US v. William Savran & Associates, Inc.

• Citation: 755 F. Supp. 1165
• Decision Date: 29 January 1991
• Docket Number: No. CV 90-4445 (ADS).,CV 90-4445 (ADS).
• Parties: UNITED STATES of America, Plaintiff, v. WILLIAM SAVRAN & ASSOCIATES, INC., a New York Corporation, d/b/a "Successful Systems"; Dr. William Savran; "John Does Nos. 1-10"; and "Jane Does Nos. 1-10", Defendants.
• Court: U.S. District Court — Eastern District of New York

755 F. Supp. 1165

UNITED STATES of America, Plaintiff, v. WILLIAM SAVRAN & ASSOCIATES, INC., a New York Corporation, d/b/a "Successful Systems"; Dr. William Savran; "John Does Nos. 1-10"; and "Jane Does Nos. 1-10", Defendants.

No. CV 90-4445 (ADS).

United States District Court, E.D. New York.

January 29, 1991.

Andrew J. Maloney, U.S. Atty., E.D. N.Y., Brooklyn, N.Y. by Stephen J. Riegel, Asst. U.S. Atty., for plaintiff.

Newmark, Lamb, Dowling & Marchisio, Garden City, N.Y. (James W. Dowling, of counsel), for defendants.

OPINION AND ORDER

SPATT, District Judge.

Seeking vulnerable consumers who, in the hopes of earning "exceptional money" in the comfort and safety of their own home, paid $27 for the "Successful Systems" product, William Savran & Associates, Inc. now finds itself the subject of a criminal indictment for mail fraud and the defendant in this related civil forfeiture proceeding. Before the Court at this time is the motion of the defendants to vacate the warrant that seized a bank account, and the cross-motion of the plaintiff to freeze the defendants' assets, among other relief sought.

I. BACKGROUND

By a verified complaint in rem in a civil forfeiture action, dated December 17, 1990, the plaintiff United States of America ("the plaintiff") requested that a warrant be issued for the "arrest" of the defendant bank account at Citibank, 2-1 Park Plaza, Glen Head, New York. The action was brought pursuant to 18 U.S.C. §§ 981, 1956 and 1957, and also 18 U.S.C. § 1345 and 28 U.S.C. § 1355. A warrant for the arrest of the said bank account was issued on December 17, 1990 listing, as potential claimants: Dr. William Savran, William Savran & Associates, Inc. and Successful Systems. The warrant was executed and the bank account was seized and/or frozen in its entirety. Apparently the account was not physically seized, but only frozen.

By order to show cause dated December 26, 1990, the defendant William Savran ("Savran") moved for an order "vacating the warrant seizing" the said bank account. On December 27, 1990, the return date of the motion by Savran, the plaintiff also presented an order to show cause in support of a motion requesting a broad spectrum of relief including enjoining the defendant from sending out any mailings or advertisements from the "Successful Systems" business pursuant to 18 U.S.C. § 1345. The plaintiff also requested a temporary restraining order asking for a wide range of remedies similar to the request in the order to show cause.

An evidentiary hearing was held on both parties' applications on December 27, 1990 and December 28, 1990. Pursuant to Fed. R.Civ.P. 52(a), the following constitutes the Court's findings of fact and conclusions of law (see also Society for Good Will to Retarded Children, Inc. v. Cuomo, 902 F.2d 1085, 1088 2d Cir.1990; Weitzman v. Stein, 897 F.2d 653, 658 2d Cir.1990).

II. THE HEARING

The following is the evidence that was adduced at the hearing on the motions and the Court's findings of fact based thereon.

a. The Plaintiff's Case.

John McDermott, a United States Postal Inspector, testified that he investigated "Successful Systems", the defendants' business, since approximately September 1990 and reviewed the various documents mailed to potential consumers by the defendant William Savran & Associates, Inc. ("Associates"). McDermott explained the system used by Associates to effectuate the "Successful Systems" program, as follows:

The potential consumer is contacted in one of two ways: either by an advertisement in a magazine or by direct mail. The direct mail ad (Plaintiff's Exhibit 1 in evidence) is the first document the consumer receives. It consists of eight separate pages and an envelope. Nowhere in these single-spaced pages is there any mention of the product to be sold. At the outset the Court finds that on its face the document is intentionally vague, ambiguous, confusing and difficult to read and comprehend. A repetitive reading of the paper did not substantially improve the Court's comprehension. Relevant portions of the initial document, which bear quotation, are as follows:

"`SUCCESSFUL SYSTEMS' Post Office Box 815 Horace Harding Station Flushing, New York 11362

HOMEWORKERS NEEDED NOW!

`Revolutionary' home-mailing program pays you up to $100 per single order.

You never have to buy stamps, envelopes, circulars, or any supplies.

Dear Friend (if not now — soon!) If you're anxious to earn exceptional money (up to $300.00, or more, each day) doing simple, pleasant work in the comfort and safety of your own home, you're going to love what my company has to offer you.

My name is Lisa Michaels. As Vice President of `Successful Systems', a reputable mail order firm, I am pleased to announce that we are looking for a limited number of `home-workers' to help us mail our offers out to the MILLIONS of people, who we could NEVER possibly reach, even if we were to work around the clock!

At present there are many ordinary people, from all walks of life, who have no special skills or previous experience, who are earning up to $300/day or more, working as `INDEPENDENT HOMEWORKERS' under the expert guidance of our company! There people call our `HOME-MAILING PROGRAM' ... `The fastest, easiest, and best way to make money without ever leaving your house or apartment.'

What makes our program `UNIQUE' is the fact that with our system you will NEVER be required to purchase ANY postage stamps, envelopes, or circulars for as long as you stay in our program.

We have the ONLY program available anywhere that pays you TWO WAYS! ... Not only will you receive $1 for every envelope that you secure for us and STUFF with our offers ... you will also receive 50% COMMISSION on every sale generated by your mailings! ... Up to $100/ORDER! Commission checks are mailed out weekly!

I can assure you that as a participant in our program, you will NEVER mail out anything objectionable or pornographic. There are no quotas to meet, and no-one will be looking over your shoulder. You can work as much or as little as YOU want. You are your own boss! There are no contracts to sign, and we further GUARANTEE that your name will never appear on any of our circulars. And don't forget, commission checks are sent out from our home office ... EVERY WEEK! NO LONG WAIT ... to get all the money you have coming!

It doesn't matter where you live! Whether you come from a big city, or live on a farm ... YOU can earn all of the extra money you need to catch up on those overdue bills, or simply to enjoy a BETTER LIFE with more spendable MONEY FOR YOU!

THIS IS NOT A `GET RICH QUICK' SCHEME ... It makes me so mad to know that several men and women who could greatly benefit from this outstanding opportunity will not do so because they are skeptical. Some questionable hit-and-run operations have given `homework' a black eye. Some have promised millions of dollars to their homeworkers! Believe me, you'll never become a multimillionaire working for my company, or any other firm. But, if you want to earn some very good money quickly, for easy to do pleasant work, we can help you! You're going to love this program ... it works!

`SUCCESSFUL SYSTEMS' OFFERS YOU IMMEDIATE PROFITS! We provide simple step-by-step instructions with your complete HOME MAILING KIT, easy enough for a child to understand. It doesn't matter where you live, big city or small town, in all 50 states. Little space is required ... a spare bedroom is great, but the kitchen table will also do just fine. Some people perform our homework tasks while watching TV.

Just 1 or 2 hours a day (or evenings) will allow you to accomplish the simple at-home tasks required. I'm proud of the fact that many of our valuable home-workers have called our program `The easiest and best way to make money at home.' No contracts ... nothing to sign. Your name will never appear on any advertising, but you can soon be receiving good money ... paid weekly ... for doing simple homework.

If you're eager to make fast profits with this exceptional homework program, take action NOW! We require a one-time only, small registration fee of $25 to register you as one of our Preferred Independent Homeworkers.

NO RISK MONEY-BACK GUARANTEE ... You are the judge! You must be 100% pleased ... absolutely delighted ... or you may return all materials within 30 days, and we'll cheerfully refund your one-time registration fee.

Yours Truly Lisa Michaels (Vice-President) `Successful Systems'

P.S. It is important that you do act NOW! We seek only a limited number of new homeworkers. Avoid disappointment ... take action right away! You'll be glad you did."

An additional sheet in the enclosure headed by the large darkened letters "Revolutionary Home-Mailing Program" reiterates that the consumer will be paid $1.00 for every envelope you stuff plus 50% commission on every sale (up to $100/order). Again, this page clearly states that the plan "NEVER requires you to purchase ANY envelopes, postage stamps or circulars for as long as you stay in the program."

What program? What product? The Court finds that by reading the initial eight-page inducement ad, a reasonably prudent person could not ascertain such information.

Also enclosed in the package is the "Norisk Homeworkers Application". For $25 plus $2.00 for "S & H", or a total of $27, "Rush me my complete Home-mailing Kit", with the right to an "immediate refund".

The Court finds that there are a number of false and/or misleading and/or deceptive statements in the ad.

First, the Court agrees with Inspector McDermott that any consumer who reads this ad would believe that he or she would be stuffing envelopes and get paid a commission based on such envelopes. In actuality, the "program" apparently has nothing to do with stuffing envelopes.

Second, nowhere in the ad is there any mention of any product whatsoever.

Third, and, significantly, nowhere in the ad does it say that the consumer will have to spend his or her own...