United States of America v. Kern et al

Filing 37

ORDER Granting 31 Stipulation Consent Decree and Final Judgment as to Defendants Golden Products, Castro, and New Generation Graphics. Signed by Judge Jennifer A. Dorsey on 4/18/2018. (Copies have been distributed pursuant to the NEF - ADR)

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CHAD A. READLER
Acting Assistant Attorney General
ETHAN P. DAVIS
Deputy Assistant Attorney General
GUSTAV W. EYLER
Acting Director, Consumer Protection Branch
JILL P. FURMAN
Deputy Director
JACQUELINE BLAESI-FREED
Trial Attorney

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Consumer Protection Branch
U.S. Department of Justice

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P.O. Box 386

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Washington,DC 20044
: (202) 353 -2809
Facsimile: (202) 514-87 42
Email: [e-mail]
Telephone

DAYLE ELIESON
United States Attorney
TROY K. FLAKE
Assistant United States Attomey
501 Las Vegas Blvd. South, Suite 1100
Las Vegas, Nevada 89101

Attorneysfor the United States

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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UNITED STATES OF

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AMERICA,
Plaintiff,

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v.

Civil

Case No: 2:18-cv-000283-JAD-PAL

STIPULATED CONSENT DECREE
AND FINAL JUDGMENT

KERN, et al.,

Defendants.

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[ECF No. 31]

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Plaintiff, the United States of America, brought this action against Patricia Kern;

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Advanced Allocation System, Inc.; Distribution Reporting Center, Inc.; Global Data Funding,

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lnc.; Marketing Image Direct, Inc.;Montgomery Marketing,Inc. LLC.; North American

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Disbursement Agency, Inc.; Pacific Allocation Systems, Inc.; Special Money Managers, Inc.; Al

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American Awards, Inc.; Golden Products Service, Inc.; Edgar Del Rio; NSD Products, Inc.; Sea

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O'Connor; Epifanio Castro; New Generation Graphics, Inc.; Andrea Burrow; Stephen Fennell;

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and Neptune Data Services, Inc., by filing a complaint pursuant to the Fraud Injunction Statute,

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18 U.S.C. § 1345. This Court granted the United States' ex parte application for a temporary

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restraining order on February 20, 2018, finding (1) the Plaintiff could likely succeed in proving

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defendants are violating or are about to violate 18 U.S.C. §§ 1341 and 1349 by executing a

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scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent

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representations with the intent to defraud using the U.S. Mail; (2) the equities weigh in favor of

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an injunction; and (3) an injunction is in the public's interest. Finding good cause to do so, on

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March 2, 2018, the Court extended the temporary restraining order until April 24, 2018.

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Plaintiff and defendant Epifanio Castro, New Generation Graphics, Inc., and Golden

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Products Service, Inc. (hereinafter the "Settling Defendants") stipulate to entry of this Consent

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Decree and Final Judgment ("Consent Decree") to resolve all matters in dispute in this action

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between them.

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IT IS HEREBY ADJUDGED, ORDERED, AND DECREED as follows:
FINDINGS

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1.

This Court has jurisdiction over this matter and the parties.

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2.

The Complaint charges defendants violated, are violating, or are about to

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violate 18 U .S.C. §§ 1341 and 1349 by executing schemes and artifices to defraud or for

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obtaining money or property my means of false or fraudulent representations with the intent to

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defraud, and, in so doing, use the United States Mail.

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3.

Settling Defendants neither admit nor deny any allegations in the Complaint,

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except as specifically stated in this Order. Only for purposes of this action, Settling Defendants

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admit the facts necessary to establish jurisdiction.
DEFINITIONS

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1.

"Caging Services" refers to opening mail; entering or inputting data about such

mail into a database or forwarding such data; handling, forwarding, or depositing payments
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received in such mail, including currency, bank checks, certified checks, money orders, or credit

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card charge authorizations; or handling or forwarding any such mail;

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2.

"Covered Materials" refers to any materials that contain advertisements,

solicitations, promotions, and/or any other materials:

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that represent, directly or indirectly, expressly or impliedly that the recipient has

won, will win, or will receive cash, awards, or prizes;

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b.

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that represent, directly or indirectly, expressly or impliedly that the recipient

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receive delivery of cash, awards, or other prizes in return for payment of a fee;

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c. that offer for sale information regarding sweepstakes or lotteries;
d. that represent, directly or indirectly, expressly or impliedly, that the recipient of

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the solicitation was specifically selected to receive the mailing based on a reason

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other than the fact that the recipient's name appears on a mailing list;

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that offer for a fee the following items or services:

i.

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Wealth-Building Programs, meaning instructions, reports, or programs

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which provide purportedly guaranteed results or methods for making

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money or an item purportedly guaranteed to provide the user with luck or

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wealth;

ii.

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Psychics, meaning persons (actual or fictitious) that are presented in

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mailed solicitations or other solicitations to consumers as having psychic,

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clairvoyant, or other such similar special abilities; or

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3.

that contain any other false or misleading representations.
o'Customer

List(s)" refers to any compilation including personal information-

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such as the name, address, telephone number, email address, social security number, other

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identifying information, or data that enables access to a person's account (including a credit

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card, bank account, or other financial account-that was compiled in whole or in part from

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individuals who have responded to any Covered Materials.

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4.

"Fee" refers to a payment of any kind, including but not limited to: processing

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fees, service fees, expediting fees, purchase fees, nominal fees, symbolic payments, gifts and

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gratuities.

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o'Payment Processing Services" refers to handling credit card transactions, debit

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card transactions, Automated Clearing House (ACH) transactions, check transactions, money

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orders, travelers check transactions, or cash transactions.

PROHIBITED ACTIVITIES

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active concert or participation with them are permanently enjoined in this civil lawsuit from:

A.
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committing mail fraud as defined by l8 U.S.C. $$ 1341 and 1349;
using the United States mail, or causing others to use the United States mail, to

distribute any Covered Materials;

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printing, or causing others to print, any Covered Materials that will be distributed
through the United States mail;

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l8 U.S.C. $ 1345 and the inherent power of this Court, Settling

Defendants, their agents, officers, employees, and successors and all other persons and entities

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Pursuant to

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receiving, handling, opening, or forwarding any correspondence transmitted

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through the United States mail that responds, by sending payment or otherwise, t

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any Covered Materials;

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E.

brokering or licensing any Customer Lists;

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disclosing, using, benefitting from, selling, offering for sale, leasing, renting,

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disclosing, using, benefitting from, selling, offering for sale, leasing, renting,

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brokering or licensing any lists compiled from or consisting in whole or in par.t

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united states residents where such lists will be used to address anv covered

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Materials;

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G.

compiling Customer Lists;

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H.

performing, or causing others to perform, Caging Services on coffespondence

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transmitted through the United States mail in response to any Covered Materials;

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performing, or causing others to perform, Payment Processing Services for
payments received from U.S. residents in response to any Covered Materials; or

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acting as a consultant (whether paid or unpaid) for any person engaged in any
the conduct described in Subparagraph

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above.

RETENTION OF CUSTOMER LISTS AND COVERED MATERIALS

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I(A)-O,

of

II.

Within seven (7) days of entry of this Consent Decree, the Settling Defendants

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herein are ordered to provide to Settling Defendants' legal counsel all copies of (1) any

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Customer Lists and (2) any Covered Materials which currently in their possession, custody or

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control. Settling Defendants shall also provide

a copy

of such Customer Lists and Covered

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Materials to counsel of record for the United States in this matter and shall not retain in their

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possession or control any copies of such Customer Lists or Covered Materials. Within seven (7)

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days of entry of this Consent Decree, Settling Defendants shall also direct any third parties who

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or which are in custody of Settling Defendants' Customer Lists and Covered Materials,

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excluding Settling Defendants' legal counsel, to provide all copies of such materials to counsel

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of record for the United States in this matter and not to retain any copies of such materials in the

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third party's possession, custody or control, provided however that these third parties may also

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provide a copy of such Customer Lists and Covered Materials to their own retained counsel.

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Within fourteen (14) days of entry of this Consent Decree, Settling Defendants shall provide

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counsel of record for the United States a certification in the form attached here as Exhibit A,

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sworn under penalty of perjury before a local notary, detailing what materials,

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provided to Seffling Defendants' legal counsel and to counsel of record for the United States in

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this matter, and certiffing that Settling Defendants no longer have in their possession any such

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materials.

any, were

NOTICE TO THIRD PARTIES

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Within five (5) days of entry of this Consent Decree, Settling Defendants shall

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provide copies of this Consent Decree to all direct mailers, graphic designers/artists, list brokers,

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printer/distributors, mailing houses, caging services, and/or payment processors with which they

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reasonably have determined to have done business with since January
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with respect to anj

of

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Covered Materials distributed through the United States mail. Within seven (7) days of entry

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this Consent Decree, Settling Defendants shall provide proof of such notice to the Court and the

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United States, including the name and addresses of the entities and/or individuals to whom the

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notice was sent, how the notice was sent, when the notice was sent, and a copy of the notice.

OWNERSHIP OF MAIL

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IV.

Settling Defendants disclaim any ownership interest in any mail determined to be

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responsive to any Covered Materials. The United States Postal Inspection Service is authorized

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to open any and all United States Mail that was detained pursuant to any order of this Court and

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any mail responsive to Covered Materials in its possession, custody, or control. The United

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States Postal Inspection Service shall return any currency, bearer instruments (including but not

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limited to money orders and travelers checks), and any personal effects that can be positively

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identified with its sender contained in any mail opened pursuant to this paragraph. This return

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shall include a letter notiffing the sender of the disposition of this matter, attached here as

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Exhibit B. The United States Postal lnspection Service is authorized to destroy any and all

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remaining detained mail (including but not limited to envelopes, order forms, correspondence,

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personal checks, and payment card information

ORDER ACKNOWLEDGEMENT

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(PCf)

V.

Within five (5) days after entry of this Consent Decree, the Settling Defendants
of record in this action

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are ordered to submit to the United States' counsel

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acknowledgement of this Consent Decree sworn under penalty of perjury.

written

SIGNATORIES. INTEGRATION. MODIFICATION. & WAIVER

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VI.

The undersigned parties through counsel each represent that he, she or it is fully

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authorized to enter into the terms and conditions of this Consent Decree and to execute and

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legally bind to this document the party which he, she, or it represents.

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VII.

This Consent Decree constitutes the final, complete, and exclusive agreement

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understanding among the Parties with respect to the settlement embodied in the Consent Decree

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and supersedes all prior agreements and understandings, whether oral or written, concerning the

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settlement embodied herein (other than deliverables that are subsequently submitted and

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approved pursuant to this Decree). The parties acknowledge that there are no representations,

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agreements, or understandings relating to the settlement other than those expressly contained in

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this Consent Decree. This Consent Decree may be signed by the parties and counsel in

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counterparts, each of which constitutes an original and all of which constitute one of the same

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Consent Decree. Signatures delivered by facsimile transmission, or as .pdf attachrnents to

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emails, shall constitute acceptable, binding signatures for purposes of this Consent Decree.

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VIIL

The Consent Decree shall not be modified except in writing by Plaintiff and the

Settling Defendants and approved by the Court.

IX.

Settling Defendants agree:

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to waive all rights to appeal or otherwise challengr

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or contest the validity of this Consent Decree; (2) to waive, release, and remit any and all claims

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either directly or indirectly against the United States and its agencies, employees, representativer

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and agents, including but not limited to the Department of Justice, the United States Postal

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Inspection Service, and their employees, with respect to this action.

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X.

attorneys' fees in this action.

FINALITY AND RETENTION OF JURISDICTION

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Plaintiff and the Settling Defendants agree to bear his, its, or their own costs and

XI.

This Court retains personal and subject matter jurisdiction of this action for the

modif,ing this Consent Decree and for the purpose of granting such

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purposes of enforcing or

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additional relief as may be necessary or appropriate.

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XII.

This Consent Decree shall constitute a finaljudgment and order in this action

to Settling Defendant.

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IT IS SO ORDERED

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UNITED STATES DISTzuCT JUDGE

Jennifer A. Dorsey
DATED:

April 18, 2018

as

DEF'ENDANTS

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Dated: 4^

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Far'

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O CASTRO, individually and as
an authorized officer ofNew Generation
Graphics, Inc. and Golden Products Service,
Inc.

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Epifanio Castro an authorized officer of
New Generation Graphics, Inc.

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Dated:

a/ -/7-19

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GOLDEN PRODUCTS SERVICE, INC. bY
Salvador Castro an authorized officer of
olden Products Service, Inc.

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APPROVED AS/TO FORM AND

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ALD J. G

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CA Bar 112495
Lawl Offices of Donald J.
4760 South Pecos Road,
Las Vegas, Nevada

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Attorneys

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Generation Graphics, Inc., and Golden
Products Service, Inc.

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for Epifanio Castro, New

Exhibit A

Exhibit A

Certification
I, ______________________, hereby declare as follows:
Pursuant to Paragraph II of the Stipulated Consent Decree and Final Judgment entered
on _____________, 2018 (the “Consent Decree”) in United States v. Kern, et al., 2:18-cv-000283JAD-PAL (D. Nev.)
I certify as follows (check all that apply):

_____ No Lists or Covered Materials in Possession or Control. As of the date of the
Consent Decree, I did not have in my possession or control any Covered Materials, as defined
in the Consent Decree, or any Customer Lists, as defined in the Consent Decree.
_____ Lists Provided to Legal Counsel. Pursuant to the Consent Decree, I have provided to
my legal counsel all Covered Materials and Customer Lists. The materials provided to legal
counsel are as follows:
Materials
(describe)

Counsel Name, Address,
and Point of Contact

(Attach additional sheets if necessary)
[Continued on next page]

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Date
Provided

_____ Requests to Third Parties. On the dates and in the manner listed below, I instructed
the individuals identified below to provide to counsel for the United States all Covered
Materials and Customer Lists, to the extent such individual has or had any such lists in his or
her possession, and not to retain copies of any such materials or lists. I indicate below whether
the individual, as of the date of this certification, has confirmed that he or she has complied
with this directive and the date of such confirmation.
Name of Third Party
(name of corporate entity, if
applicable, and address)
Name of entity/individual
contacted:
Address:

Communication of Instruction
Date:

Response
□ Confirmed lists and Covered
Materials destroyed

Manner (e.g., phone, mail,
email):

Name of individual responding:
Date of confirmation:
Manner communicated (e.g.,
phone, mail, email):
or
□ No response received within
five business days

Name of entity/individual
contacted:

Date:

□ Confirmed lists and Covered
Materials destroyed

Address:

Manner (e.g., phone, mail,
email):

Name of individual responding:
Date of confirmation:
Manner communicated (e.g.,
phone email):
or
□ No response
received within five business
days

(Attach additional sheets if necessary)

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I declare under penalty of perjury under the laws of the United States that the foregoing is true
and correct.

Dated _________, and executed at __________.

______________________
Signature
______________________
Typed or Printed Name and Title

State of [STATE]
County of [XXX]

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On the _____ day of _________ in the year 2018, before me, the undersigned notary public,
personally appeared _________________________, personally known to me or proved to me
on the basis of satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in his/her capacity,
and that by his/her signature on the instrument, the individual, or the person upon behalf of
which the individual acted, executed the instrument.

Notary Public/State of [STATE][

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Exhibit B

Exhibit B

UNITED STATES POSTAL INSPECTION SERVICE

DOJ MAIL FRAUD TEAM

[Date]

First Name, Last Name
Address 1
Address 2
City, State Zip
Re:

United States of America v. Kern, et al.
Civil Case No: 2:18-cv-000283-JAD-PAL

Dear Sir/Madam:
We are writing you because you previously mailed [merge field—money/bearer
instrument/personal item and specific amount of remission] in response to a letter claiming
you were entitled to receive a cash prize. We are returning your [merge field—money/bearer
instrument/personal item and specific amount of remission].
The United States Department of Justice (DOJ) has filed civil charges against Patricia Kern;
Advanced Allocation System, Inc.; Distribution Reporting Center, Inc.; Global Data Funding,
Inc.; Marketing Image Direct, Inc.; Montgomery Marketing, Inc. LLC.; North American
Disbursement Agency, Inc.; Pacific Allocation Systems, Inc.; Special Money Managers, Inc.; All
American Awards, Inc.; Golden Products Service, Inc.; Edgar Del Rio; NSD Products, Inc.; Sean
O’Connor; Epifanio Castro; New Generation Graphics, Inc.; Andrea Burrow; Stephen Fennell;
and Neptune Data Services, Inc. The case, filed in the District of Nevada, alleged that the
defendants conducted a scheme to defraud consumers through the mail. Specifically, DOJ
alleged that the defendants solicited payments from consumers by sending letters representing
that the recipient was entitled to receive a large cash prize or other valuable prize in return for a
payment in the range of $20 to $30. DOJ alleged that these representations were fraudulent
and that consumers who sent in payments did not receive the promised cash or prizes. The
letters were sent in the names of multiple different companies and individuals.
On February 20, 2018, the United States District Court made a determination that DOJ could
likely succeed in proving that defendants were engaging in a fraudulent scheme.
On _______ 2018, the District Court entered a permanent injunction against the defendants,
prohibiting them from mailing advertisements representing that a consumer is entitled to receive
a prize in return for a payment. This injunction also requires the U.S. Postal Inspection Service
to return to consumers any currency or bearer instruments (such as money orders or travelers
checks). Enclosed, please find the [merge field—money/bearer instrument and specific
amount of remission] that was able to be identified as belonging specifically to you.
Should you have any questions about this notice, please contact Sabrina Holmes with the U.S.
Postal Inspection Service at [phone]. For more information, visit [insert URL for press
release website.]

PO Box 7404
Washington, DC 20044-7404