Rule ("TSR"), 16 C.F.R. Part 310; and Section 13(b) of the Federal Trade Commission Act ("FTC Act”), 15 U.S.C. § 53(b); and

WHEREAS the Court having consolidated the FTC action and a similar action filed by Plaintiff Peter Verniero, Attorney General of New Jersey (“State”); the FTC and the State having filed its Second Amended Consolidated Complaint ("Amended Complaint"); the Court having entered an opinion on March 25, 1998 and a preliminary injunction and appointed Robert L. Clifford, Esq., as Receiver on April 3, 1998; and

WHEREAS the FTC and Defendants National Credit Management Group, LLC, Glen Buzzetti, and Joseph Ferguson (collectively "Defendants") having agreed to the entry of this Stipulated Order for Permanent Injunctive Relief with Consumer Redress and Other Equitable Relief ("Order") by this Court in order to resolve all matters of dispute between them in this action, including all allegations of Defendants’ violation of the CROA, TCFA, TSR, and the FTC Act as alleged in the Amended Complaint; and

WHEREAS this Order leaves unresolved only those claims asserted by the State for violations of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq.

NOW, THEREFORE, the FTC, the Receiver, and the Defendants having requested the Court to enter this Order, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED as follows:

FINDINGS

1. This Court has jurisdiction of the subject matter of this case and of all parties hereto;
2. The Amended Complaint states a claim upon which relief may be granted against Defendants under Sections 5 and 19 of the FTC Act, 15 U.S.C. §§ 45 and 57b; Sections 6103(a) and 6105(b) of the TCFA, 15 U.S.C. §§ 6103(a) and 6105(b); and Sections 410(b) and (c) of the CROA, 15 U.S.C. § 1679h(b) and (c);
3. Entry of this Order is in the public interest;
4. Defendants have waived all rights to seek appellate review of, or otherwise challenge or contest the validity of, this Order or any prior order of the Court entered in this matter as it pertains to any claim for relief sought by the FTC;
5. The Defendants’ stipulation is for settlement purposes only; does not constitute an admission of facts, other than jurisdictional facts, or violations of law as alleged in the Second Amended Complaint and in fact Defendants deny same; and may not be used against Defendants in any other proceeding; and
6. Defendants have waived all claims under the Equal Access to Justice Act, 28 U.S.C. § 2412.

Definitions

1. "Assets" means all real and personal property of any Defendant, or held for the benefit of any Defendant, including, but not limited to "goods," "instruments," "equipment," "fixtures," "general intangibles," "inventory," "checks," or "notes" (as these terms are defined in the Uniform Commercial Code), and all cash, wherever located.
2. "Consumer" means an individual purchasing goods or services primarily for personal, family, household, or agricultural purposes, or a business employing less than ten persons purchasing good or services for use in such business.
3. "Defendants" means National Credit Management Group, LLC, Glen Buzzetti, Joseph Ferguson, and any corporations owned or controlled by National Credit Management Group, LLC, Glen Buzzetti or Joseph Ferguson and any unincorporated business entities operated by National Credit Management Group, LLC, Glen Buzzetti or Joseph Ferguson or any of them, including but not limited to National Telecommunication Center, LLC; National Credit Learning Center, LLC; American Credit Learning Center, LLC; FYI, LLC; Credit Information Center, LLC; Auto Mortgage Express Center, LLC; Credit Education Center, LLC; Tiger GF Leasehold, Inc.; and Cyber Wars T.B.K., LLC; and their successors, assigns, officers, agents, servants, employees, and those persons in active concert or participation with them who receive actual notice of this Order by personal service, facsimile, or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device.
4. “Material” means likely to affect a person’s choice of, or conduct regarding, goods or services;
5. “Person” means any individual, group, unincorporated association, limited or general partnership, corporation, or other business entity;
6. “Telemarketing” has the same meaning as defined in Section 310.2(u) of the TSR, 16 C.F.R. § 310.2(u).

I.

IT IS THEREFORE ORDERED that Defendants Glen Buzzetti and Joseph Ferguson are hereby restrained and enjoined from selling, offering for sale, promoting, advertising, or performing any service, in return for direct or indirect monetary or other compensation, which is sold, offered for sale, promoted, or advertised for the express or implied purpose of:

A. improving any consumer’s credit record, credit history, or credit rating;

B. providing advice or assistance to any consumer with regard to any activity or service described in clause(a); or

C. obtaining or arranging for credit cards or other extension of credit for consumers; provided that this clause shall not prohibit said Defendants from obtaining or arranging for extensions of credit when such credit is being extended to a buyer whose purchase of goods or services is from a business in the ordinary course of such business and it is customary for buyers of such goods or services to obtain financing.

II.

IT IS FURTHER ORDERED that in connection with the sale of any product or service in or affecting commerce, Defendants Glen Buzzetti and Joseph Ferguson are hereby restrained and enjoined from obtaining or submitting for payment a check, draft, or other form of negotiable paper drawn on a consumer’s checking, savings, share, or similar account unless said check, draft, or other form of negotiable paper contains the original signature of said consumer. This Section shall not be construed to prohibit them from obtaining or submitting for payment a traditional credit, debit, or other substantially similar charge as to which the Fair Credit Billing Act, 15 U.S.C. § 1666-1666j, or any substantially similar provision of state or federal law applies at the time of the transaction.

III.

IT IS FURTHER ORDERED that, in connection with the telemarketing of any product or service, Defendants are hereby restrained and enjoined from violating the TSR, 16 C.F.R. Part 310, as presently promulgated or as it may hereinafter be amended, including, but not limited to, the following:

A. Violating Section 310.3(a)(1)(i) of the TSR, 16 C.F.R. § 310.3(a)(1)(i), by failing to disclose in a clear and conspicuous manner the total costs to purchase, receive, or use, the goods and/or services that are the subject of a sales offer;

B. Violating Section 310.3(a)(1)(ii) of the TSR, 16 C.F.R. § 310.3(a)(1)(ii), by failing to disclose all material restrictions, limitations, or conditions to purchase, receive, or use the goods and/or services that are the subject of a sales offer;

C. Violating Section 310.3(a)(1)(iii) of the TSR, 16 C.F.R. § 310.3(a)(1)(iii), by failing to clearly and conspicuously disclose all material terms and conditions of any refund policies;

D. Violating Section 310.3(a)(2)(ii) of the TSR, 16 C.F.R. § 310.3(a)(2)(ii), by misrepresenting any material restriction, limitation or condition to purchase, receive or use goods or services that are the subject of a sales offer; and

E. Violating Section 310.3(a)(2)(iii) of the TSR, 16 C.F.R. § 310.3(a)(2)(iii), by misrepresenting any material aspect of the performance, efficacy, nature or central characteristics of goods or services that are the subject of a sales offer.

IV.

IT IS FURTHER ORDERED that Defendants are hereby restrained and enjoined from violating the CROA, 15 U.S.C. §§ 1679 to 1679k, as presently enacted or as it may hereinafter be amended, including, but not limited to:

A. Violating Section 405(a) of the CROA by failing to provide the written statement in the form and manner required by that Section to each consumer before any contract or agreement with the consumer is executed;

B. Violating Section 406 of the CROA by providing services to a consumer prior to obtaining a signed, written and dated contract which meets the requirements of Section 406(b) or prior to the end of the third business day after the date on which the contract is signed;

C. Violating Section 407(b) of the CROA by failing to provide the "Notice of Cancellation" form, in the form and manner required by that Section; and

D. Violating Section 407(b) of the CROA by failing to honor the cancellation requests of consumers made, mailed, or postmarked on any of the first three business days following the date of their agreement to purchase.

V.

IT IS FURTHER ORDERED that, in connection with the advertisement, promotion or sale of any goods or service, Defendants are hereby restrained and enjoined from:

A. Misrepresenting, directly or by implication, that Defendants, their services or their products have been approved or endorsed by any governmental authorities or any consumer protection entities;

B. Misrepresenting, directly or by implication, the objectivity of any entity or individual who provides a positive recommendation for Defendants;

C. Misrepresenting, directly or by implication, that employees of the Defendants have received a certification approved, conducted or endorsed by any governmental authorities;

D. Failing to disclose the material terms, conditions, and limitations of any refund policy or any policy of nonrefundability;

E. Failing to disclose the material terms, conditions and limitations on any secured, unsecured and catalogue credit card applications offered by Defendants to consumers;

F. Misrepresenting, directly or by implication, any fact material to a consumer’s decision to purchase Defendants’ services or products;

G. Misrepresenting, directly or by implication, that Defendants will perform a confidential analysis of the credit history or standing of a consumer;

H. Misrepresenting, directly or by implication, that Defendants will provide a service that will assist consumers in establishing or reestablishing credit; and

I. Misrepresenting, directly or by implication, that any application for credit has been pre-approved.

VI.

IT IS FURTHER ORDERED that Defendants are hereby restrained and enjoined from:

A. providing or selling to any person a list which contains the name, address, telephone number, or credit card or bank account number, of any customer who purchased any goods or services from Defendant National Credit Management Group, LLC, unless such disclosure is required by law or court order; and

B. Making any collection efforts on accounts arising from contracts entered into between Defendant National Credit Management Group, LLC, and its customers prior to the date this Order is entered.

VII.

IT IS FURTHER ORDERED that Defendant Glen Buzzetti shall pay to the FTC and the Receiver the sum of Three Hundred and Ten Thousand Dollars ($310,000.00) ("Buzzetti Settlement Amount") as follows:

A. Defendant Glen Buzzetti shall pay the sum of One Hundred and Thirty Thousand Dollars ($130,000.00) no later than seven (7) days after entry of this Order;

B. Defendant Glen Buzzetti shall pay all proceeds, net of outstanding mortgage debt and bona fide costs of sale, from the sale of real property owned by him at Roc Harbour, 3-D Cove Lane, North Bergen, New Jersey ("the Roc Harbour Property"), no less than one hundred and eighty (180) days after entry of this Order, and shall provide a copy of the HUD-1 settlement sheet to counsel for Plaintiffs; and

C. Defendant Glen Buzzetti shall pay the balance of the Buzzetti Settlement Amount in eighteen (18) equal monthly installments of one/eighteenth (1/18) of the balance due and owing as of the first day of the sixth month following entry of this Order, the first installment of which shall be payable no later than the first day of the sixth month following entry of this order and subsequent installments shall be due on the first day of every month thereafter.

D. In the event of any default on any obligation to make payment under this Section VIII, interest, computed pursuant to 28 U.S.C. § 1961(a), shall accrue from the date of default to the date of payment.

E. Defendant Glen Buzzetti shall pay to the Receiver on behalf of the Receivership Estate and subject to the provisions of Section IX the first Sixty Thousand Dollars ($60,000.00) payable under Subsections (A) through (D) of this Section VII. The balance of the payments required by this Section VII shall be paid to the FTC in the manner provided in Section X of this Order.

F. Defendant Glen Buzzetti shall secure the Buzzetti Settlement Amount as follows:

1. Upon entry of this Stipulated Order, Defendant Glen Buzzetti shall immediately execute and deliver to the FTC his Promissory Note ("Buzzetti Note"), in a form acceptable to Plaintiffs’ counsel, in the amount of Three Hundred and Ten Thousand Dollars ($310,000). The Buzzetti Note shall be payable as set forth in subparagraphs A to D of this Section.

2. The Buzzetti Note shall be secured by delivery to the FTC of:

a. A Mortgage in favor of the FTC in a form acceptable to counsel for the FTC to the Roc Harbour Property. The FTC shall hold the second security interest and second lien on the Roc Harbour Property and shall be subordinate only to the first mortgagee and such other liens as shall have priority under applicable law; and

b. A Form UCC-1 Financing Statement in favor of the FTC securing the items on that certain list of furniture, equipment and other personal property set forth in the letter of July 21, 1998, from Albert L. Buzzetti, Esq., to counsel for Plaintiffs ("Buzzetti Assets"). The FTC shall hold the security interest and lien on the Buzzetti Assets and shall be subordinate only to such other liens as shall have priority under applicable law;

c. The Roc Harbour Property and the Buzzetti Assets shall be pledged to secure full payment of the amount due under the Buzzetti Note.

3. Defendant Buzzetti shall execute and deliver such financing statements, affidavits of title and other collateral security agreements or documents as, in the opinion of Plaintiffs’ counsel, are necessary to perfect the FTC’s security interests referred to above.

4. Within ten (10) days of the payment of the full amount required by this Section VII, all liens and mortgages in favor of the FTC shall be canceled by the FTC.

G. In the event that Defendant Buzzetti fails to make any payment required by subparagraphs (A) through (D) of this Section VII, the FTC may, at its sole option, declare Defendant Buzzetti in default, in which case the FTC shall provide Defendant Buzzetti with written notice of said default. Should such default not be cured within ten (10) days of mailing such notice, the Buzzetti Note shall immediately be due and payable, less any payments made.

H. Defendant Glen Buzzetti agrees not to discharge in bankruptcy the amount equal to the Buzzetti Settlement Amount, less any payments made pursuant to this Agreement with the understanding that nothing herein shall waive Defendant Buzzetti’s right or affect his ability to discharge any other debt. For purposes of any subsequent proceedings to enforce payment of the amount required by this Section VII, including but not limited to a nondischargeability complaint filed in a bankruptcy proceeding, Defendant Glen Buzzetti waives any right to contest any of the allegations of the Second Amended Consolidated Complaint filed herein. This waiver does not constitute an admission of facts or violations of law and may not be used in any other proceeding except as set forth above.

VIII.

IT IS FURTHER ORDERED that Defendant Joseph Ferguson shall pay to the FTC, in the manner provided in Section X of this Order, the sum of Forty Thousand Dollars ($40,000.00) ("Ferguson Settlement Amount") as follows:

A. Defendant Joseph Ferguson shall pay the sum of Twenty- Five Thousand Dollars ($25,000.00) no later than ten (10) days after entry of this Order; and

B. Defendant Joseph Ferguson shall pay the balance of the Ferguson Settlement Amount six (6) months after the date of entry of this Order.

C. In the event of any default on any obligation to make payment under this Section VIII, interest, computed pursuant to 28 U.S.C. § 1961(a), shall accrue from the date of default to the date of payment.

D. Defendant Joseph Ferguson shall secure the Ferguson Settlement Amount as follows:

1. Upon entry of this Stipulated Order, Defendant Joseph Ferguson shall immediately execute and deliver to the FTC his Promissory Note ("Ferguson Note"), in a form acceptable to counsel for the FTC, in the amount of Forty Thousand Dollars ($40,000). The Ferguson Note shall be payable as set forth in subparagraph (A) through (C) of this Section VIII.
2. The Ferguson Note shall be secured by delivery to the FTC of a Mortgage in favor of the FTC in a form acceptable to counsel for the FTC to real estate located at 39 Revere Road, Ardsley, New York ("the Ardsley Property"). The FTC shall hold a second mortgage on the Ardsley Property and shall be subordinate only to the first mortgagee and such other liens as shall have priority under applicable law. The Ardsley Property shall be pledged to secure full payment of the amount due under the Ferguson Note.
3. Defendant Ferguson shall execute and deliver such financing statements, affidavits of title and other collateral security agreements or documents as, in the opinion of counsel for the FTC, are necessary to perfect the FTC’s security interests referred to above.
4. Within ten (10) days of the payment of the full amount required by this Section VIII, all liens and mortgages in favor of the FTC shall be canceled by the FTC.

E. In the event that Defendant Ferguson fails to make any payment required by subparagraphs (A) through (C) of this Section VIII, the FTC may, at its sole option, declare Defendant Ferguson in default, in which case the FTC shall provide Defendant Ferguson with written notice of said default. Should such default not be cured within ten (10) days of mailing such notice, the Ferguson Note shall immediately be due and payable, less any payments made.

F. Defendant Joseph Ferguson agrees not to discharge in bankruptcy the amount equal to the Ferguson Settlement Amount, less any payments made pursuant to this Agreement with the understanding that nothing herein shall waive Defendant Ferguson’s right or affect his ability to discharge any other debt. For purposes of any subsequent proceedings to enforce payment of the amount required by this Section VIII, including but not limited to a nondischargeability complaint filed in a bankruptcy proceeding, Defendant Joseph Ferguson waives any right to contest any of the allegations of the Second Amended Consolidated Complaint filed herein. This waiver does not constitute an admission of facts or violations of law and may not be used in any other proceeding except as set forth above.

IX.

IT IS FURTHER ORDERED that the appointment of Robert L. Clifford, Esq., as Receiver for Defendant National Credit Management Group, LLC., pursuant to this Court’s Order for Preliminary Injunction entered on April 3, 1998, is hereby continued as modified by this Section. The Receiver shall proceed to liquidate all assets of Defendant National Credit Management Group, LLC, including, but not limited to, all right, title, and interest in and to the of the telephone number 1-800-YES-CREDIT and any other telephone number used or controlled by any Defendant or affiliate and all rights to revenue from the sale of written material prepared by National Credit Management Group, LLC. For purposes of this Section IX, all assets owned by National Telecommunication Center, LLC; National Credit Learning Center, LLC; American Credit Learning Center, LLC; FYI, LLC; Credit Information Center, LLC; Auto Mortgage Express Center, LLC; Credit Education Center, LLC; Tiger GF Leasehold, Inc.; and Cyber Wars T.B.K., LLC shall be considered to be assets of National Credit Management Group, LLC.

The Receiver shall continue to pay administrative expenses of the receivership estate including, but not limited to rent, insurance, utilities, telephone, mail box rental, and storage fees. Upon liquidation of the assets of National Credit Management Group, LLC, and the payment by Defendant Glen Buzzetti of the sum required by Section VII(E) of this Order to the Receivership Estate, the Receiver shall submit his report and his application for fees and expenses, and upon the approval of the same, shall pay:

A. the amounts allowed by the Court pursuant to his application for fees and expenses, including but not limited to, professional fees and auctioneers’ fees;

B. to the extent that funds remain, in the order of priority set forth in 11 U.S.C. § 507; provided that all claims for commissions and claims for wages and salaries by managerial employees (which shall be defined as consisting of Defendants and all persons with a title of Vice President, Manager, Executive Assistant, or Supervisor) shall be specifically excluded from any 11 U.S.C. § 507(a)(3) and (4) distribution; and provided further that claims by the FTC for consumer redress shall be considered within the ambit of any 11 U.S.C. § 507(a)(6) distribution; and

C. to the extent that funds remain, to the FTC.

Upon the filing of the Receiver’s final report and the Court’s approval of the same, the Receivership over Defendant National Credit Management Group, LLC., pursuant to this Court’s Order for Preliminary Injunction entered on April 3, 1998, shall be terminated and the provisions of said Preliminary Injunction related to the appointment of the Receiver contained therein shall be dissolved.

X.

IT IS FURTHER ORDERED that:

A. For purposes of administration, all payments required to be made to the FTC under Section VII and VIII shall be made by certified check or other guaranteed funds payable to and delivered to the FTC or by wire transfer in accord with directions provided by the FTC. All payments required to be made to the Receiver under Section VII(E) shall be made by certified check or other guaranteed funds payable to and delivered to the Receiver, with a copy of the check or wire transfer instructions being provided to the FTC at the same time payment is made to the Receiver.

B. The funds paid to the FTC by the Defendants pursuant to Sections VII and VIII of this Order, and by the Receiver pursuant to Section IX(B) and/or IX(C) of this Order shall be deposited into a redress fund, administered by the FTC, to be used for equitable relief including but not limited to consumer redress and any attendant expenses for the administration of any redress fund. If the FTC determines, in its sole discretion, that redress to purchasers is wholly or partially impracticable, any funds not so used shall be paid to the United States Treasury as disgorgement. Defendants shall be notified as to how the funds are disbursed but shall have no right to contest the manner of distribution chosen by the FTC. The FTC in its sole discretion may use a designated agent to administer consumer redress. The FTC and Defendants acknowledge and agree that this judgment for equitable monetary relief is solely remedial in nature and is not a fine, penalty, punitive assessment, or forfeiture.

C. The Defendants are hereby required, in accordance with 31 U.S.C. § 7701, to furnish to the FTC their respective taxpayer identifying numbers (social security number or employer identification numbers), which shall be used for purposes of collecting and reporting on any delinquent amount arising out of such persons’ relationship with the government.

XI.

IT IS FURTHER ORDERED that:

A. If, upon motion by the FTC, this Court finds that at the time this Order was signed by Defendants, that Defendants have any interest in any material asset other than the following:

1. In the case of Defendant Glen Buzzetti, real estate located at Roc Harbour, 3-D Cove Lane, North Bergen, New Jersey; the sum of approximately $49,236 cash held in the client trust account of Lustigman Law Firm; jewelry valued at approximately $50,000; stock in Bridge View Bank valued at approximately $75,000; and the items of furniture, equipment, and personal items owned by Glen Buzzetti listed in the letter of July 21, 1998, from Albert L. Buzzetti, Esq., to Russell Damtoft and Gail M. Cookson; and
2. In the case of Defendant Joseph Ferguson, real estate located at 39 Revere Road, Ardsley, New York and 3875 Waldo Ave., #10L, Bronx, New York; an annuity in the amount of approximately $25,361.30 in the Operating Engineers’ Trust Fund; an Individual Retirement Account with a sum value of $3,585.53 in American Life Partners, and a 401K plan in the vested amount of $12,154.41;

or if the value of said assets materially exceeds any amount set forth above, the FTC may request that the judgment herein be reopened for the purpose of requiring additional monetary consumer redress in an amount approximately equivalent to any such asset in the case of an asset not listed above, or in an amount approximately equivalent to any resulting understatement of any asset listed above.

Provided, that in all other respects this judgment shall remain in full force and effect; and provided further, that proceedings instituted under this Section are in addition to and not in lieu of any other remedies as may be provided by law, including, but not limited to, contempt proceedings, or any other proceedings the Commission may initiate to enforce this Order.

B. If, upon motion by the Receiver, this Court finds that:

1. any asset of the Receivership Defendant was fraudulently transferred to third parties within 90 days prior to the time the Receiver took control on April 3, 1998;
2. such transfer was made in contemplation of the lawsuits filed by the State and the FTC on March 3, 1998; and
3. such transfer is not reflected on the books and records of the Receivership Defendant,

the Receiver may seek that the Judgment be reopened for the purpose of seeking such asset of the Receivership Defendant or an amount reasonably equivalent to the value of such asset. Any motion by the Receiver does not nullify or void any of the provisions of the Order.

XII.

IT IS FURTHER ORDERED that the asset freeze provisions contained in Section V(A) of this Court’s Order for Preliminary Injunction dated April 3, 1998, shall remain in effect with respect to the real and personal property referred to in Section XI of this Order. Defendants shall be permitted to make such transfers as are necessary to comply with Sections VII and VIII of this Order and upon such compliance, the asset freeze provisions contained in Section V of this Court’s Order for Preliminary Injunction dated April 3, 1998, shall thereupon be deemed dissolved as to that party.

XIII.

IT IS FURTHER ORDERED that, within five (5) business days after receipt by each Defendant of this Order as entered by the Court, each Defendant shall submit to the FTC a truthful sworn statement, in the form shown on Exhibit A, that shall acknowledge receipt of this Final Order.

XIV.

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, Defendants shall:

A. Provide a copy of this Order to, and obtain a signed and dated acknowledgment of receipt of same from, each officer or director, each individual serving in a management capacity, all personnel involved in responding to consumer complaints or inquiries, and all sales personnel, whether designated as employees, consultants, independent contractors or otherwise, immediately upon employing or retaining any such persons, for any business in which:

1. such Defendant is an owner of the business or directly or indirectly manages or controls the business, and
2. the business is engaged in, or assists others in engaging in (a) telemarketing to consumers, or (b) the sale, offering for sale, or advertising of any credit-related goods or services to consumers;

provided that persons who are required to be given a copy of this Order solely because they are involved in responding to consumer complaints or inquiries or are sales personnel may be provided a summary of this Order in the form attached hereto as Exhibit B in lieu of a copy of the entire Order.

B. Maintain for a period of three (3) years after creation, and upon reasonable notice, make available to representatives of the FTC, the original signed and dated acknowledgments of the receipt of copies of this Order, as required in Subparagraph (A) of this Section.

XV.

IT IS FURTHER ORDERED that Defendants, in connection with any business in which:

1. such Defendant is an owner of the business or directly or indirectly manages or controls the business, and
2. the business is engaged in, or assists others in engaging in (a) telemarketing to consumers or (b) the sale, offering for sale, or advertising of any credit-related goods or services to consumers;

are hereby permanently restrained and enjoined from:

A. Failing to take reasonable steps sufficient to monitor and ensure that all employees and independent contractors engaged in sales or other customer service functions comply with Sections III, IV, and V of this Order. Such steps shall include adequate monitoring of sales presentations or other calls with customers, and shall also include, at a minimum, the following: (1) listening to the oral representations made by persons engaged in sales or other customer service functions; (2) establishing a procedure for receiving and responding to consumer complaints; and (3) ascertaining the number and nature of consumer complaints regarding transactions in which each employee or independent contractor is involved; provided that this Paragraph does not authorize or require any Defendant to take any steps that violate any federal, state, or local laws;

B. Failing to investigate promptly and fully any consumer complaint received by any business to which this Section applies; and

C. Failing to take corrective action with respect to any sales person whom Defendant determines is not complying with this Order, which may include training, disciplining, and/or terminating such sales person.

XVI.

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, Defendants, in connection with any business in which:

1. such Defendant is an owner of the business or directly or indirectly manages or controls the business, and
2. the business is engaged in, or assists others in engaging in (a) telemarketing to consumers or (b) the sale, offering for sale, or advertising of any credit-related goods or services to consumers;

are hereby restrained and enjoined from failing to create, and from failing to retain for a period of three (3) years following the date of such creation, unless otherwise specified:

A. Books, records and accounts that, in reasonable detail, accurately and fairly reflect the cost of goods or services sold, revenues generated, and the disbursement of such revenues;

B. Records accurately reflecting: the name, address, and telephone number of each person employed in any capacity by such business, including as an independent contractor; that person’s job title or position; the date upon which the person commenced work; and the date and reason for the person’s termination, if applicable. The businesses subject to this Section shall retain such records for any terminated employee for a period of two (2) years following the date of termination;

C. Records containing the names, addresses, phone numbers, dollar amounts paid, quantity of items or services purchased, and description of items or services purchased for all consumers to whom such business has sold, invoiced or shipped any goods or services;

D. Records that reflect, for every consumer complaint or refund request, whether received directly or indirectly or through any third party:

(1) the consumer’s name, address, telephone number and the dollar amount paid by the consumer;

(2) the written complaint or refund request, if any, and the date of the complaint or refund request;

(3) the basis of the complaint, including the name of any salesperson complained against, and the nature and result of any investigation conducted concerning any complaint;

(4) each response and the date of the response;

(5) any final resolution and the date of the resolution; and

(6) in the event of a denial of a refund request, the reason for the denial; and

E. Copies of all sales scripts, training materials, advertisements, or other marketing materials utilized; provided that copies of all sales scripts, training materials, advertisements, or other marketing materials utilized shall be retained for (3) years after the last date of dissemination of any such materials.

XVII.

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

A. For a period of five (5) years from the date of entry of this Order, each Defendant shall notify the Commission of the following:

(1) Any changes in Defendant’s residence, mailing addresses, and telephone numbers, within ten (10) days of the date of such change;

(2) Any changes in Defendant’s employment status (including self-employment) within ten (10) days of such change. Such notice shall include the name and address of each business that Defendant is affiliated with or employed by, a statement of the nature of the business, and a statement of Defendant’s duties and responsibilities in connection with the business or employment; and

(3) Any proposed change in the structure of any business entity owned or controlled by Defendant Glen Buzzetti or Joseph Ferguson, such as creation, incorporation, dissolution, assignment, sale, merger, creation, dissolution of subsid iaries, proposed filing of a bankruptcy petition, or change in the corporate name or address, or any other change that may affect compliance obligations arising out of this Order, thirty (30) days prior to the effective date of any proposed change; provided, however, that, with respect to any proposed change in the corporation about which Defendant learns less than thirty (30) days prior to the date such action is to take place, Defendant shall notify the Commission as soon as is practicable after learning of such proposed change.

B. One hundred eighty (180) days after the date of entry of this Order, each Defendant shall provide a written report to the FTC, sworn to under penalty of perjury, setting forth in detail the manner and form in which the Defendant has complied and is complying with this Order. This report shall include but not be limited to:

(1) Defendant’s then current residence address and telephone number;

(2) Defendant’s then current employment, business addresses and telephone numbers, a description of the business activities of each such employer, and Defendant’s title and responsibilities for each employer;

(3) A copy of each acknowledgment of receipt of this Order obtained by Defendant pursuant to Section XIII; and

(4) A statement describing the manner in which Defendant has complied and is complying with Sections III, IV, V, XV, and XVI of this Order.

C. Upon written request by a representative of the FTC, and subject to any applicable privilege, Defendants shall submit additional written reports (under oath, if requested) and produce documents on fifteen (15) days’ notice with respect to Defendants’ compliance with this Order.

D. For the purposes of this Order, Defendants shall, unless otherwise directed by the authorized representatives of the FTC, mail all written notifications to the FTC to:

Regional Director
Federal Trade Commission
Chicago Regional Office
55 E. Monroe St., Suite 1860
Chicago, Illinois 60603

Re: In re National Credit Management Group.

E. For the purposes of this Section XVII, "employment" includes the performance of services as an employee, consultant, or independent contractor; and "employers" include any individual or entity for whom Defendant performs services as an employee, consultant, or independent contractor.

XVIII.

IT IS FURTHER ORDERED that the FTC is authorized to monitor Defendants’ compliance with this Order by all lawful means, including but not limited to the following means:

A. The FTC is authorized, without further leave of court, to obtain discovery from any person in the manner provided by Chapter V of the Federal Rules of Civil Procedure, Fed. R. Civ. P. 26 - 37, including the use of compulsory process pursuant to Fed. R. Civ. P. 45, for the purpose of monitoring and investigating any Defendant’s compliance with any provision of this Order; and

B. The FTC is authorized to use representatives posing as consumers and suppliers to any Defendant, any Defendant’s employees, or any other entity managed or controlled in whole or in part by any Defendant, without the necessity of identification or prior notice.

C. Nothing in this Order shall limit the FTC’s lawful use of compulsory process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49, 57b-1, to investigate whether any Defendant has violated any provision of this Order or Section 5 of the FTC Act, 15 U.S.C. § 45.

XIX.

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, for the purpose of further determining compliance with this Order, each Defendant shall permit representatives of the FTC, within three (3) business days of receipt of written notice from the FTC:

A. Access during normal business hours to any office, or facility storing documents, of any business in which:

1. such Defendant is an owner of the business or directly or indirectly manages or controls the business, and
2. the business is engaged in, or assists others in engaging in (a) telemarketing to consumers or (b) the sale, offering for sale, or advertising of any credit-related goods or services to consumers.

In providing such access, Defendant shall permit representatives of the FTC to inspect and copy all documents relevant to compliance with this Order; and shall permit FTC representatives to remove documents relevant to any matter contained in this Order for a period not to exceed five (5) business days so that the documents may be inspected, inventoried, and copied.

B. To interview the officers, directors, and employees, including but not limited to all personnel involved in responding to consumer complaints or inquiries, and all sales personnel, whether designated as employees, consultants, independent contractors or otherwise, of any business to which Subparagraph (A) of this Section applies, concerning matters relating to compliance with the terms of this Order. The person interviewed may have counsel present.

Provided that, upon application of the Commission and for good cause shown, the Court may enter an ex parte order granting immediate access to any Defendant’s business premises for the purposes of inspecting and copying all documents relevant to compliance with this Order.

XX.

IT IS FURTHER ORDERED that all claims by all parties that Defendants have violated the FTC Act, CROA, TCFA, and TSR as alleged in the Amended Complaint are hereby resolved and that this Order leaves unresolved only the State’s claims that Defendants violated the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq.

XXI.

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for the purpose of resolutions of the claims asserted by the State and for interpretation and enforcement of the Orders of this Court.

XXII.

The FTC and Defendants agree and stipulate to entry of the foregoing Order as a Final Judgment in this action.

FEDERAL TRADE COMMISSION

Dated:

By:
Russell W. Damtoft, Esq.
Attorney
NATIONAL CREDIT MANAGEMENT GROUP, LLC

Dated:

By:
Glen Buzzetti
LUSTIGMAN LAW FIRM

Dated:

Sheldon A. Lustigman, Esq.
Andrew B. Lustigman, Esq.
Attorney for Defendant National Credit Management Group, LLC
GLEN BUZZETTI, INDIVIDUALLY

Dated:

Glen Buzzetti
JOSEPH FERGUSON, INDIVIDUALLY

Dated:

Joseph Ferguson
SEKAS & BUZZETTI, L.L.C.

Dated:

Albert L. Buzzetti, Esq.
Attorney for Defendants Glen Buzzetti and Joseph Ferguson

ROBERT L. CLIFFORD, RECEIVER FOR NATIONAL CREDIT MANAGEMENT GROUP, LLC

Dated:

Robert L. Clifford, Esq.

IT IS SO ORDERED:

Dated: , 1998

Honorable Alfred J. Lechner, Jr.
United States District Judge

EXHIBIT A

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

In Re NATIONAL CREDIT MANAGEMENT GROUP, LLC; GLEN BUZZETTI, individually and as an officer of National Credit Management Group, LLC; and JOSEPH FERGUSON, individually and as an officer of National Credit Management Group, LLC

Civ. No. 98-936 (AJL)

Hon. Alfred J. Lechner, Jr.

[Name of defendant], being duly sworn, hereby states and affirms as follows:

1. My name is_______________________. My current residence address is __________________________________________. I am a citizen of the United States and am over the age of eighteen. I have personal knowledge of the facts set forth in this Affidavit.
2. I am a Defendant in In re National Credit Management Group, LLC, et al. (United States District Court for the District of New Jersey).
3. On ____________, I received a copy of the Stipulated Order for Permanent Injunctive Relief with Consumer Redress and Other Equitable Relief, which was signed by the Honorable Alfred J. Lechner, Jr., and entered by the Court on _____________. A true and correct copy of the Order I received is appended to this Affidavit.

I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct. Executed on __________, at _____________, New Jersey.

___________________________________

[Full name of defendant]

State of New Jersey

County of ____________________

Subscribed and sworn to before me

this _____ day of _________, 199___.

EXHIBIT B

The United States District Court for the District of New Jersey has entered an injunction that prohibits National Credit Management Group, LLC, Glen Buzzetti, Joseph Ferguson, and any corporation or unincorporated business entity owned or controlled by any of them, and their successors, assigns, officers, agents, servants, employees, and those persons in active concert or participation with them who receive actual notice of this Order by any means, including through this notice, whether acting directly or through any corporation, subsidiary, division, or other device, from the following:

1. Violating the Federal Trade Commission’s Telemarketing Sales Rule in any way, including the following:

A. failing to disclose in a clear and conspicuous manner the total costs to purchase, receive, or use, the goods and/or services that are the subject of a sales offer;

 

B. failing to disclose all material restrictions, limitations, or conditions to purchase, receive, or use the goods and/or services that are the subject of a sales offer;

 

C. failing to clearly and conspicuously disclose all material terms and conditions of any refund policies;

 

D. misrepresenting any material restriction, limitation or condition to purchase, receive or use goods or services that are the subject of a sales offer; and

 

E. misrepresenting any material aspect of the performance, efficacy, nature or central characteristics of goods or services that are the subject of a sales offer.

2. Violating the Federal Credit Repair Organizations Act in any way, including the following:

A. failing to provide the written statement in the form and manner required by that Act to each consumer before any contract or agreement with the consumer is executed;

 

B. providing services to a consumer prior to obtaining a signed, written and dated contract which meets the requirements of that Act prior to the end of the third business day after the date on which the contract is signed;

 

C. failing to provide the "Notice of Cancellation" form, in the form and manner required by that Act; and

 

D. failing to honor the cancellation requests of consumers made, mailed, or postmarked on any of the first three business days following the date of their agreement to purchase.

3. In connection with the advertisement, promotion or sale of any product or service, doing any of the following:

A. Misrepresenting that they, their services or their products have been approved or endorsed by any governmental authorities or any consumer protection entities;

 

B. Misrepresenting the objectivity of any entity or individual who provides a positive recommendation for them;

 

C. Misrepresenting that their employees have received a certification approved, conducted or endorsed by any governmental authorities;

 

D. Failing to disclose the material terms, conditions and limitations on the refund of any fees obtained for any goods or services;

 

E. Failing to disclose the material terms, conditions and limitations on the various secured, unsecured and catalogue credit card applications offered by them to consumers;

 

F. Misrepresenting any fact material to a consumer’s decision to purchase their services or products;

 

G. Failing to disclose the material terms, conditions, and limitations of any refund policy or any policy of nonrefundability;

 

H. Misrepresenting that they will perform a confidential analysis of the credit history or standing of a consumer;

 

I. Misrepresenting that they will provide a service that will assist consumers in establishing or reestablishing credit; and

 

J. Misrepresenting that any application for credit has been pre-approved.

VIOLATION OF THE COURT’S ORDER IS CONTEMPT OF COURT, WHICH IS A CRIME PUNISHABLE BY FINE OR IMPRISONMENT.