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UNITED STATES DISTRICT COURT
FEDERAL TRADE COMMISSION,
SPEAR SYSTEMS, INC., a
COMPLAINT FOR INJUNCTIVE AND OTHER EQUITABLE RELIEF
1. The FTC brings this action under Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b, and under Section 7(a) of the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 ("CAN-SPAM"), 15 U.S.C. § 7706(a), to obtain injunctive relief and other equitable relief for Defendants' deceptive and unfair acts or practices and the making of false advertisements in violation
JURISDICTION AND VENUE
2. This Court has jurisdiction over this matter pursuant to 15 U.S.C. §§ 45(a), 52, 53(b), 57b, 7706(a) and 28 U.S.C. §§ 1331, 1337(a) and 1345.
3. Venue in the United States District Court for the Northern District of Illinois is proper under 15 U.S.C. § 53(b) and 28 U.S.C. §§ 1391 (b), (c) and (d).
4. Plaintiff FTC is an independent agency of the United States Government created by statute. 15 U.S.C. §§ 41-58. The Commission enforces Sections 5(a) and 12 of the FTC Act, 15 U.S.C. §§ 45(a) and 52, which prohibit, respectively, deceptive or unfair acts or practices and false advertisements for food, drugs, devices, services, or cosmetics, in or affecting commerce. The FTC is also charged with enforcing CAN-SPAM as if statutory violations of CAN-SPAM "were an unfair or deceptive act or practice proscribed under Section. 18(a)(1)(B) of the [FTC Act] (15 U.S.C. 57a(a)(1)(B))." 15 U.S.C. § 7706(a).
5. Sections 13(b) and 19 of the FTC Act authorize the FTC to initiate federal district court proceedings, in its own name by its designated attorneys, to enjoin violations of any provision of law enforced by the FTC, and to secure such equitable relief as maybe appropriate in each case. 15 U.S.C. §§ 53(b), 57b.
7. Defendant Bruce Parker is the President of Spear Systems, Inc. Parker has formulated, directed, controlled, or participated in the acts or practices of Spear Systems, Inc. set forth in this Complaint.
8. Defendant Lisa Kimsey is, or has held herself out as, an officer of Spear Systems, Inc., including, but not limited to, as the chief financial officer of Spear Systems, Inc. Kimsey has formulated, directed, controlled, or participated in the acts or practices of Spear Systems, Inc. set forth in this Complaint.
9. Defendant Xavier Ratelle has formulated, directed, controlled, or participated in the acts or practices set forth in this Complaint. Ratelle also does business as eHealthyLife.com.
10. "Defendants" means Spear Systems, Bruce Parker, Lisa Kimsey, and Xavier Ratelle. Defendants have transacted business in the Northern District of Illinois within the meaning of 15 U.S.C. § 53(b).
11. At all times material to this Complaint, Defendants have maintained a substantial course of trade in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15U.S.C.§44.
13. "Electronic mail address" means a destination, commonly expressed as a string of characters, consisting of a unique user name or mailbox (commonly referred to as the "local part") and a reference to an Internet domain (commonly referred to as the "domain part"), whether or not displayed, to which an electronic mail message can be sent or delivered. 15 U.S.C. § 7702(5).
14. "Commercial electronic mail message" means any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service (including the content on an Internet website operated for commercial purposes). 15 U.S.C. § 7702(2).
15. "Header information" means the source, destination, and routing information attached to an electronic mail message, including the originating domain name and originating electronic mail address, and any other information that appears in the line identifying, or purporting to identify, a person initiating the message. 15 U.S.C. § 7702(8).
16. "Initiate," when used with respect to a commercial email message, means to originate or transmit such message or to procure the origination or transmission of such message. 15 U.S.C. § 7702(9).
17. "Procure," when used with respect to the initiation of a commercial email message, means intentionally to pay or provide other consideration to, or induce, another person to initiate such a message on one's behalf. 15 U.S.C. § 7702(12).
19. "Sender" means a person who initiates a commercial email message and whose product, service, or Internet Web site is advertised or promoted by the message. 15 U.S.C. § 7702(16).
DEFENDANTS' BUSINESS ACTIVITIES
20. Since at least April 2006, and continuing to the present, Defendants have marketed and sold a variety of dietary supplement products. One line of products marketed by Defendants under a variety of different names such as HoodiaLife and HoodiaPlus is a pill that purports to contain hoodia gordonii and cause substantial weight loss by suppressing appetite (the "Hoodia Products"). Defendants also market a pill they claim causes the body to produce human growth hormone, using a variety of different names such as HGHLife and HGHPlus (the "HGH Products"). The Hoodia and HGH Products are each sold for $55.95, plus $9.99 shipping and handling.
21. Defendants have marketed their products by initiating commercial email messages. The primary purpose of these commercial email messages has been the commercial advertisement or promotion of Internet Web sites operated for a commercial purpose by Defendants. Particularly, the text of the commercial email messages contains hyperlinks to Web sites at which consumers can order Defendants' products.
23. To induce consumers to purchase the HoodiaLife, Defendants' Web sites make the following statements:
DIET PILL BREAKTHROUGH!
What if you could actually shed 10, 15, or even 25 pounds quickly and safely in less than 30 days? Now you can...
If you haven't heard of HoodiaLifeTM yet, you soon will because it is being touted as the new miracle supplement for safe, effective weight loss. Hoodia gordonii, (Hoodia) is the botanical name for a cactus like plant that grows in Southern Africa. Scientists have recently isolated several compounds in this amazing plant that are responsible for dramatic weight loss. This all-natural appetite suppressant is also being applauded for containing no dangerous stimulants that caused adverse side effects associates with weight loss products of the last decade.
Our sustained release formula helps you reach your optimal weight zone, the continued weight loss will pace itself to allow your body and metabolism to adjust to your new weight. The sustained release slowly releases the powerful Hoodia into your system so the effects last all day. This balance is crucial to maintaining your weight-loss and keeping those unwanted inches off...and HoodiaLifeTM is proven to do exactly just that so you can KEEP THE WEIGHT OFF PERMANENTLY
24. To induce consumers to purchase HoodiaPlus, Defendants' Web sites contain statements substantially identical to those in Paragraph 23 above.
25. To induce recipients to visit the Web sites and purchase Defendants' Hoodia Products, commercial email messages promoting Web sites operated by Defendants or their agents contain the image below, claiming users will safely lose 25 pounds in a month: [image redacted from text version]
HGHPlus: Making you look and feel younger, naturally...
Researchers say the steady drop in our HGH level is what causes many health problems and diseases related to aging. These symptoms include weight gain, muscle loss, reduced energy, poor mental alertness, weak immune system, hearing/vision problems, wrinkles and cellulite, decreased libido and the list goes on. To put it simply, there is a direct relationship between your body's level of HGH production and the signs and symptoms of modem aging. So, it would be logical that all you need to do in order to reduce these symptoms or even reverse aging itself, is to give yourself a steady supply of HGH... .
Dr. Robert Klaz, MD says, "You can boost your hGH levels by taking certain natural supplements. And you can do it safely, effectively, and economically," but don't be fooled into resorting to expensive and painful HGH injections as they do not boost your overall production. Only the amino acids used by the body to create its own HGH can do this, in powerful combination with other things, which is the beauty of HGH P1usTM. It contains all the amino acids and trace minerals needed, to restore your own HGH production, along with everything you need to be more vital, youthful and alive with vigorous energy than ever before. HGH P1usTM is such a powerful, ultra high-quality blend, the benefits are almost too many to list.
* * *
HGH PIusTM can reduce stress and anxiety, improve emotional balance, and provide a great enhancement to one's self-confidence.
27. To induce consumers to purchase HGHLife, Defendants' Web sites contain statements substantially identical to those in Paragraph 26 above.
28. Defendants "initiate" a commercial email message when they have either originated or transmitted a message themselves or have procured the origination or transmission of a message through payments or other consideration, or inducements.
29. Defendants are "senders" with respect to a commercial email message when they have initiated a message and it is Defendants' Web sites that are being advertised or promoted by such message.
30. Defendants have initiated commercial email messages containing materially false or misleading header information. In many instances, the email contains an originating email address that was not assigned by the email service provider or was used without the authorization of the subscriber who obtained the email address from the email service operator. In other instances, the email message fails to identify accurately the protected computer used to initiate the message because the email message was relayed or retransmitted through another protected computer for purposes of disguising its origin.
32. Defendants' commercial email messages fail to include any notification to recipients of their ability to decline receiving future email messages from Defendants, and they fail,to include a reply email address or other mechanism that recipients can use to decline receiving future email messages from Defendants. .
33. Defendants have initiated commercial email messages that failed to include a valid physical postal address of the sender.
VIOLATIONS OF SECTION 5 OF THE FTC ACT
35. As set forth below, Defendants have engaged in unlawful practices in violation of Sections 5(a) and 12 of the FTC Act in connection with the marketing and/or sale of the Hoodia and HGH Products.
36. Through the means described in Paragraphs 20-25 above, Defendants have represented, expressly or by implication, that:
37. In truth and in fact:
38. Therefore, Defendants' representations as set forth in Paragraph 36 above are false or misleading and constitute a deceptive practice, and the making of false advertisements, in or affecting commerce, in violation of Sections 5(a) and 12 of the FTC Act, 15 U.S.C. §§ 45(a) and 52.
39. Through the means described in Paragraphs 20-25 above, Defendants have represented, expressly or by implication, that:
40. Defendants did not possess and rely upon a reasonable basis that substantiated the representations made in Paragraph 39 above at the time the representations were made. Therefore, the making of the representations set forth in Paragraph 39 above constitutes a deceptive practice, and the making of false advertisements, in or affecting commerce, in . violation of Sections 5(a) and 12 of the FTC Act, 15 U.S.C. §§ 45(a) and 52.
41. Through the means described in Paragraphs 20-22 and 26-27 above, Defendants have represented, expressly or by implication, that the HGH Products:
42. In truth and in fact, Defendants' HGH Products:
43. Therefore, Defendants' representations as set for in Paragraph 41 above are false or misleading and constitute a deceptive practice, and the making of false advertisements, in or affecting commerce, in violation of Sections 5(a)) and 12 of the FTC Act, 15 U.S.C. §§ 45 (a) and 52.
44. Through the means described in Paragraphs 20-22 and 26-27 above, Defendants have represented, expressly or by implication, that their HGH Products:
VIOLATIONS OF THE CAN-SPAM ACT
47. Section 5(a)(1) of CAN-SPAM, 15 U.S.C. § 7704(a)(1), states:
48. Section 5(a)(6) of CAN-SPAM, 15 U.S.C. § 7704(a)(6), states:
49. Section 5(a)(2) of CAN-SPAM, 15 U.S.C. § 7704(a)(2), states:
50. Section 7(e) of CAN-SPAM, 15 U.S.C. § 7706(e), states that in any action to enforce compliance through an injunction with Section 5(a)(2) and other specified sections of CAN-SPAM, the FTC need not allege or prove the state of mind required by such sections.
51. Section 5(a)(3) of CAN-SPAM, § 7704(a)(3) states:.
52. Section 5(a)(5)(A) of CAN-SPAM, § 7704(a)(5)(A) states:
55. Defendants' acts or practices, as. described in Paragraph 54 above, violate 15 U.S.C. § 7704(a)(1).
57. Defendants' acts or practices, as described in Paragraph 56 above, violate 15 U.S.C. § 7704 (a)(2).
59. Defendants' acts or practices, as described in Paragraph 58 above, violate 15 U.S.C. § 7704(a)(5)(A)(ii) and/or § 7704(a)(3).
61. Defendants' acts or practices, as described in Paragraph 60 above, violate 15 U.S.C. § 7704(a)(5)(A)(iii).
THIS COURT'S POWER TO GRANT RELIEF
63. Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, empowers this Court to grant injunctive and other ancillary equitable relief to prevent and remedy Defendants' violations of the FTC Act, and in the exercise of its equitable jurisdiction, to award redress to remedy the injury to individuals and businesses, to order the disgorgement of monies resulting from Defendants' unlawful acts or practices, and to order other ancillary equitable relief. A violation of CAN-SPAM may be remedied in the same manner as a violation of the FTC Act. 15 U.S.C. § 7706.
PRAYER FOR RELIEF
WHEREFORE, Plaintiff FTC, pursuant to Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, Section 7(a) of CAN-SPAM, 15 U.S.C. § 7706(a), and the Court's own equitable powers, requests that the Court:
1. Award Plaintiff such preliminary injunctive and ancillary relief as may be necessary to avert the likelihood of consumer injury during the pendency of this action and to preserve the possibility of effective final relief, including, but not limited to, temporary and preliminary injunctions and an order freezing assets;
2. Enter a permanent injunction to prevent future violations of the FTC Act and the CAN-SPAM Act by defendants;
3. Award such relief as the Court finds necessary to redress injury to consumers resulting from Defendants' violations of the FTC Act and the CAN-SPAM Act,
4. Award Plaintiff the costs of bringing this action, as well as such other and additional relief as the Court may determine to be just and proper.
Steven M. Wernikoff
Dated: October 5, 2007
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