Wayne Phillips

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Ix THE MATTER OF WAYNE PHILLIPS, ET AL.

CONSENT ORDER , ETC. , IX REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket 9237. Complaint, Feb. 1990-Decision, Oct. , 1,991 This consent order requires, among other things, that Wayne Philips, a Scottsdale Arizona individual! and two companies of which he was an officer, cease and desist distributing the "Government Grants " commercial and pay to the Commission consumer redress of $50 000.

Appearances For the Commission: Sylvia J. Kundig and Jeffrey A. Klurfeld. For the respondents: Eric M. Rubin, Rubin Winston, Diercks & Harrs Washington, D.

COMPLAINT The Federal Trade Commission, having reason to believe that Wayne Philips, individually and as an officer of Accelerated Systems Inc. , and of United States Educational Services, Inc. ; Accelerated Systems, Inc. , a corporation; and United States Educational Services Inc. , a corporation ("respondents ); have violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, alleges:

PARAGRAPH 1. (a) Respondent Wayne Phillips is an individual who has been an officer of Accelerated Systems, Inc. , and of United States Educational Services, Inc. At all times material to this case, he has formulated, directed, and controlled the acts and practices of the corporate respondents, including the acts and practices alleged in this complaint. He resides at 15608 N. 55th Street, Scottsdale, Arizona and his principal office or place of business is located at 13610 North Scottsdale Road #10- 105 , Scottsdale, Arizona. (b) Respondent Accelerated Systems, Inc. , is a corporation organized and doing business under the laws of the territory of the Northern Marianas Islands. Its offices and principal places of business Complaint 114 F.

are located at 13610 North Scottsdale Road #10- 105 , Scottsdale Arizona 85254 , and at P. O. Box 17878 , Salt Lake City, Utah. , Inc. , is a (c) Respondent United States Educational Systems corporation organized and doing business under the laws of the state of Nevada. Its office and principal place of business is located at 100 W. Grove Street #360 , Reno, Nevada.

(d) Respondents have cooperated and acted together in carrying out the acts and practices alleged in this complaint. (2) PAR. 2. Respondents have directed, participated in, and assisted others in the creation and dissemination to the public of advertisements and promotional materials that offer for sale various materials that are represented to feature information on obtaining government grants to start small businesses, including but not necessarily limited to a book titled How To Start Your Own Bus,:ness By Doing Business With The Government (hereinafter "the government grants book" and a service called the "Grant Alert Service. PAR. 3. The acts and practices of respondents alleged in this complaint have been in or affecting commerce! as "commerce " is defined in the Federal Trade Commission Act. PAR. 4. Typical of respondents ' advertising for the government grants book and the Grant Alert Service, but not necessarily allinclusive thereof, is a 30-minute commercial that appears in the form of a talk show titled "Nloney Nloney Money" (hereinafter "the Government Grants commercial"), a complete transcript of which is attached hereto as Exhibit A. In the Government Grants commercial Hal Morris and Debra Morris are represented to be the hosts of a talk show " about how to get government grants. Grants means the government gives you the money to go out and get involved in a business. " (Ex. A , p. 1 , 1. 4- 10). Respondent Wayne Philips, allegedly America s foremost expert on low interest government loans and government grants. " (Ex. A , p. 1 , 1. 10-11) and the author of the government grants book, is purported to be a guest of the talk show. COU T I PAR. 5. The Government Grants commercial contains the following statements:

(a) Debra Morris: "How much money does the government give out to help people start ne\',' businesses?"

WAYNE PHILLIPS, ET AL. 589 587 Complaint Wayne Philips: "Well, for sma!! businesses, Debbie, there s 33 bilion dollars. (Ex. A , p. 3 , 1. 27 - p. 4 , 1. 3) (b) Wayne Philips: "Understand, folks, with 33 bilion dollars sitting out there for small businesses. . . . If you were only to receive onc one-thousandth of one percent of this money" you would have a $330 000 grant. And that's a lot of money. So I mean there isjust so much money available, we couldn t sell enough books to get rid of all the money. Its almost an unlimited amount of money available out there for any kind of job and opportunity. " (Ex. A. , p. 22 1. 25 - p. , 1. 6) PAR. 6. By and through the use of the statements referred to in paragraph five, and others of similar import and meaning in the Government Grants commercial or in other advertisements or promotional materials and not specifically set forth herein, respondents have represented, directly or by implication, that there is 33 bilion dollars in grants available from federal, state, and local governments to start small businesses. (3) PAR. 7. In truth and in fact, there is not 33 bilion dollars in grants available from federal, state, and local governments to start small businesses. Therefore, respondents ' representation as set forth in paragraph six is false and misleading.

COUNT II PAR. 8. The Government Grants commercial contains the following statements:

(a) Wayne Philips: "You can start a part-time business right now-you can go out and start a part-time business in your house. Or if you wanted to you can go out and get a franchise; a Pizza Hut, Burger King franchise. Or, export or import goods.

Hal Morris: "And you can get government money for those types of things?" Wayne Phillips: "Well this is grant money or award money where they give you the money, and again, you are not borrowing the money, you don t have to pay it back, so if the business doesn t do too great, you don t have to worry about going bankrupt city, or anything like that." (Ex. A , p. 3 , 1. 12-25) (b) Wayne Philips: "There s programs that you ean go out and use and get some free money, you know. There s just about money available for every purpose that you can think of. There s programs for women and minorities, there s programs for people who own a business, and want to sort of get rid of that high debt load you name it, there s something for everybody out there." (Ex. A , p. 4 , 1. 9- 14) (c) Wayne Philips: "They want to know what you are going to do with the money, what type of jobs you are going to provide, and there is 108 business that are approved by the government that you could start and this money would qualify for. For instance, travel services. . . " (Ex. A , p. 4 , 1. 21- 24) (d) Hal Morris: "Now you created "Wayne s Road to Wealth. " You have come up 590 FEDERAL TRADE COMMISSION DECISIO:-S Complaint 114 F.

with 5 steps that people need to follow \Vayne Phillips: "Five proven steps that if they follow they can get $25 000 of this money very quickly and rather easily, Hal." (Ex. A , p. 5 , 1. 5- 10) (e) Wayne Phillips: " . . . I show the people how to get this information, but more important than that, I show the people how to answer the government' questions. And Hal, I'm telling you, this is exciting. When you learn how to answer the government' s questions, man, the government answers your questions, and you get your money. And that is what this is all about, getting your money, starting your business. . . " (Ex. A , p. 7 , 1. 28 - p. 8 , 1. 6) (4) (f) Wayne Phillips: "But the point I' m trying to make is that in a shOit period of time, the government wil provide funds for you so that you can start your own business. I mean, how many people here right now today are just sick and tired of working from paycheck to paycheck, and who would love to tell your boss and bil collectors to go shove it-come on, let me see your hands out there. Sure everybody would, wouldn t you? Here s an opportunity where you can start your own business without having any risk involved, they pay you to start your own business. " (Ex. A , p. 9 . I. 6- 14) (g) Audience member: Ii. . . so we re exporting American-made products to other countries. And, we need start-up capital, we were going to go the conventional system with the bank loans.

Wayne Philips: "Right. Don t do that. So the answer to your question, yes, there is money available, either award 01' grant money. . . " (Ex. A. , p. 19 , 1. 20 - p. , I. 15) (h) Wayne Phillips: " . . you can get S25 000 rather quickly, and safely, and very fast, and there s no risk involved. " (Ex. A , p. 25 , 1. 8- 10) PAR. 9. By and through the use of the statements referred to in paragraph eight, and others of similar import and meaning in the Government Grants commercial or in other advertisements or promotional materials and not specifically set forth herein, respondents have represented, directly or by implication, that it is easy for the average consumer to obtain a government grant to start virtually any type of small business.

PAR. 10. In truth and in fact, it is not easy for the average consumer to obtain a government grant to start virtually any type of small business. Therefore, respondents' representation as set forth in paragraph nine was and is false and misleading. COUNT II PAR. 11. The Government Grants commercial contains the following statements:

(a) Hal Morris: "!\ow you created "Wayne s Road to Wealth. " You can come up with 5 steps that people need to follow WAYNE PHILLIPS , ET AL 591 587 Complaint Wayne Philips: "Five proven steps that if they follow they can get $25 000 of this money very quickly and rather easily, Hal." (Ex. A , p. 5 , 1. 5- 10) (b) Wayne Philips: ". . . I show the people how to get this information, but more important than that, I show the people how to answer the government questions. And Hal, I'm telling you, this is exciting. When you learn how to answer the government' s questions, man, the government answers your questions, and you get your money. And that is (5) what this is all about, getting your money, starting your business. . . " (Ex. A , p. 7 , 1. 27 - p. 8 , 1. 6) (c) Audience member: " \Vauld you have to be very very thorough, like maybe do premarketing or whatever to present a propos a! for a grant'!" Wayne Phillips: "An excellent question, and the answer to that, and this is my !itte pet baby right here, in my book, I have a business plan, and I' m tellng you something, this is the piece de resistance that I've worked on for two years. This business plan takes you step by step and shows you how not only, to answer your question, but more importantly, how to answer the government' s questions. . . . And you show the government what the government is going to get if they give you a three to four hundred thousand dollar award. And when you show the government what's in it for them, you are going to show it, how the government to give you the money, and you are going to get your business started, you going to get your money. And that is so important. So that is what the business plan is all about here. " (Ex, A . p. 17 , L 21 - p. 18 , L 13) (d) Hal Morris: " Al! right, review for people, I'm sure they re going to want to get your book. Review for people what they re going to get and how much it is. Wayne Philips: " Wel! they re going to get the only book of its kind, Hal, ever written in the United States. How to Start Your Own Business by Doing Business With the Government, where you don t borrow money, the government pays you or gives you the money for providing a service or exporting goods. . . There s programs in here jf you want to go to the trade shows. Perhaps you can apply for money, and they ll fly you over to Frankfurt to annual trade show over there. They !! make you fly on an American airline, though, they want that money to stay with the United States. If you have a travel agency, you can expand your business. If you own a business now, you can get money to sort of pay down your overhead and refinance it. You know, you get everything that you need to get started. Take advantage of this information. The opportunities are there, the programs are there, and whether you do something or not about it folks, somebody ese wi! be doing it if it is not you. And I think that is the essence of this program. It is affordable, you can get $25 000 rather quickly, and safely, and very fast, and there s no risk involved. " (Ex. A, p. 24 , 1. 11 p. 25 , 1. 10) PAR. 12. By and through the use of the statements referred to in paragraph eleven, and others of similar import and meaning in the Government Grants commercial or in other advertisements or promotional materials and not specifically set forth herein, respondents have represented, directly or by implication, that the government grants book consists primarily of information on how average consumers can Complaint 114 F.

easily obtain grants from federal, state, and local governments to start virtually any kind of small business. (6) PAR. 13. In truth and in fact, the government grants book does not consist primarily of information on how average consumers can easily obtain grants from federal, state, and local governments to start virtually any kind of small business. Therefore, respondents' representation as set forth in paragraph twelve was and is false and misleading.

COUNT IV PAR. 14. The Government Grants commercial contains the following statement:

(a) Wayne Philips: "There is one program I would like to take just a moment to mention, it is called an SBIR, I was mentioning that to Diane a litte while before the show, this is the Sma!! Business Innovation Research Program, where there is 400 milion dollars in grants available right now. It is a federal program administrated through the state government. Yau can apply through the State government and get $25 000 very, very easily, and in a short period of time, (Ex. A , p. 14 , 1. 13-20) PAR. 15. By and through the use of the statements referred to in paragraph fourteen, and others of similar import and meaning in the Government Grants commercial or in other advertisements or promotional materials and not specifically set forth herein, respondents have represented, directly or by implication, that the Small Business Innovation Research Program provides grants to consumers to start virtually any kind of small business, and that average consumers can obtain a $25 000 grant from the Small Business Innovation Research Program to start a small business quickly and easily. PAR. 16. In truth and in fact, the Small Business Innovation Research Program does not provide grants to consumers to start virtually any kind of small business and average consumers cannot obtain a $25 000 grant from the Small Business Innovation Research Program to start a small business quickly or easily. Therefore respondents' representations as set forth in paragraph fifteen were and are false and misleading.

COCXT V PAR. 17. The Government Grants commercial contains the following statements:

, WAYNE PHILLIPS , ET AL. 593 587 Complaint (a) Wayne Philips: "And this is exciting because you can have bankruptcy or bad credit. It is not a loan-you don t apply for it. You are given the money or you are paid to start your own business. " (Ex. A , p. 3 , 1. 3- (b) Audience member: ":\ly name is Joanne Joiner, and my question is, what sort of credit rating do they want to look at?"

Wayne Phillips: "Good, Joanne. You know, you don t need a credit rating, because you are not borrowing money. You see, you are given l7) money, or you are paid to start a business. This is my whole point, and I failed if I haven brought that across Joanne to you. This is not a loan; you don t apply for anything. . . . You could have filed bankruptcy this morning, and go out and get this money tomorrow afternoon. . . . Show the government what's in it for them and, you know, you can forget about going to a bank and qualifying. See that is the beauty of this. You are absolutely paid or given money where you don t have to qualify. And if you make 100 000 or 2 milion dollars a year, or if you file for bankruptcy, it doesn t make a difference, because you are not borrowing money. "

Audience member: " I see. Thank you.

Hal Morris: " So Wayne, you don t even fil out a financial statement?" Wayne Phillips: "You don t even fill out a financial statement." (Ex. A, p. 20 , 1. 24 - p, 21 , L 26) PAR. 18. By and through the use of the statcmcnts referred to in paragraph seventeen, and others of similar import and meaning in the Government Grants commercial or in other advertisements or promotional materials and not specifically set forth herein, respondents have represented, directly or by implication, that federal, state, and local governments provide grants to consumers to start small businesses without regard to the grant applicant' s financial history or resources. PAR. 19. In truth and in fact, federal, state, and local governments do not provide grants to consumers to start small businesses without regard to the grant applicant' s financial history or resources. The financial history and resources of the applicants are factors that are considered by the federal, state, and local governments in making grants. Therefore, respondents' representation as set forth in paragraph eighteen was and is false and misleading. COUXT VI PAR. 20. The Government Grants commercial contains the following statements:

(a) Wayne Philips: "A couple of years ago I was sitting on the plane and a gentleman next to me rccognizcd me from one of my many television appearances and said Well I have made money with government programs, but a !ittle bit different than you have, \Vaync. The government pays me 01' gives me 594 FEDERAL TRADE COMMISSJOX DECISIONS Complaint 114 F.

grant money to start my own business.' And the gentleman s name is Bil McConarty from back in Maryland. He has a company called AMAF, where they make circuit boards for computers for the GSA office. And OTIe thing led to another and we talked for the entire plane trip across the country, and Bil got me started looking into programs available for people who have litte or no money, or own a business, maybe you need to refinance it, where you can start your own business without having, one, to borrow money and put your house and your spouse (8) and yourself in hock, where the government wil pay you to start your own business." (Ex. A , p. 2 , 1. 3- 18) (b) Wayne Philips: " Sandy Taylor, who came to onc of my lectures and my seminars, . . . (sJhe came to my seminar, one because it wasn t free, there is no free !unch, and two it wasn t too expensive, it was I think $30 at that time, Sandy went out and she used the information and this is a copy of her very first bank statement that she got from a contract award, when the government paid her to do business, she received the very first month, 866 675 and change. That' s $800 000 a year, just for going out and providing a service for the government. Now I'm not going to promise to people, you know, here in the audience today, that you re going to get such great success as Sandy, but on the other hand, maybe your success wil be a lot bigger than that. But the point I' trying to make is that in a short period of time, the government will provide funds for you so that you can start your own business." (Ex. A, p, 8 , 1. 17 - p. 9 I. 8) (c) lSUPER: FRED ARBAB FORMER TAXI DRTVF.R WHO USED \I,'AYKE S SYSTK\I - NOW GROSSING S400 000 MONTHLY, (Ex. A, p. II , I. 14- 16) PAR. 21. By and through the use of the statements referred to in paragraph twenty, and others of similar import and meaning in the Government Grants commercial or in other advertisements or promotional materials and not specifically set forth herein, respondents have represented, directly or by implication, that respondents ' claimed success stories are true and/or illustrate and substantiate that the information provided in the government grants book has been used successfully by average consumers to start small businesses. PAR. 22. In truth and in fact, respondents' claimed success stories are not true and do not ilustrate or substantiate that the information provided in the government grants book has been used successfully by average consumers to start small businesses. Therefore, respondents representations as set forth in paragraph twenty-one were and are false and misleading.

COUNT VII PAR. 23. The Government Grants commercial contains the following statements:

, W A YNr- PIILLIPS , ET AL. 595 587 Compaint (a) (SUPER: SPECIAL BONUS IF YOL' ORDER !\DW! #1 GOVERNMENT GRANT ALERT SERVICE.

(Ex. A , p. 16 , 1. 12- 15) (9) (b) Wayne Philips (voice only): I wi! also include my special ' Grant Alert Service as a bonus for your benefit, which will alert you to all these opportunities in your area. . . " (Ex. A , p. 26 , 1. 16- 18) PAR. 24. By and through the use of the statements referred to in paragraph twenty-three, and others of similar import and meaning in the Government Grants commercial or in other advertisements or promotional materials and not specifically set forth herein, respondents have represented, directly or by implication, that evcry consumer who purchases the government grants book wil receive, in a timely manner and at no additional cost, respondents' Grant Alert Service, which consists of information that will alert consumers promptly and preferentially of the availabilty, in their particular geographic area, of govcrnment grants to start small businesses. PAR. 25. In truth and in fact, every consumer who purchases the government grants book has not received from respondents, in a timely manner and at no additional cost, respondents ' Grant Alert Service or any other information that wil alert consumers promptly and preferentially of the availability, in their particular geographic area, of government grants to start small businesses. Therefore respondents' representation as set forth in paragraph twenty- four was and is false and misleading.

PAR. 26. Respondents ' dissemination of the aforesaid false and misleading representations, as alleged in paragraphs five through twenty-five of this complaint, and respondents' failure to provide to purchasers of the government grants book thc Grant Alert Service or any other information that served to alert them promptly and preferentially ofthe availability, in their particular geographic area, of government grants to start small businesses, as alleged in paragraphs twenty-three through twenty-five of this complaint, constitute unfair and deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act. EXHIBIT A Transcript of "Government Grants " Commercial (Music Yloney Money Money " IdentificationJ Complaint 114 F.T.C.

Hal Morris: Thank you. Welcome to our show today. Today you’re going to learn about how to get government grants.

[SUPER: HAL MORRIS and DEBRA MORRIS] Hal Morris: Grants means the government gives you the money to go out and get involved in a business. We have America’s foremost expert on low interest government loans and government grants, Mr. Wayne Phillips, who has a brand new book called, “How to Start Your Own Business By Doing Business With the Government.” And Deb, you may be interested in knowing that Wayne used to be with the Charlie Byrd jazz band. He was a jazz drummer. You have come a long way from the jazz band to America’s foremost expert on low interest government loans and grants.

Wayne Phillips: It has been a long road.

Hal Morris: Bring us up to date on what has been happening as far as you are concerned and what has been happening in the area of the government grants. Wayne Phillips: Well, the last two years, Hal and Debbie, and thank you again for inviting me on your program here today.

(SUPER: WAYNE PHILLIPS, GOVERNMENT GRANT EXPERT] [2] Wayne Phillips: I’ve been doing a lot of research, basically doing the same thing J have been doing for the last 11 years, researching and using government programs. A couple of years ago I was sitting on the plane and a gentlemen next to me recognized me from one of my many television appearances and said, ‘Well I have made money with government programs, but a little bit different than you have, Wayne. The government pays me or gives me grant money to start my own business.’ And the gentleman’s name is Bill McConarty from back in Maryland. He has a company called AMAF, where they make circuit boards for computers for the GSA office. And one thing led to another an we talked for the entire plane trip across the country, and Bill got me started looking into programs available for people who have little or no money, or own a business, maybe you need to refinance it, where you can start your own business without having, one, to borrow money and put your house and your spouse and yourself in hock, where the government will pay you to start your own business. Debra Morris: Why? Wayne Phillips: Why, because number one, Debbie, the government is going to give you the money, you are going to provide jobs. You are going to put money back into the economy, you are going to hire people, and number two, you know, the government is the biggest employer in the world, they need paper clips, they need pencils provided for them. How about, a little bit later on you are going to meet a gentlemen who is exporting. [3] If 10,000 people were to do what this one gentlemen did, we would reduce our trade deficit by 50 billion dollars, and that would have a tremendous impact. And this is exciting because you can have bankruptcy or bad credit. It is not a loan—you don’t apply for it. You are given the money or you are paid to start your own business.

Hal Morris: Okay, so you go through a process where you go to the government and say “I'd like to go into the business of selling products to some foreign country” or... Wayne Phillips: Or right in your own backyard, Hal. You can start a part-time business right now—you can go out and start a part-time business in your house. Or if you wanted to you can go out and get a franchise, a Pizza Hut, Burger King franchise. Or, export or import goods.

WAYNE PHILLIPS, ET AL. 597 587 Complaint Hal Morris: And you can get government money for those types of things Wayne Philips: We!! this is grant money or award money where they give you the money, and again, you are not borrowing the money, you don t have to pay it back, so if the business doesn t do too great, you don t have to worry about going bankrupt city, or anything like that.

Debra Morris: How much money docs the government give out to help people start new businesses? (4J Wayne Philips: Well, for small businesses, Debbie, there s 33 bilion dollars. Debra Morris: (laughs) Wayne Phillips: Just. . . under Executive Orders 11625 and 12138 the government has set aside special money just for women and minorities. There s programs that you can go out and use and get some free money, you know. There s just about money available for every purpose that you can think of. There s programs for women and minorities, there s programs for people who own a business, and want to sort of get rid of that high debt load, you name it, there s something for everybody out there. Debra Morris: ?'aw if they give you, okay, let's say they give me a grant, what do they expect in return? Wayne Philips: Well, Debbie, the government is just not going to say, "Here $100 000, Debbie, go out and have a party. " They want to know what you arc going to do with the money, what type of jobs you are going to provide, and there is 108 businesses that are approved by the government that you could start and this money would qualify for. For instance, trave! services, or perhaps jf you had an idea or an invention there is money available for you inventors that would be out there who are trying to raise, what do they ea!! it, capita! , you know, venture fund capita!, the government has money available for that. So 15) basically, if you answer the government' s questions, Debbie, the government is going to answer you!' questions and you get your money. And that is the bottom line, is gettng your money. Hal Morris: :1' ow you created "Wayne s Road to Wealth. " You have come up with 5 steps that people need to follow . . .

Wayne Phillips: Five proven steps that if they follow they can get $25 000 of this money very quickly and rather easily, Hal.

Hal Morris: A!! right. L€t's go to that right now. L€t's go to the screen and take a !ook at "Wayne s Road to Wealth.

(SUPER: WAY S ROAD TO WEALTH I. FIND A BlJSI ESS YOU WOULD ENJOY 2. ORDER "HOW TO START YOCR OW BUSINESS"

3. APPLY FOR YOUR GOVER MENT GRANTS A D AWARDS 4. OBTAIN GOVER MENT GRANTS 5. REPEAT THE PROCESSJ Wayne Philips: Okay, now step number one, obviously is, I recommend that you find a business that you d be happy in, obviously you don t want to be in a business that you re not going to be happy with. :.number two is get the information. This (6) is the ony book of its kind in the United States. Hal Morris: Order your book.

Wayne Phillips: Get this information. There is no other book !ike it. Three, you really have got to go out and use the information and apply for these avmrds and the grants. I\number four, get the government contracts, so that. you are paid for providing Complaint 114 F.T.C.

these services. And the most important thing of all, Hal and Debbie, is once you’ve done this, don’t stop doing this just one or two times, repeat the process over, use it to start another business or perhaps employ your family members. So it is an easy process, and the most important thing is that it is very affordable. You know, a lot of people, you see them march across television, talking about everybody making money with a good program, but it costs three or four hundred dollars to buy the program. What I have done this time, is I made it affordable for everyone. So that everybody can go out and get this information.

Hal Morris: Okay, now one of the things that impressed me is this is 338 pages, packed full of information...

Wayne Phillips: It is about the size of an average city telephone book. Look, it is two years of my life into that darn thing, and it is hot off the press, and I mean literally, hot off the press.

Hal Morris: And it’s not just how to get the grants, but it [7] shows you also how to do business with governments.

Wayne Phillips: It shows you, well for instance, ah, Hal, I show people how to get the information from the government. Here is a copy of a letter from the United States embassy in Cairo, Egypt, where I wrote to them, I think it was for 5 or 10 bucks, I asked for this information, and the government sent me this telephone-sized book, it is called, the A-Z Directory for Doing Business in Egypt... . [STILL PHOTOGRAPH OF LETTER DATED MAY 22, 1988 TO W. PHILLIPS, ASI, SCOTTSDALE, ARIZONA, ON U.S. EMBASSY LETTERHEAD] Wayne Phillips: Now this is just one country. Addresses, phone numbers, banks, contacts there, and as you see on the letter there, you know there is a lot of doubting Thomases out there, ‘“‘Oh, there is no grant money available,” that is a bunch of poppycock. Right in that letter from the embassy in Cairo, Egypt it says on page 37, “Mr. Phillips, you will find the information that you requested about the grants and the low interest rate loans.’’ So, Hal and Debbie, now... . Hal Morris: So at no charge, you can get hold of it... Wayne Phillips: Right, it costs about five or ten bucks, you know, the government is running into tough times now. You know, you have to help them out a little bit here and there. But I show the people how to get this information, but more important [8] than that, I show the people how to answer the government’s questions. And Hal, I’m telling you, this is exciting. When you learn how to answer the government’s questions, man, the government answers your questions, and you get your money. And that is what this is all about, getting your money, starting your business, putting people back to work, exporting, reducing that federal trade deficit, this is the most—I haven’t been this excited about anything since I got that first low interest rate government loan back in 1980, and that was a long time ago. This is incredible. Hal Morris: Okay, so now you have a check, a copy of a check there. Tell us of the story about the lady who, and show us this check. Wayne Phillips: Well, this check right here, this a copy of a... Sandy Taylor, who came to one of my lectures and my seminars .. . [STILL PHOTOGRAPH OF BANK STATEMENT CONTAINING CREDIT ENTRY OF $66,675.] Wayne Phillips: She came to my seminar, one because it wasn’t free, there is no free WAYNE PHILLIPS, ET AL. 599 587 Compaint lunch, and two it wasn t too expensive, it was I think $30 at that time. Sandy went out and she used the information and this is a copy of her very first bank statement that she got from a contract award, when the government paid her to do business, she received the very first (9) month, $66 675 and change. That' s $800 000 a year, just for going out and providing a service for the government. Now I'm not going to promise to people, you know, here in the audience today, that you re going to get such great success as Sandy, but on the other hand, maybe your success wi!! be a lot bigger than that. But the point I'm trying to make is that in a short period of time, the government wil provide funds for you so that you can start your own business. I mean, how many people here right now today are just sick and tired of working from paycheck to paycheck, and who would love to tell your boss and bill collectors to go shove it-come on, let me see your hands out there. Sure, everybody would, wouldn you? Here s an opportunity where you can start your own business without having any risk involved, they pay you to start your own business. And if you are a female or a minority, there are special programs under the Executive Orders 11625 and 12138. This is the most, you know Hal, this is an opportunity that people, that they can use in a short period of time to get control of their financial destiny. And I think that is important. It is not get rich quick, or make a million dollars, but you can dramatically improve your financial well being.

Debra Morris: If you would like to order Wayne Philips book, for ony $49. , you can ca!! the phone number on the bottom of your screen L:.O PHOKE :.NUMBER LISTEDJ. Dad, why don t you go get some questions from the audience, and Wayne you can introduce the two people we ve just been joined by. (10) Wayne Philips: Well, thanks Debbie. On my immediate !eft here, this lovely young lady, her name is Diane Tavares. She is a former government employee who is a business consultant. Diane actually writes the grants for the government. Debra ::orris: Wow! Wayne Phillips: And the gentlemen, to Diane s !eft, now my good friend, :Mr. Fred Arbab, and fate brought Fred and 1 together, who has an incredible story that I think that if Fred has done, just about anybody can do it. Debra Morris: Okay, well, why don t you start by introducing, or telling us how you and Fred met.

Wayne Philips: Well, I' !! !et Fred tell the story, I came back off of a plane trip from overseas and Fred Arbab: About a year ago I was a taxi driver. Mr. Wayne Phillips came in as a passenger into my taxi, as I was loading his !uggage into the back, in the trunk of the taxi, I noticed a card frequent flyers, which one of the, most of the airlines they have that for their frequent flyers. Sittng in the eab, I noticed that he is very tired. I ask him if he has been overseas, he said yes, he has eo me overseas, he is very tired. I wanted a very short conversation with him. I told him, yes, I noticed that frequent flyers, you must be doing a lot of travellng. He said yes, I do. I' m almost 4 days of the week (11) out of town, and giving seminars. I asked him what kind of seminars, he told me the government !oan, and how to start making your own business. During the 20 minute drive to his house to Scottsdale, I tried to pump him out as much as I could . (LAUGHTERJ . . . After he tod me what it cost to get that package 1 tried to get as much as I could, because I didn t have the money to pay for that. After that several times I bothered him again at home, I ealled him, and, about starting in March, I stopped driving a eab and I start my own Import-export company. \Within two months Complaint 114 F.T.C.

after I start the company, or three months rather, I got a contract from one of the companies overseas for $400,000 a month, for one year. Total of four million dollars. (SUPER: FRED ARBAB FORMER TAXI DRIVER WHO USED WAYNE’S SYSTEM - NOW GROSSING $400,000 MONTHLY. ] Wayne Phillips: Four million, eight hundred thousand dollars on the first order! Fred Arbab: First order.

Debra Morris: Oh wow! Fred Arbab: That order is going to commence starting at the beginning of next month, and will be going until October of 1989. Debra Morris: And what are you... ? [12] Fred Arbab: This was through reading his book, talking to him, and get an initial start and motivation, and the way he talked, very simple, very easy, so if I could understand, everybody else could too.

Debra Morris: So, let me understand, you went from driving a taxicab to a contract now making $400,000.

Fred Arbab: To the owner of an import-export company making $400,000. Wayne Phillips: A month! That’s 4.8 million—just imagine, Debbie, if we can help 10,000 people do what Fred has done, we would reduce the federal trade deficit by almost 50 billion dollars, and that folks would have a significant impact on our financial future in this country. See, the, inch by inch, Debbie, it’s a cinch. Now Diane here, she is the lady that puts the mechanics, you know, I have the technique, she puts the mechanics, and Diane has a very interesting story that as a former employee of the state of Nevada.

Diane Tavares: Nevada.

[SUPER: DIANE TAVARES GOVERNMENT GRANT WRITER] Diane Tavares: I worked for the State of Nevada for [13] 12 and 1/2 years, and decided to go out on my own as a consultant, and one of the things I had done as an employee was write grants, or work with people who were writing grants. And a state agency will ask for 10,000 up to 30, 40, 50,000 dollars, whatever is available. You are told in advance that this money will be available and different states will apply for it. And so when I left the state agency, I talked with Wayne, had some conversations with him, and a little bit like Fred, kept getting in touch with him about more information. And now I’m working with people, particularly women, in small businesses that are wanting to start businesses with child care centers, restaurants, franchises, whatever.

Debra Morris: That is exciting! Wayne Phillips: Yes.

Diane Tavares: Thank you.

Wayne Phillips: There are special programs just for women and minorities and there’s opportunities there for people, there’s also if you happen to be a retired person, there’s special opportunities out there so that if you just don’t want to go out and play 9 rounds, 9 holes of golf there, that you can start a little business and perhaps travel the world, go to trade shows, and things like that. Its very gratifying, Debbie, to know that, yes, I make money doing this, Fred and Diane and the people watching, now they’ll make money doing this, but I think [14] that the bottom line is that you are really helping people. And that’s, that’s very gratifying. WAYNE PIILLIPS, ET AL. 601 587 Complaint Debra Morris: And what I like about it is you can choose a business that you enjoy doing. .

\Vayne Phillips: Right.

Debra Morris: So many people are in jobs that they are unhappy in. And when you can start your own business, that' s exciting. Wayne Philips: Right. There is one program I would like to take just a moment to mention, it is called an SBIR, I was mentioning that to Diane a litte while before the show, this is the Small Business Innovation Research Program, where there is 400 milion dollars in grants available right now. 1t is a federal program administrated through the state government. You can apply through the State government and get $25 000 very, very easily, and in a short period of time. And just think, if you started your own business, Debbie, and you provided x y z service for the State of California and your profit was only $10 000, wouldn t that make a substantial impact on your financial well being, and take care of some of those credit card payments that we have all ran up . . .

Debra Morris: Oh, yeah! (15) Wayne Phillips:. . during the last year or two? That is just one program that you can get started with immediately. It' s very exciting though. Hal Morris: One of the programs that are out there has to do with minority programs, and also welfare. I saw something the other day, where women who have been on welfare are being set up in their own business and many times they are operating it from at home while they are still taking care of the kids. But there are grant programs in all types of different areas, isn t that correct? Wayne Philips: \Vell, that' s true, Hal, and more importantly, the government wi!! pay professionals like Diane to help you set up your own business. (MCSIC) (MO EY MO EY !\ONEY IDENTIFICA TIOKJ ,SCPER: "HOW TO START YOUR OWN BUSI ESS BY DOI G BCSI ESS WITH THE GOVERNMEKT" $49. 95 & $4 SHIPPIKG & HA DLING 800-453- 3300 VISA, MASTERCARD, A:IEX OR SEND CHECK. OR ,1OKEY ORDER TO: GOVERNMENT GRA!'TS , P.O. BOX 54880 , PHOENIX, AZ 85078) V'layne Phillips (voca! only): Go to the telephone, order this information now. Call the tau-free number you see on your screen, or send your check 01' money order to the address you see on the screen. Look, think about a!! of the ways that you can be making money with this opportunity. Think about the people that you can be helping. And.

,SUPER: SPECIAL BOKUS IF YOC ORDER KOW' #1 GOVERNMEKT GRAKT ALERT SERVICE #2 LIST OF PRODUCTS & SERVICES THE GOVER!'ME T WILL PAY YOC FOR ON A DAILY BASIS.

Wayne Phillips (vocal only): . . . if you do that, the first thousand people that order from this broadcast, I wil send you as a special bonus, my ' Grant Alert Service.' Look this is the only service of its kind in the entire country, where you wi!! be alerted before anyone else to these government awards and contracts in your area. And, as a Complaint 114 F.T.C.

second special bonus, I’ll even send you the list of businesses that the government will pay you on a daily basis for. [17] (SUPER: “HOW TO START YOUR OWN BUSINESS BY DOING BUSINESS WITH THE GOVERNMENT” $49.95 & $4 SHIPPING & HANDLING 1-800-453-3300 VISA, MASTERCARD, AMEX OR SEND CHECK, OR MONEY ORDER TO: GOVERNMENT GRANTS, P.O. BOX 54880, PHOENIX, AZ 85078] Wayne Phillips (vocal only): So go to the telephone, call the toll-free number that you see on the screen, or send your check or money order to the address on the screen. Do it now! [SUPER: ORDER NOW! CALL TOLL FREE! 1-800-453-3300] Audience member: Would you have to be very very thorough, like maybe do premarketing or whatever to present a proposal for a grant? Wayne Phillips: An excellent question, and the answer to that, and this is my little pet baby right here, in my book, I have a business plan, and I’m telling you something, this is the piece de resistance that I’ve worked on for two years. This [18] business plan takes you step by step and shows you how not only, to answer your question, but more importantly, how to answer the government’s questions. As a matter of fact, I have examples here, obviously you want to take my name off of it and put your name on there, otherwise, what, if you want to put my name on then I’ll be happy to start a business with you, but I take you step by step. And you show the government what the government is going to get if they give you a three to four hundred thousand dollar award. And when you show the government what’s in it for them, you are going to show it, how the government to give you the money, and you are going to get your business started, you’re going to get your money. And that is so important. So that is what the business plan is all about here. Audience member: My question is, I’m interested in starting a riding school for handicapped children. The second part of my question deals with, would the livestock which are needed for this type of child come under that grant program? Wayne Phillips: Well, the answer is yes and no. It all depends. You have to remember the government wants to know that the more money they give you, the more jobs they want you to put people to work with. So if you were to get a small award, say $25,000, the answer would probably be ‘‘no.” However, if you were to apply and receive say 250, or 8 or 400,000, and hire 2 or 3 or 4 full-time employees, then the chances are very good that could in fact pay for the livestock that would be included in your business. [19] Hal Morris: Diane, you’re shaking your head in agreement with that? Debra Morris; Yes, I agree with Wayne and also I have found that the government tends to go with grants that are dedicated to either women, children, handicapped, or those things, and it may be your creative idea that they would choose to fund. Audience member: I feel like fate brought me here... Wayne Phillips: Well good.

Audience member: . . . because I am involved in a start-up business right now. It is women and minority owned...

Wayne Phillips: That’s great.

W A YNB PHILLIPS, ET AL. 603 587 Complaint Audience member: We arc making plastic products, and exporting them to other countries Wayne Philips: Great! Audience member: so we re exporting American-made products to other countries. And, we need start-up capital, we were going to go the conventional system with the bank loans.

Wayne Phillips: Right. Don t do that. l20) Audience member: So do you have any suggestions? Wayne Phillips: Yes, absolutely Linda, for instance, and glad you asked that question, I have right here the name and address where you can apply for a mailing list, this is a mailing jist of 160 000 businesses overseas that are looking to buy your product. In addition to that, something more important, if you are not a female or a minority, and I would certainly qualify for that, what you do is that you form a litte sub- S corporation, have your wife, mother, sister, or daughter own 51% or more Linda, of that corporation, presto, you have formed a minority/female corporation. So the answer to your question, yes, there is money available, either award or grant money, plus, more important than that, you have the mailing list, the export mailing list in here, that you can use for 160 000 businesses overseas looking to buy your products.

Audience member: That's terrific. Thank you. Wayne Philips: Good luck to you. Thank you.

Audience member: My name is Joanne Joiner, and my question is, what sort of credit rating do they want to look at? Wayne Phi !lips: Good, Joanne. You know, you don t need a credit rating, because you are not borrowing money. You see, you are given money, or you arc paid La start a business. This is 121) my whole point, and I failed if I haven t brought that across Joanne to you. This is not a loan; you don t apply for anything. You have to provide a proposal!-a business plan, where people like Diane help you with, or my business plan in the book will help you with. But it is not a joan-you could have filed bankruptcy this morning, and go out and get this money tomorrow afternoon. But you have to remember this, Joanne, you ve got to show the government what' s in it for them. How many people are you going to hire if you start a little business? You know, what kind of FICA is the government going to get? You know, the insurance, Socia! Security insurance. Show the government what's in it for them and, you know, you can forget about going to a bank and qualifying. See that is the beauty of this. You are absolutely paid or given money where you don t have to quality. And if you make 100 000 or 2 milion dollars a year, or if you file for bankruptcy, it doesn t make a difference, because you are not borrowing money. Audience member: I see. Thank you.

Hal Morris: So Wayne, you don t even fil out a financial statement': Wayne Philips: You don t even fi! out a financial statement. You have to fill out a business plan and show them where the money s gonna . . . Joanne, you got to show the government where the money s going to go. I mean, you can t take a trip to Las Vegas and have a party, I mean, that' s a no-no. (221 Hal Morris: Okay.

Audience member: Okay, hi, Wayne. My husband, \-Vayne, and I' m Elaine, we interested in starting a home appraisal business. What 1 want to know about this Complaint 114 F.TC.

grant-how stringent are, is the government in policing the grant process, and how often would we expect audits or inspections or whatever if we were granted. Wayne Philips: \Vell, why don t I allow Diane to answer that question. That' s more of her area of expertise right there.

Diane Tavares: Thank you Wayne. I think that if you write your proposal and particularly the business plan that' s in the book I've found it to be very beneficial because you address ali the areas. And usually you re not accountable until a time frame has come up, like your grant is for a one-year period, or for six months. And at that time when you are re-applying for a grant, you would be stating what you had done with it. Some of them may ask for a specific time frames, !ike a report once a month, but very few of them do.

\Vayne Philips: Cnderstand, folks, with 33 bilion dollars sitting out there for small businesses. See, the government understands that 7 out of 10 new jobs are going to be created by the sma!! entrepreneur, the small business person. If you were only to receive one one-thousandth of one percent of this money, (23) you would have a $330 000 grant. And that's a !ot of money. So I mean there is just so much money available, we couldn t sell enough books to get rid of all the money. Its almost an unlimited amount of money available out there for any kind of job and opportunity. Audience member: Thank you.

Wayne Philips: Thank you. Good luck to you.

Ha! Morris: Wayne, earlier in giving your five steps to the road to wealth, you said repeat the process.

Wayne Philips: Repeat the process.

Hal Morris: And your point is, once you ve done it successfully, then you are on the track record, and you can do it over and over again. \Vayne Phillips: Right, and not ony that, Ha! , but the government wil pay people to come out and hep set up your business. They wil! pay profession a! business consultants like Diane. Or sometimes, there is a special! program for instance, Debbie where the government sends out retired business execuiives to hep you set up your business for free. Why? Because these people have been in business aU iheir lives, they are retired, in their 70' , and they believe in the free enterprise system, and they want to pass this down from (24) generation to generation. Look, this is the greatest country in the world. Now we ve gotten off track somewhere along the !ine, but here how we can put this country back on track. Reduce that Federa! deficit. Yeah, we going to make a buck out of this, but that is what free enterprise is all about. You know, helping people and helping yourself. And here is an opportunity that you can have a dramatic impact on the financial wen being of your life and the country of the United States of America too.

Hal Morris: All right, review for people, I' m sure they re going to want to get your book. Review for people what they re going to get and how much it is. Wayne Phillips: Well they re going to get the only book of its kind, Ha! , ever written in the United States. How to Start Your Own Business by Doing Business With the Government, where you don t borrow money, the government pays you or gives you the money for providing a service or exporting goods, for instance !ike Fred has done. They get my business plan. And I'll !et Diane eomment on that. I mean, you d have to spend what, a thousand dollars or more for a business plan. I give you the names addresses, telephone numbers of every Federal, state and 10caJ agency that wants you to do business with them. There s programs in here if you want to go to the trade , W A YXE PHILLIPS, ET AL. 605 587 Complaint shows. Perhaps you can apply for money, and they ll fly you over to Frankfurt to annual trade show over there. They ll make you fly on an American airline, though they want that money to stay with the United States. If you have a travel agency, you can expand your (25) business. If you own a business now, you can get money to sort of pay down your overhead and refinance it. You know, you get everyhing that you need to get started. Take advantage of this information. The opportunities are there the programs are there, and whether you do something or not about it, folks somebody else will be doing it if it is not you. And I think that is the essence of this program. It is affordable, you can get $25 000 rather quickly, and safely, and very fast, and there s no risk involved.

,MUSICJ ,"MONEY MOKEY MONEY" IDENTIFICATIONJ ,SUPER: " HOW TO START YOUR OWN BUSINESS BY DOING BUSINESS WITH THE GOVERKMEKT" $49.95 & $4 SHIPPI:-G & HANDLING 800-453-3300 VISA, MASTERCARD , AM EX OR SE:-D CHECK OR MOKEY ORDER TO: GOVERNMENT GRANTS , P.O. BOX 54880, PHOE:-IX, AZ 85078J Wayne Philips (voice only): Go to your telephone and call (26) the toll-free number you see on the screen right now, or send your check into the address on the screen and get my book How to Start Your Own Business by Doing Business With the Government." So do it now! Heck, it's only $49. , which is less than 15 cents a day for all this information, and (SUPER: SPECIAL BO:-US IF YOU ORDER :-OW #1 GOVERNMEKT GRANT ALERT SERVICE #2 LIST OF PRODUCTS & SERVICES THE GOVERNMENT WILL PAY YOU FOR 0:- A DAILY BASIS.

Wayne Philips (voice only): . . . I will also include my special " Grant Alert Service as a bonus for your benefit, which wil alert you to a!! these opportunities in your area and you !! also receive the list of businesses the government wi!! pay you for on a daily basis. So go to the telephone, ca!! the toll-free number on your screen, or send your check in to the address on the screen, and think about a!! the \vays you re going to be making money. Do it now! Hal Morris: L€t's just have a few closing thoughts as we go around. Fred, from your vantage point, do you recommend Wayne and his program? (27) Fred Arbab: Definitely.

Hal Morris: Tel! us why.

Fred Arbab: One hundred percent. Because there is an example sitting right in front of you.

(SUPER: FRED ARBAB FORMER TAXI DRIVER WHO USED WAY:-E' SYSTEM - :-OW GROSSING $400 000 MO:-THLY.

Hal Morris: You.

Fred Arbab: I did. Yes.

Hal Morris: You went from a taxi driver to a company doing $400 000 a month. That' s exeiting. Diane, how about you'! ,SePER: DIANE TAVARES GOVERK IE:-T GRANT WRITERl 606 FEDERAL TRADE COMMISSIOJ\ DECISIONS Decision and Order 114 F.

Diane Tavares: I definitely do. Both for the business plan, and the grant writing. It gives the person an opportunity without going into debt to try and get their own business started.

Hal Morris: And you know, there are consultants out there that want SI aoo to 500 to set up the kind of business plan (28) that Wayne is talking about, aren there? Diane Tavares: Yes. That is what I woud charge. Hal Morris: Really? Diane Tavares: Urn-huh.

Hal Morris: And in his book, for $49. , you have the same. Diane Tavares: There is an excellent plan there. It is vel)' thorough, it addresses all the areas that you would need, particularly for grants, but it also starts your business out on a footing that is very solid.

Hal Morris: That's good, practical advice. Okay, \Vayne, any last thoughts on your part? Wayne Phillips: Just do it, folks. Don t listen to the people who tell you what you can t do. Listen to the people who tel! you what you can do. You can do it, Fred has done it, Diane s done it, I've done it, and you can do it too. Hal Morris: Great. Let' s give him a hand. Thank you. Wayne Philips: God bless you. Thank you very much. (Music STARTS , CREDITS BEGIK TO ROLLj (29) Debra Morris: What are some of the different businesses that people can go into? Wayne Philips: Wel! Debbie, there s 108 different businesses, but here s just a few of the different products and services that you wil be paid on a daily basis for. For instance, advertising, air conditioning, artwork, audio visual supplies, automobile maintenance, automobile supplies and accessories (VOICES FADE OUTj (SUPER EXECUTIVE PRODUCER CONXIE MORRIS BRAD THQ)!PSON EDITOR MICHAEL O' REILLY AND PATI HODGES CATERING lSUER THE GUESTS FEATl'REI OX THIS SHOW ARE RESPOXSIBLE FOR ALL CUIIMS AND REPRESENTATIONS REGARDING THEIR PRODUCT OR SERVICE. THE PRODl'CERS, STATIONS, CABLE NETWORKS, HOSTS, AGEJ\CIES AND RELATED COMPANIES ACCEPT XO RESPONSIBILITY FOR THE CLAIMS OF THE PRODCCTS OR SERVICES OFFERED.

(SUPER COPYRIGHT 1988 MONEY MONEY MONEY , INC. ) (ENDj DECISION AND ORDF:R The Commission having issued its complaint charging the respondents named in the above caption with violations of Section 5 of the Federal Trade Commission Act, as amended, and the respondents having been served with a copy of that complaint, together with a notice of contemplated relief; and The respondents, their attorneys, and counsel for the Commission W A YXE PHILLIPS , ET AL. 607 587 Decision and Order having thereafter executed an agreement containing a consent order an admission by the respondents of all the jurisdictional facts set forth in the complaint, a statement that the signing of the agreement is for settement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in the complaint and waivers and other provisions as required by the Commission Rules; and The Secretary of the Commission having withdrawn this matter from adjudication in accordance with Section 3.25(c) of the Commission s Rules; and The Commission having considered the matter and having accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribed in Section 3. 25(f) of its Rules, the Commission makes the following jurisdictional findings and enters the following order:

1. Respondent Wayne Phillips is an individual who has been an officer of Accelerated Systems, Inc., and of United States Educational Services, Inc. At all times material to this case, he has formulated directed, and controlled the acts and practices of the corporate respondents, including the acts and practices alleged in this complaint. He resides at 15608 N. 55th Street, Scottsdale, Arizona, and his principal office or place of business is located at 13610 North Scottsdale Road #10- 105 , Scottsdale, Arizona. 2. Respondent Accelerated Systems, Inc., is a corporation organized and doing business under the laws of the territory of the :\orthern Marianas Islands. Its office and principal place of business is located at c/o ICS International, 918 Tower 3, China Hong Kong City, Kowloon, Hong Kong.

3. Respondent United States Educational Systems, Inc. , is a corporation organized and doing business under the laws of the state of Nevada. Its office and principal place of business is located at 100 W. Grove Street #360 , Reno, Nevada.

4. The acts and practices of respondents alleged in this complaint have been in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act.

5. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

608 FEDERAL TRADE COM"lission DECISIOXS Decision and Order 114 F.

ORDER DEFINITIOX For purposes of this order grant" shall mean any money or item of value that is given or awarded without a concomitant obligation to repay or to provide goods or services.

It is ordered That respondents Accelerated Systems, Inc. , a corporation; United States Educational Services, Inc. , a corporation; their successors and assigns, and their officers; and Wayne Philips individually and as an officer of the corporate respondents; and respondents' representatives, agents, and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, promotion, offering for sale, sale, or distribution of any product or service, in or affecting commerce, as commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from selling, broadcasting, disseminating, or assisting or encouraging others to sell, broadcast or disseminate the Government Grants" commercial described in the complaint. II.

It is further ordered That respondents Accelerated Systems, Inc., a corporation; United States Educational Services, Inc. , a corporation; their successors and assigns, and their officers; and Wayne Phillips individually and as an officer of the corporate respondents; and respondents ' representatives, agents, and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, promotion, offering for sale, sale, or distribution of any product or service, in or affecting commerce, as commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, directly or by implication:

A. That there is 33 bilion dollars in grants available from federal state, and local governments to start small businesses; B. That it is easy for the average consumer to obtain a grant from federal, state, or local governments to start a small business: W A YXE PHILLIPS, ET AL. 609 587 Decision and Order C. That the book How to Start Your Own Business By Doing Business With The Government consists primarily of information on how average consumers can obtain grants from federal, state, and local governments to start a small business; D. That the Small Business Innovation Research program provides grants to consumers to start small businesses; or E. That federal, state, and local governments provide grants to consumers to start small businesses without regard to the grant applicant' s financial history or resources. It is further ordered That respondents Accelerated Systems, Inc. , a corporation; United States Educational Services, Inc. , a corporation; their successors and assigns, and their officers; and Wayne Philips individually and as an officer of the corporate respondents; and respondents ' representatives, agents and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, promotion, offering for sale, sale, or distribution of any product or service, in or affecting commerce, as commerce " is defined in the Federal Trade Commission Act, do forthwith cease and desist from making any direct or implied representation concerning:

A. The availability of grants from any source for any purpose; B. Whether any book or other writing contains information about a particular subject or topic;

C. The terms or conditions upon which any person, firm, agency, or institution will award a grant to any other person, firm, or organization;

D. The terms or conditions of any government or private business opportunity, business assistance program, grant program, loan program, or procurement program; or E. Any method or technique for starting, operating, or financing any profession or business;

unless at the time of making the representation, respondents possess and rely upon competent and reliable evidence that substantiates the representation; provided, however, that whenever respondents represent that any book or other writing contains information about a particular subject or topic, subpart B. shall not be construed to require 610 FEDERAL TRADE COMMISSIO:- DECISIONS Decision and Order 114 F.

respondents to possess and rely upon evidence that such information in said book or other writing is true, but only that it is present in said book or other writing.

IV.

It is further ordered That respondents Accelerated Systems, Inc. , a corporation; United States Educational Services, Inc. , a corporation; their successors and assigns, and their officers; and Wayne Phillips individually and as an officer of the corporate respondents; and respondents ' representatives, agents, and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, promotion, offering for sale, sale, or distribution of any product or service, in or affecting commerce, as commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

A. Using, publishing, or referring to any endorsement (as "endorsement" is defined in Section 255(b), Part 255 , Title 16, Code of Federal Regulations) unless respondents have good reason to believe that at the time of such use, publication, or reference, the endorscment reflects the honest opinions, findings, beliefs, or experience of the endorser and contains no representations which would be false or unsubstantiated if made directly by respondents. B. Representing, directly or by implication, that any endorsement of the product or service represents the typical or ordinary experience of members of the public who use the product or service unless such is the case.

C. Failng to honor, in a timely manner, any offer or guarantee that in connection with the purchase of the product or service, another product or service will be provided to the purchaser as a bonus, prizc gift, award, or promotional item, or wil bc sold to the purchaser at a reduced or special price.

It is further ordered That respondents Accelerated Systems, Inc. , a corporation; United States Educational Services, Inc. , a corporation; their successors and assigns, and their officers; and Wayne Phillips individually and as an officer of the corporate respondents; and respondents ' representatives, agents, and employees, directly or WAYNE PHILLIPS, ET AL. 611 587 Decision and Order through any corporation, subsidiary, division, or other device, in connection with the advertising, promotion, offering for sale, sale, or distribution of any product or service, in or affecting commerce, as commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from creating, producing, selling, or disseminating:

A. Any commercial or other advertisement for any such product or service that misrepresents, directly or by implication, that it is an independent program and not a paid advertisement. B. Any commercial or other advertisement for any such product or service longer than fifteen (15) minutes in length that does not display visually, in a clear and conspicuous manner, within the first thirty (30) seconds of the commercial and immediately before each presentation of ordering instructions for the product or service, the following disclosure:

THE PROGRAM YOU ARE WATCHI:\G IS A PAID ADVERTISEMENT FOR lthe PRODUCT OR SERVICE)." VI.

It is further ordered That for three (3) years from the date that the practices to which they pertain are last employed, respondents shall maintain and upon request make available to the Federal Trade Commission, at a place designated by Commission staff for inspection and copying:

A. All advertisements, promotional materials, documents, or other materials covered by this order;

B. All materials relied on to substantiate any claim or representation covered by this order;

C. All materials in their possession or control that contradict qualify, or call into question such representation or the basis on which respondents relied for such representation; and D. All materials that demonstrate respondents' compliance with this order.

VII.

It is further ordered:

A. That respondents shall jointly and severally pay to the Commis- Decision and Order 114 F.

sion as consumer redress the sum of two million one hundred thousand dollars ($2 100 000. 00); provided however that this liability wil be suspended, subject to the provisions of subparts Band D below, upon the payment of fifty thousand dollars ($50 000. 00) no later than fifteen (15) days after the date of service of this order. Such payment shall be made by cashier s check or certified check payable to the Federal Trade Commission and shall be delivered to the Federal Trade Commission, 901 Market Street, Suite 570 , San Francisco California 94103.

B. That, in the event of respondents' default on the $50 000 payment set forth in subpart A above, the amount of two million one hundred thousand dollars ($2,100 000.00), less the sum of any payments made pursuant to subpart A above, shall become immediately due and payable without any notice required to be given to the respondents, and interest computed at the rate prescribed under 28 C. 1961 , as amended, shall immediately begin to accrue on the unpaid balance.

C. That any funds paid by respondents pursuant to part VII. of this order shall be paid into a redress fund administered by the Commission and shall be used to provide direct redress to purchasers of the book "How To Start Your Own Business By Doing Business With The Government " by respondent Wayne Philips. If the Commission determines, in its sole discretion, that redress to purchasers is wholly or partially impracticable, any funds not so used shall be paid to the L:united States Treasury. Respondents shall be notified as to how the funds are disbursed, but shall have no right to contest the manner of distribution chosen by the Commission. D. That the Commission s acceptance of this order is expressly premised upon the respondents' financial statements, depositions, and related documents provided by respondents to the Commission for purposes of this agreement. For a period of ten (10) years from the date of the Commission s acceptance of this order, or for a period of thirty (30) months after the respondents' last submission of documents as required by part VII of this order, whichever period is shorter, after service upon respondents of an order to show cause, the Commission may reopen this proceeding to make a determination whether there are any material misrepresentations or omissions in said financial statements, depositions, and related documents. Respondents shall be given an opportunity to present evidence on this issue. If, upon consideration of respondents ' evidence and other W A Y:\E PHILLIPS, ET AL. 613 587 Decision and Order information before it, the Commission determines that there are any material misrepresentations or omissions in said financial statements and related documents, that determination shall cause the entire amount of monetary liabilty of two million and one hundred thousand dollars ($2 100 000. 00), less the sum of any payments made under subpart A above, to become immediately due and payable to the FTC and interest computed at the rate prescribed in 28 U. C. 1961 , as amended, shall immediately begin to accrue on the unpaid balance. Proceedings instituted under this subpart are in addition to, and not in lieu of, any other civil or criminal remedies as may be provided by law including any other proceedings the Commission may initiate to enforce this order.

VII It is further ordered That:

A. Each respondent shall submit to the Commission copies of all federal tax returns (including but not limited to income tax, gift estate, partnership, etc. ) that the respondent files with the United States Internal Revenue Service for the years 1990 through 1994 inclusive. These submissions shall be made within thirty (30) days of the filing of the returns.

B. If Wayne Philips does not timely file with the Internal Revenue Service the federal tax returns referenced in subpart Villa. , he shall submit to the Commission, on a copy of the form attached hereto as Exhibit A, a sworn statement describing his assets and liabilities for the tax year involved. For purposes of this subpart, timely filed shall mean within the time period, inclusive of extensions, allowed by the Internal Revenue Service. The fiing of sworn statements of assets and liabilities shall not discharge Philip s obligation to provide the Commission with copies of the federal tax returns referenced in subpart Villa. of this order.

C. If the corporate respondents do not timely file with the Internal Revenue Service the federal tax returns referenced in subpart Villa. they shall submit to the Commission, on a copy of the form attached hereto as Exhibit B, a sworn statement describing their assets and liabilities for the tax year involved. For purposes of this subpart timely filed shall mean within the time period, inclusive of extensions allowed by the Internal Revenue Service. The filing of sworn statements of assets and liabilities shall not discharge the corporate 614 FEDERAL TRADE COMMISSION DECISIO:\S Decision and Order 114 F.

respondents' obligation to provide the Commission with copies of the federal tax returns referenced in subpart Villa. of this order. D. Annually, for five (5) years after the date of service of this order respondent Wayne Phillips shall, within ninety (90) days of the request, provide sworn answers to such written questions regarding his finances, assets and liabilities and their sources as the staff of the Commission may pose.

IX.

It is further ordered That the respondents shall, for five (5) years from the date of entry of this order, distribute a copy of this order to each present and future managerial employee. It is further ordered That respondents Accelerated Systems, Inc. and United States Educational Services, Inc. shall notify the Commission, at least thirty (30) days prior to the proposed change, of any proposed change in the corporate respondent such as dissolution assignment, or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries, or any other change in the corporation that may affect compliance obligations arising out of the order.

XI.

It is further ordered That respondent Wayne Phillips, for a period of five (5) years from the date of service of this order, shall promptly notify the Commission, in writing, of his new affiliation with any business or employment that engages in any act or practice covered by any provision of this order. For each such new affiliation or employment, the notice shall include the name and address of the new business or employment, and a description of respondent' s duties and responsibilities.

XII.

It is further ordered That respondents shall, within sixty (60) days after service of this order upon them and at such other times as the Commission may require, file with the Commission a report, in WAYNE PHILLIPS, ET AL. 615 587 Decision and Order writing, setting forth in detail the manner and form in which they have complied with this order.

Commissioner Yao not participating.

EXHIBIT A FI:\ANCIAL STATE:vent OF DEBTOR (Use Additional Sheets Where Needed) This information is requested under the authority of Sections 6 & 9 of the Federal Trade Commission Act, 15 U. C. 46 , 49. The principal purpose for gathering this information is to evaluate your financial status. Disclosure of this information is voluntary. There is no penalty imposed for failure to provide the information requested. Upon completing this statement, however, you will be asked to certify that the above statement is true and that it is complete statement of all your income and assets. The making of any false statements herein may be punishable by fines or imprisonment as provided by law.

YOUR FULL NAME SOCIAL SECURITY NUMBER TELEPHO NUMBER STREET ADDRESS CITY STATE ZIP CODE HOW LO YRS SPOUSE' S NAME SOCIAL SECURITY NUMBER TELEPHONE NUMBER STREET ADDRESS CITY STATE ZIP CODE HOW LO;.G? YRS CHILD' S NAME SOCIAL SECURITY NUMBER TELEPHONE NUMBER STREET ADDRESS CITY STATE ZIP CODE HOW LOKG? YRS CHILD' S NA SOCIAL SECL'RITY NL'MBER TELEPHONE NUMBER STREET ADDRESS CITY STATE ZIP CODE HOW LONG? YRS CHILD' S NAME SOCIAL SECURITY NUMBER TELEPHONE BER STREET ADDRESS CITY STATE ZIP CODE Ho\v LONG'! YRS Decision and Order 114 F.

CHILD' S NAME SOCIAL SECURITY NCMBER TELEPHONE IBER STREET ADDRESS CITY STATE ZIP CODE HOW LONG? YRS YOUR E11PLOYERS HOW LONG' YRS POSITION?\ SALARY (Per Year) FIRM NAMES & ADDRESSES (Pa;:t 10 Years) BALANCE SHEET ASSETS A)IOl' LIABILITIES AMOU?\T Cash in Banks (Schedule I) Accounts Payable Money Market Funds lnstal!rnent Co!!ectiblc Aects Due You Obligations Notes Rcceivab1e & Trust Commercial; ::otes Payable to Deeds Owned (Schedule :-!) Banks (Schedule 2) Loans payable Other Receivables to Others Securities (Schedule 4A) Income Taxes Payable Other investments (Schedule 48) Property Taxes Payable Cash Value of Life Insurance or Endowment Loans on Life Policies (Schedule 5) Insurance (Schedule 5) Rea! Estate (Schedule 6) Rea! Estate Loar:s (Schedule 7) Value of Annuities or IRAs (Schedule 8) Other Liabilities 1motor Vehicles/Make & Year (Describe) Household Furniture and Goods S-- Other Personal! Property WAYNE PHILLIPS , ET AL. 617 587 Dccision and Order ASSETS AMOU'IT LIABILITIES AMOU'IT (Schedule 9) Items Used in Trade or Business TOTAL LIABILITIES Other Assets (Describe) NET WORTH (Total Assets uss Total Liabilities) TOTAL ASSETS TOTAL LIABILITIES & NET WORTH FOR MOST RECE '.n FISCAL YEAR (indicate dates): GROSS ANI\' lJAL CONTINGENT INCOME EXPENDITCRES LIABILITIES Residential Property Taxes Salary & Assessments As Endorser Spouse s Salary Other Taxes As Guarantor Dividends :.ortgage PaymentsS On Damage Claims Other Interest Fixed Payments For Taxes Fees or Commissions Living Expenses Other (Describe) All Expenses on Rentals Income Property CHECK HERE IF ;;ONE Other (describe) Gtr.er (describe) TOTAL TOTAL CO:m,GE,T TOTAL I'ICOME EXPE:'DlTURES LIABILITIES RAL INSTlWCTIONS: Please fill all blanks, entering ")Jone" where appropriate. Attach supplemental schedules as needed. On all schedules, designate Pledged Assets with a " P" am! any Separate Property of your Spouse with an " SCHEDCLE 1: CASH CASH BALANCE (On Date You Sign Below) BAKK WHERE CAERIED BRANCH OFFICE Decision and Order 114 F.

TOTAL $ GENERAL II\' STRUCTIONS: Please fil all blanks, entering one where appropriate. Attach supplemental schedules as needed. On all schedules, designate Pledged Assets with a " P" and any Separate Property of your Spouse with an " SCHEDULE 2; COMMERCIAL NOTES PAYABLE TO BANKS METHOD OF BORROWIKG AMoeNT OWNED (eKSECURED, TYPE (On Date you AN:-. IKT MATURITY OF COLLATERAL Sign Below) RATE DATE GUARA:-TEED, ETC. TOTAL $ SCHEDULE 3: NOTES RECEIVABLE AND TReST DEEDS MORTGAGES OWKED KAME OF HOW PAID BALA:-CE FINAL MATURITY COLLATERAL DEBTOR Dee DATE pe' pee pee pee pe' pee pee per pee pe, TOTAL $ SCHEDULE 4A: SECURITIES CURRE!'T TOTAL VALUE :.IARKET AT CURRENT TOTAL NAME OF KO. PRICE ARKET YEARLY REGISTERED DESCRIPTIOK SHARES PER SHARES PRICE INCOME OW!\ER WAYNE PHILLIPS, ET AL.

587 Decision and Order TOTALS $ $ SCHEDULE 4B: OTHER INVESTMENTS CURRENT TOTAL VALUE MARKET AT CURRENT TOTAL NAME OF NO. OF PRICE MARKET YEARLY REGISTERED DESCRIPTION UNITS PER UNIT PRICE INCOME OWNER TOTALS $ $ SCHEDULE 5: LIFE INSURANCE OR ENDOWMENT POLICIES CURRENT CASH PRIMARY FACE SURENDER LOANS MATURITY INSURED BENEFICIARY AMOUNT VALUE ON POLICY DATE $ $ Plan [ow la |[w lw le PIP [RH 1H | le leo lea Pile |e [wm leo lw |e Decision and Order 114 F.

TOTAL OF ALL POIJCIES, SCHEDULE 6: REAL ESTATE-DESIG ATE A!\'Y HOMESTEADED REAL ESTATE WITH AN "

LOCATION ESTIMATED GROSS PARCEL A:"D TYPE OF TITLE IK % OWNED YEAR PURCHASE PRESEm THLY NO, PROPERTY NAME OF BY WHm,1 ACQClRED PRICE VALUE COME TOTAL, SCHEDULE 7: REAL ESTATE LOANS SHOW );0. OF YEAR OF PARCEL FRO,j TO WHO)! HOW AK);. FIKAL PRESENT SCHEDULE 6 PAYABLE PAYA. INT RATE MATURITY AMOUKT OWI"G BLE PER PER TOTAL SCHEDULE ANNUITIES AND IRA ACCOUKTS WHERE DUE FACE AMOCKT CASH SURREKDER DESCRIPTION LOCATED DATE VALUE VALUE WAYNE PHILLIPS , ET AL. 621 587 Decision and Order TOTAL, SCHEDcLE 9: OTHER PERSONAL PROPERTY DESCRIPTIO'i INScRA'iCE CcRRENT (e. paintings, vases DATE OR ASSESSED 'oARKET cars, jewelry, etc. LOCATIO, ACQUIRED COST V AL1;A non VALUE Tota::

PROPERTY That\' SFERS List all transfers of property, including cash (by loan, gift, sale etc.), that you have made since January 1 , 1988. (List only transfers of cash or property exceeding $500) DATE AMov,r PROPERTY TO WHm! RELATIONSHIP TRA!\SFERRED (Name and Address) 622 FEDERAL TRADE COMMISSIO:\ DECISIONS Decision and Order 114 F.

Is anyone holding any money or property on your behalf? If so, give details.

Have you gone through bankruptcy or compromised a debt in the last 7 years? Yes If this is a statement of you and your spouse, are any assets your spouse s separate property? Yes No Are any assets pledged or debts secured except as shown? Yes No Executor of your wil:

NAME STREET ADDRESS CITY STATE ZIP CODE TELEPHO:-E NO. With knowledge of the penalties for false statements provided by 18 United States Code 1001 ($10 000 fine and/or five years imprisonment) and with knowledge that this financial statement is submitted by me to affect action by the Federal Trade Commission, I certify that the above statement is true and that it is a complete statement of all my income and assets, real and personal, whether held in my name or by another.

Date Signature JoXHIBIT 13 FEDERAL TRADE MISSION F!XA CIAL STATEMJ::.T Of CORPORATE DEFENDAKT (I) For Profit ( ) arne Type (2) )lot for Profit ( ) Home 2. Business State Zip AddressesStreet City KOTE: ATTACH SCHEDULE OF ALL BUSINESS ADDRESSES Domestic3. Foreign4. State-Incorporation Date-Incorporation License to do business in 5. Name Registered Agent WAYNE PHILLIPS, ET AL. 623 587 Decision and Order 6. Address Registered Agent Phone 7. Names and Addresses of Principal Stockholders. Indicate the ownership of 75% of the stock of the Corporation.

Number of shares owned by each.

(I) (2) (3) (4) (5) (6) (7) (8) 8(A). Names and Addresses of Current Officers and number of shares held by each. Term Expires 0 (1) (2) (3) (4) (5) 8(B). Name and Address of Current Members of Board of Directors. Term Expires Orl (1) (2) (3) (4) (5) 9(A). Registration on National or Local Stock Exchange(s). (Give details, including date of Registration and/or de!isting).

(J) (2) (3) 9(B). Tota! Authorized Shares of each type issued and present market value per share of each type of stock.

(1) (2) (3) 9(C). Total outstanding shares of each type stock currently being hed as Treasury Stock.

9(D). Tota! outstanding shares of each type of stock. Amount of bonded debt and principal! bondho!ders.

10. List States and Municipalities to which taxes have been paid and/or are being ( ) ( ) ( ) Decision and Order 114 F.

paid. Describe nature and amount of such taxes, state most recent year of payment thereof and whether tax payments are current. 11. Has this Corporation filed United States Corporate Income Tax Returns during the last 3 years. Yes ( ) No ( To What IRS Office(s) What Years? Are Federal Taxes Current? Yes ( ) Ioo ( ) 12. Kame and Address of:

Corporation s Independent Certified Public Accountants Corporate Attorney(s) retained by Corporation From to 13. Does this Corporation have a Profit and Loss Statement and Balance Sheet Year ( ) Years (Yes) submit one copy of each. Submit for audited documents if available.

14. Does this Corporation maintain bank accounts? Give names and addresses of Banks, Savings and Loan Associations, and other such entities, within the United States or located elsewhere. Indicate name and number of accounts and ba!anees.

BALAIoCE CHECKING ACCOUNT(S) SAVINGS ACCOCNT(S) OTHER ACCOUNT(S) SA VIIoGS & LOAK ASSOCIATIOIoS OR OTHER SCCH ENTITES TRUST ACCOUNT(S) OTHER ACCOUNT(S) 15. List aU commercial paper, negotiable or non-negotiable, in which the Corpora- WAYNE PHILLIPS , ET AL. 625 587 Decision and Order tion has any interest whatsoever, presently in transit or in the possession of any banking institution. Describe such paper and the Corporation s interest therein and state its present location. List al! accounts and loans receivable in excess of $300 and specify if due from an officer, stockholder, or director. 16. From personal knowledge as President, Vice President, or Chairman of the Board for the last taxab!e year, indicate in round figures: (A) Gross Income (B) Expenses (Fixed & Current) (C) Gross Profit(or Loss) (D) Net Profit After Taxes (E) (List approximate totals):

Payables:$ Receivables:S 17. Is this Corporation presently:

(A) Active Yes ( ) No ( ) (B) Inactive Yes ( ) No ( ) (C) Void and lor Terminated by State authority Yes ( ) No ( ) (D) Otherwise dissolved Yes ( ) 1\0 ( ) I. Date 2. By who 3. Reaso 18(A). List corporate salaries to or/and drawings of the following personnel for the last three taxable years:

Position (Inc. officers) Years (1) (2) (3) President Vice President Chairman/Board Secretary Treasurer 18(B). List five most highly compensated employees or officers other than above describe position and set forth salary and/or bonus for last three taxable years: Years (1) (2) (3) 18(C). Describe the nature of the compensation paid to the persons listed in (A) and (B) above and set forth any stock options, pensions, profit sharing, royalties, or other deferred compensation rights of said persons. Decision and Order 114 F.

19. List Corporate commercial activity (fields of activity resulting in income) Prime: 20. List aU other supplementary fields of activity in which this Corporation is engaged either directly, through subsidiaries, or affiliates, stating the name(s) and state(s) of incorporation of such subsidiaries or affiliates. 21. Has the Corporation at any time been the subject of any proceeding under the provisions of any State Insolvency Law, or the Federa! Bankruptcy Act, as Amended? If so, supply the following information as to each such proceeding: Date (Commencement) Date (Termination) Discharge or other disposition, if any, and operative affect thereof: State Court Federa! Cou County District Docket Ko.

22(A). List aU Real Estate and Personalty of an estimated value in excess of $500. owned or under contract to be purchased by this Corporation and where located: (include inventory, machinery, equipment, furniture, vehicles, and any other personal property).

22(B). List and describe all judgments, recorded and unrecorded: (1) Against the Corporation (2) In favor of the Corporation WAYNE PHILLIPS, ET AL. 627 587 Decision and Order 22(C). List and describe all other encumbrances against Real Estate owned by the Corporation: (Including but not limited to mortgages, recorded or unrecorded); 22(D). List and describe aU other encumbrances (including but not limited to Security Interest, whether perfected or not) against any such personalty owned by the Corporation as is listed in 22(A) above. 22(E). List and describe location of Real Estate, including Real Estate being purchased under contract with name and address of Seller and contract price 23. List all Life Insurance, now in force on any or all officers, Directors, and lor key employees, setting forth face amounts, names of Life Insurance companies and policy numbers where this Corporation has an "Insurable interest " and/or is paying the premium or part of same. Where applicable indicate under which policy(s) this Corporation is a Beneficiary, type policy(s), yearly premium, and location of policy(s).

24. List aU transfers of any or aU assets (Real) or/and (Personal) and each (over $300.00) made by this Corporation OTHER THA:- THE ORDIr-ARY Course OF BUSINESS during the last three (3) calendar years and state to whom transfer was made. Describe compensation paid by recipient and to whom. 25. Is this Corporation a party in any law suit now pending? ( ) Yes (Give details below. ( ) Ko.

Decision and Order 114 F.T.C.

26. Please list names and addresses of any person or other business entity, holding funds in escrow or in trust for this Corporation, or any of its subsidiaries or affiliates.

27. Additional Remarks:

With knowledge of the penalties for false statements provided by 18 United States Code 1001 ($10,000 fine and/or five years imprisonment) and with knowledge that this financial statement is submitted by me as a responsible officer of this Corporation to affect action by the Federal Trade Commission, I hereby certify that I completely understand the above statement, and that the same is a true and complete statement of all corporate income and assets, real and personal, whether held in the Corporate name or otherwise.

DATE:

AFFIANT (Officer) LIST CORPORATE POSITION NOTARY PUBLIC My Commission Expires PEPSICO , I 629 629 Complaint