2004 Credit Suit

Gates is to receive an honorary knighthood / Human Rights code violations?

Microsoft in human rights row

"Gates's firm supplied technology used to trap Chinese dissidents, says Amnesty

... Amnesty believes Microsoft is in violation of a new United Nations Human Rights code for multinationals which says businesses should 'seek to ensure that the goods and services they provide will not be used to abuse human rights'.

China is the world's most aggressive censor of the internet. Websites are banned for using words such as 'Taiwan', 'Tibet', 'democracy', 'dissident' and 'human rights'. Amnesty has recorded dozens of cases of political opponents jailed for circulating material offensive to the Chinese government.

Microsoft told The Observer: 'We are focused on delivering the best technology to people throughout the world. However, how that technology is used is with the individual and ultimately not in the company's control.' ..."

Of course not, as long as they pay. Ever wonder how the credit bureaus assist foreign governments?

Ever consider that the CRAs are monopolies?

They treat us exactly like MicroSoft. We have no choice but to buy their products, from each one of them, to do their quality control, without pay.

They have no ethics, no morals, and no respect for any laws. They do what they want. I think they have standing agreements with the major consumer law firms not to file class actions.

I am stunned that the CRAs can get away with so many violations. Of course it's real expensive to sue CRAs, so the smaller firms or individuals can't finance a long legal battle.

In individual actions, the consumer gets a few deletions of derogs, maybe a few hundred bucks, the "consumer advocate" attorney makes 10 or 20K in legal fees.

It's a nice arrangement. For them.

You can just replace "Microsoft" with "CRA":

The 'teenage' hard nut at the centre of Microsoft

He outwitted IBM to retain control of the PC operating system, and dumped them when they ceased to be useful. He missed the significance of the internet, but turned the company on a sixpence to face the challenge once he had seen the light, determined to ensure that Microsoft would dominate it the way it had come to dominate the market for operating systems and office software. This led to the campaign to exterminate Netscape and the ill-fated anti-trust action that was decided in 2001, with Microsoft being found guilty of violating the law but escaping the penalty of break-up on appeal.

What was most interesting about the anti-trust trial was not the obduracy of Microsoft's defence (which is only to be expected from corporate lawyers) but the incredulity of Gates and his colleagues about the fact that they were being prosecuted at all. Gates's videotaped testimony made riveting viewing: he looked exactly like a rebellious teenager being interrogated by teachers for possession of cannabis. He made it abundantly clear that he regarded his interrogators as dunces and ceded no authority to them or to the legal process that brought them to his office. The government, he gave them to understand, had no business intervening in the process of industrial innovation.

And even after Microsoft was found guilty of violating the Taft-Sherman Act, he and his colleagues showed no remorse. Instead there was haggling about the implementation of the piffling penalties imposed by the court, shrill defiance and a return to the old ways of intimidating competitors and 'leveraging' the Windows monopoly. And, of course, there were no resignations.

..."

More on CreditExpert and the FCRA violations

After spending some time at CreditExpert, I found the following major changes/violations:

It is as incomplete as ConsumerInfo.com (PrivacyGuard) reports, missing dates for derogs, closing dates, aging dates, payment history, etc.

NO soft inquiries, clearly another FCRA violation.

NO Experian report number, resulting in the inability to make phone disputes with Experian (I will have to do a test next week to see if they made any changes to the Experian phone dispute requirements.)

No more online disputes (not illegal, just another reason not to pay for it.)

And of course the new "PLUS" score is nothing but another snake oil score - a total fraud.

The free trial is still there, 30 days, you still get daily reports but it's a very tedious process, make sure you CANCEL within 30 days. It's not worth paying $90/year for that crap.

CreditExpert monitoring cost?

Since CreditExpert (Experian) changed the site last week, I can't find any info on how much the monitoring is.

The signup form doesn't say.

"A free Experian Credit Report so you can make sure everything is current and accurate."

You get only ONE report? No longer unlimited access?

No free 30 day trial? Experian still has the link to the free trial, but it doesn't say anything about it on the signup page.

Experian selling reports for $14.95, the FTC increased from the $9 max?

Just about all the bureaus and resellers have been overcharging for the tri-merged reports, but this is the first time that I see a $14.95 fee for an Experian report.

Did we have any changes to:

3. The Federal Trade Commission increased the maximum allowable charge to $9.00, effective January 1, 2002. 66 Fed. Reg. 63545 (Dec. 7, 2001).

Is it $14.95 now?

Equifax mailed their Motion to a completely different address

Steven Ford
Stinson Morrison Hecker LLP
1850 North Central Avenue, Suite 2100
Phoenix, AZ 85004-4584
602-279-1600
fax: (602) 240-6925

Via fax to (602) 240-6925

Re: 03-525 Baker v. Fair Isaac, et al
Equifax and Thomas Chapman motion to dismiss sent to the wrong address

1/30/04

Dear Mr. Ford:

I received the Equifax motion to dismiss today from you, apparently Mr. Pearling notified you that I hadn't received it.

According to the Certificate of Service, you didn't send the filing to the address of record. Where did you get this address?

I'll appreciate your notifying the Court and extending my time to respond accordingly.

Sincerely,

Christine Baker

Fair Isaac, Experian CEO Craig Smith and Pacific Bell dismissed

I expected the dismissal of Smith and the Fair Isaac employees, but I'm surprised Pacific Bell can get away with knowingly selling fraudulent debts of Arizona residents.

Of course my intention was to DOCUMENT that the CEOs KNOW what's going on. I've submitted literally pounds of exhibits, and I sure hope that these *people* can't claim they didn't know the damages their actions have been causing when the next person sues and does a better job at legalese.

Already lots of people are finding CreditCourt and the blog in searches for "Craig Smith" and my exhibits can be used by anyone.

I don't know if I should appeal Pacific Bell or just refile in California. I have read some really nice decisions for consumers in the 9th Circuit on appeal.

Judge Broomfield made some very strange comments about me not having submitted an affidavit while Pacific Bell DID submit affidavits. Essentially that makes me a liar. I pointed out that one of theirs was perjury, and he entirely ignored that.

He stated that I failed to submit proof of the agency relationship between Pacific Bell and American Agencies. I was supposed to prove my entire case prior to discovery? Because I didn't include the contract between Am. Ag. and Pac Bell they are right? I don't think they ever denied the agency relationship.

I'll have to scan everything next week and read this again - very strange.

It is SO important that Pacific Bell will continue to sell invalid debts if the consumers have to sue in California. I'll have to think about it. It also depends on the statute of limitations. Wished I could do both, appeal and file in Cal. at the same time.

How long does the appeal take?

A perjury conviction upheld

It's interesting how everybody is interested when it comes to abortion. When Pacific Bell employees commit perjury, nobody cares.

The entire ruling:

United States v. Pendercraft, 297 F.3d 1198 (11th Cir. 07/16/2002)
[1]
U.S. Court of Appeals, Eleventh Circuit
[2]
No. 01-13057
[3]
297 F.3d 1198, 2002.C11.0000228
[4]
July 16, 2002
[5]
UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
JAMES SCOTT PENDERGRAFT, MICHAEL SPIELVOGEL, DEFENDANTS-APPELLANTS.
[6]
Appeal from the United States District Court for the Middle District of Florida D. C. Docket No. 00-00021 CR-0C-10
[7]
Before Tjoflat, Roney and Cox, Circuit Judges.
[8]
The opinion of the court was delivered by: Cox, Circuit Judge
[9]
[PUBLISH]
[10]
James Scott Pendergraft and Michael Spielvogel were convicted, following a jury trial, for (1) attempted extortion, in violation of the Hobbs Act, 18 U.S.C. § 1951, (2) mail fraud, in violation of 18 U.S.C. § 1341, and (3) conspiracy to commit extortion, mail fraud, and perjury, in violation of 18 U.S.C. § 371. Spielvogel was also convicted of filing a false affidavit, in violation of 18 U.S.C. § 1623, and making a false statement to the Federal Bureau of Investigation, in violation of 18 U.S.C. § 1001. Pendergraft and Spielvogel appeal, challenging their convictions and sentences.
[11]
The charges against Pendergraft and Spielvogel arose out of their threat to seek damages in a lawsuit against Marion County, Florida, and to use false evidence in support of the lawsuit. Because we conclude that their threat was neither "wrongful" within the meaning of the Hobbs Act nor a "scheme to defraud" within the meaning of the mail-fraud statute, we reverse the attempted extortion and mail-fraud convictions, and we vacate the conspiracy convictions. However, we affirm Spielvogel's convictions for perjury and making false statements.
[12]
I. BACKGROUND
[13]
A. FACTS
[14]
Pendergraft is a physician specializing in maternal-fetal medicine. *fn1 As part of his practice, he performs abortions, including late-term, or "partial-birth," abortions. He opened the Orlando Women's Center in Orlando, Florida, in 1996. In 1997, seeking to expand his Florida practice, Pendergraft purchased a medical building in Ocala, Florida, for about $200,000.
[15]
Ocala is the county seat of Marion County. In 1989, an abortion clinic in Ocala, the All Women's Health Center, was destroyed by an arsonist, and Ocala had not had an abortion clinic since. Pendergraft had performed many abortions on Ocala residents in his Orlando clinic and believed he could profit by opening a clinic in Ocala.
[16]
Pendergraft's presence in Ocala sparked a lot of controversy. During a meeting of the Marion County Board of Commissioners in October 1997, Steve Klein, a resident of Ocala, proposed that the Board write a letter to Pendergraft asking him to reconsider opening his Ocala clinic. The Board unanimously supported Klein's proposal, and Larry Cretul, the Chairman of the Board, wrote and signed the letter and sent it to Pendergraft. The letter asked Pendergraft to reconsider his plans because of the controversy the clinic would bring to Ocala. Pendergraft received many other letters from concerned citizens of Marion County.
[17]
Pendergraft received the Board's letter and, after a few days, showed it to Michael Spielvogel, a business associate whose wife, Mary, worked for Pendergraft as an office administrator. In late October, Spielvogel called Cretul to discuss the possibility of Pendergraft withdrawing from Ocala if the County would purchase the clinic building for a good price.
[18]
Immediately after his discussion with Spielvogel, Cretul called the county sheriff's office and expressed some concern that he was being asked to pay for peace. The sheriff's office relayed Cretul's concern to FBI Special Agent Pamela Piersanti, and the FBI opened an investigation. As part of the investigation, the FBI recorded Cretul's subsequent conversations with Spielvogel. During one of the conversations, Spielvogel implied that Pendergraft would sell the clinic building for between $350,000 and $500,000.
[19]
On January 29, 1998, a bomb exploded at the New Woman All Women Health Care Center, an abortion clinic in Birmingham, Alabama, killing an off-duty police officer and injuring a chief nurse. That evening, Cretul and Spielvogel spoke by telephone. Following their conversation, Spielvogel called the FBI and reported that Cretul had threatened him. Specifically, Spielvogel reported that Cretul had said that the Alabama bombing was nothing compared to what would happen to the Ocala clinic. Because the FBI was monitoring Cretul's conversations with Spielvogel, it knew that Spielvogel's allegation was false. The FBI declined to investigate the alleged threat and told Spielvogel of its declination in late February.
[20]
On February 24, Pendergraft wrote identical letters to Cretul and several other Ocala citizens who had previously written letters to Pendergraft. In this letter, Pendergraft articulated his reasons for opening the Ocala clinic and acknowledged that he would perform abortions. At the end of his letter, he intimated that he would entertain other plans for the facility, including a sale of it, and asked potential offerors to contact Spielvogel.
[21]
At the FBI's request, Cretul called Pendergraft and finally got in touch with him on March 26, 1998. Cretul told Pendergraft that he was worried about the potential controversy and violence that the Ocala clinic would bring, but Pendergraft denied that he wanted or caused violence. Cretul asked Pendergraft how much money it would take to keep him out of Ocala. Pendergraft said that he would stay away three years for $550,000, five years for $750,000, and forever for $1,000,000. Cretul told Pendergraft that his offer felt like extortion, but Pendergraft denied any such intent and offered to cease negotiations. On April 8, the FBI told Cretul to call off negotiations, and thereafter the investigation of Pendergraft was closed.
[22]
In July 1998, the Ocala clinic opened amid much controversy. Protestors consistently blocked the driveway to the clinic and harassed those who entered the building. Pendergraft asked the City of Ocala and the Marion County Sheriff's Department if he could hire off-duty law enforcement officers to protect his clinic. Though such requests were routinely granted to other businesses, Pendergraft's request was denied.
[23]
Pendergraft and the Ocala Women's Center filed a federal lawsuit in December 1998, naming Marion County, the City of Ocala, and several individual protestors as defendants. It sought injunctive relief against Marion County that would permit Pendergraft to hire off-duty law enforcement officers.
[24]
Marion County retained Virgil Wright to defend the suit. Wright contacted Roy Lucas, Pendergraft's lawyer, and told Lucas that, since the Sheriff's Department was not controlled by Marion County, Marion County should not be a party to the suit. Lucas responded on March 15, 1999, with a letter stating that Cretul's threats, as reported by Spielvogel, violated the Freedom of Access to Clinic Entrances Act, 18 U.S.C. § 248, and exposed the County to actual and punitive damages as well as litigation fees and expenses. Lucas threatened to file an amended complaint that would seek damages against the County and add Spielvogel, Spielvogel's wife, and the Ocala clinic administrator as plaintiffs. Attached to the letter were two unsigned affidavits, one by Spielvogel and one by Pendergraft.
[25]
Spielvogel's affidavit reported Cretul's threat and said that Pendergraft witnessed Spielvogel's reaction to the threat when it was made. Pendergraft's affidavit said that he believed Spielvogel's report that Cretul made threats because of Spielvogel's reaction when he was on the phone with Cretul.
[26]
When Wright received Lucas's letter, he contacted Cretul, who told Wright that the FBI taped the phone call during which Cretul was alleged to have made the threat. Wright agreed to assist the FBI in the investigation of Pendergraft and Spielvogel by holding a settlement conference with them. Wright and Lucas agreed to hold a settlement conference on March 22. In a letter confirming the time the conference was scheduled, Lucas said that he would bring a copy of a proposed amended complaint but that he might not need to file it, depending on the discussion.
[27]
On March 19, Pendergraft and Spielvogel filed a motion for partial summary judgment in their federal lawsuit. The motion sought to enjoin the protestors from harming clinic workers and to allow Pendergraft to hire off-duty officers. In support of the motion, Pendergraft and Spielvogel filed, among other things, the affidavits they sent to Wright regarding Cretul's threats. These affidavits were signed, dated, and notarized. Pendergraft and Spielvogel mailed a copy of this motion to Wright.
[28]
On March 22, Wright, Lucas, Spielvogel, and Pendergraft attended the settlement conference, and the FBI captured it on videotape. At the conference, Spielvogel again asserted that Cretul had threatened him, and Pendergraft claimed that he was present when Spielvogel received the threatening phone call. While Spielvogel expressed his desire for an immediate settlement, Pendergraft made it clear that he wanted to go to trial. Lucas and Pendergraft informed Wright that the lawsuit could bankrupt Marion County based on prior verdicts in similar cases. Wright told them he would report to Marion County and ask the county what it would like to do.
[29]
On April 12, Piersanti, the FBI agent, confronted Spielvogel with evidence that his allegations against Cretul were false, and she asked Spielvogel to cooperate in an investigation of Pendergraft. Spielvogel declined this offer and instead informed Pendergraft of the investigation.
[30]
On August 4, 1999, an amended complaint was filed in Pendergraft's lawsuit. It did not add Spielvogel or his wife as plaintiffs. It did not add Larry Cretul as a defendant. Instead of adding a claim for damages against Marion County, it dropped Marion County from the suit entirely. Nevertheless, a grand jury investigation of Pendergraft and Spielvogel was initiated.
[31]
B. PROCEDURAL HISTORY
[32]
1. The Indictment
[33]
On June 13, 2000, the grand jury indicted Pendergraft and Spielvogel. Count One charges that they conspired to commit extortion under 18 U.S.C. § 1951, perjury under 18 U.S.C. § 1623, and mail fraud under 18 U.S.C. § 1341.
[34]
Count Two charges Pendergraft and Spielvogel with the substantive offense of attempted extortion for using false affidavits and statements in an attempt to obtain a monetary settlement from Marion County. The indictment alleges that Pendergraft and Spielvogel authored false affidavits accusing Cretul of threatening them and attached these affidavits to a letter sent to Wright. Based on these false affidavits, they threatened, in the letter, to file an amended complaint seeking damages against Marion County. According to the indictment, they then arranged a settlement conference with Wright during which they threatened a multi-million dollar suit unless Marion County settled.
[35]
In Count Three, Pendergraft and Spielvogel are charged with mail fraud. Their alleged scheme to defraud was the use of false statements about Cretul's threats to obtain a settlement from Marion County. In furtherance of this scheme, they mailed copies of their motion for partial summary judgment, to which the allegedly false affidavits were attached, to Wright and other lawyers in the civil case.
[36]
Counts Four and Five charge only Spielvogel with perjury and making a false statement to the FBI. These charges arose out of Spielvogel's accusation, which he included both in his affidavit and in his report to the FBI, that Cretul threatened the Ocala clinic while on the phone with him.
[37]
2. Motion to Dismiss the Indictment
[38]
Pendergraft and Spielvogel filed a consolidated motion to dismiss the indictment on several grounds. (R.1-26.) They argued, among other things, that Counts One, Two, and Three of the indictment violated Pendergraft's First and Fourteenth Amendment rights. Because he had a right to assert claims against the government, he and Spielvogel could not be charged with extortion for their actions in connection with a lawsuit against the government. Furthermore, they argued, the indictment imperiled the privacy rights of Pendergraft and his patients because it endangered Pendergraft's ability to provide abortions.
[39]
Pendergraft and Spielvogel further argued that Counts One, Two, and Three were legally insufficient because a threat to file a lawsuit could never amount to extortion. They relied primarily on I.S. Joseph Co. v. J. Lauritzen A/S, 751 F.2d 265 (8th Cir. 1984), where the Eighth Circuit held that a threat to sue, even if groundless and in bad faith, could not constitute extortion.
[40]
The district court declined to dismiss any of the counts, noting that the indictment tracked the statutory language. (R.1-32.)
[41]
3. Motions for Judgment of Acquittal
[42]
The case ultimately went to trial. At the close of the Government's case, Pendergraft and Spielvogel made an oral motion for judgment of acquittal. (R.25 at 128-71.) They argued, among other things, that their litigation activities did not constitute extortion for purposes of the Hobbs Act, that the evidence failed to demonstrate a conspiratorial agreement between Pendergraft and Spielvogel, and that there was no "scheme to defraud" for purposes of the mail-fraud statute. The court denied the motion, and Pendergraft filed a renewed motion in written form. (R.3-99.)
[43]
Both Pendergraft and Spielvogel testified in their own defense. Spielvogel admitted, on the stand, that he lied, both in his affidavit and to the FBI, about the content of Cretul's threats. (R.18 at 76-77.) He also testified that he staged the phone call about which Pendergraft testified in his affidavit and that Pendergraft did not find out about it until just before the trial. (R.18 at 78-82.) Pendergraft testified that he witnessed the staged phone call but did not, at that time, know it was staged. (R.17 at 145-46; R.15 at 8-10.) On cross-examination, the Government elicited testimony suggesting that Pendergraft did not, in fact, witness the staged phone call when he said he did. (R.15 at 70-76.) At the close of all the evidence, the court deemed as restated all motions for judgment of acquittal made during the trial and denied them all. (R.19 at 401-06.)
[44]
During closing argument, the Government focused on the credibility of Pendergraft and Spielvogel. It argued that, because Pendergraft and Spielvogel were liars, the jury could conclude that they engaged in the conduct alleged in the indictment. The jury convicted them as charged on every count.
[45]
After the verdict, Pendergraft and Spielvogel filed separate renewed motions for judgment of acquittal or, in the alternative, for a new trial. In addition to the grounds raised previously, they argued that the prosecutor had made improper statements in his closing arguments, including his statement that Pendergraft "shucked and jived" on the witness stand.
[46]
The district court summarily denied the renewed motions for judgment of acquittal and refused to grant a new trial. (R.4-140.) Pendergraft was sentenced to 46 months in prison and two years of supervised release. He was also fined $25,000. Spielvogel was sentenced to 41 months in prison and three years of supervised release. He was not fined.
[47]
II. ISSUES ON APPEAL
[48]
Pendergraft and Spielvogel raise the following issues on appeal: *fn2 (1) whether the district court erred by denying their motion to dismiss the indictment and their motions for judgment of acquittal because the conduct at issue was legally insufficient to support convictions for extortion or mail fraud; (2) whether the district court erred by denying their motions for judgment of acquittal because there was insufficient evidence of an illegal conspiracy; (3) whether the district court erred by denying their motions for a new trial because the prosecutor introduced racial prejudice by accusing Pendergraft of "shucking and jiving." *fn3
[49]
III. STANDARDS OF REVIEW
[50]
We review the district court's denial of a motion to dismiss the indictment for abuse of discretion, see United States v. Pielago, 135 F.3d 703, 707 (11th Cir. 1998), but the sufficiency of an indictment is a legal question that we review de novo. See United States v. Steele, 178 F.3d 1230, 1233 (11th Cir. 1999). We review the denial of a motion for judgment of acquittal de novo. See United States v. Hansen, 262 F.3d 1217, 1236 (11th Cir. 2001). In the absence of a contemporaneous objection, we review the district court's failure to correct an improper closing argument for plain error. See United States v. Newton, 44 F.3d 913, 920-21 (11th Cir. 1995). We review the denial of a motion for a new trial for abuse of discretion. See United States v. Ward, 274 F.3d 1320, 1323 (11th Cir. 2001).
[51]
IV. DISCUSSION
[52]
A. LEGAL SUFFICIENCY OF THE INDICTMENT
[53]
Pendergraft and Spielvogel assert error in the district court's denial of their motion to dismiss the indictment and their motions for judgment of acquittal. In their motions and on appeal, they challenge Counts One, Two, and Three on the ground that the extortion and mail-fraud charges are legally insufficient and that the Government failed to offer sufficient evidence of an illegal conspiracy. Because we conclude that there was evidence to support the extortion and mail-fraud allegations in the indictment, we will examine those allegations to determine whether they are legally sufficient to charge an offense. *fn4
[54]
1. Extortion (Counts One & Two)
[55]
The Hobbs Act imposes criminal sanctions on those who affect interstate commerce by extortion. See 18 U.S.C. § 1951(a) (2000). Extortion is defined as "the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right." Id. § 1951(b)(2). In this case, the indictment alleges that Pendergraft and Spielvogel conspired to extort money from Marion County by threatening to file an amended complaint, supported by false affidavits, unless Marion County settled with them. Pendergraft and Spielvogel argue that such threats are not criminal under the Hobbs Act.
[56]
Several courts have held that a threat to file a lawsuit, even if made in bad faith, is not "wrongful" within the meaning of the Hobbs Act. See Vemco, Inc. v. Camardella, 23 F.3d 129, 134 (6th Cir. 1994); First Pacific Bancorp, Inc. v. Bro, 847 F.2d 542, 547 (9th Cir. 1988); I.S. Joseph Co. v. J. Lauritzen A/S, 751 F.2d 265, 267-68 (8th Cir. 1984); G-I Holdings, Inc. v. Baron & Budd, 179 F. Supp. 2d 233, 259 (S.D.N.Y. 2001); Heights Cmty. Cong. v. Smythe, Cramer Co., 862 F. Supp. 204, 207 (N.D. Ohio 1994); Am. Nursing Care of Toledo, Inc. v. Leisure, 609 F. Supp. 419, 430 (N.D. Ohio 1984). All of these cases have arisen in the civil RICO *fn5 context where litigants have included a threat to file a lawsuit as the predicate act of extortion. By rejecting such threats as predicate acts, these courts have implicitly held that threats to sue cannot constitute criminal extortion. Most of these courts have recharacterized the extortion charges as actions for malicious prosecution and have held that malicious prosecution is not a RICO predicate act.
[57]
Because an action for malicious prosecution is a civil matter, we are reluctant to recharacterize the criminal extortion charges in this case as actions for malicious prosecution. Instead, we must analyze the Hobbs Act to determine whether it criminalizes the bad-faith threat to sue that is alleged in this case.
[58]
We begin, of course, by examining the text of the statute. See Adams v. Fla. Power Corp., 255 F.3d 1322, 1324 (11th Cir. 2001). To commit extortion, a person's actions must, in some sense, be "wrongful." See 18 U.S.C. § 1951(a) (2000). In United States v. Enmons, 410 U.S. 396, 93 S. Ct. 1007 (1973), the Supreme Court interpreted "wrongful," within the meaning of the Hobbs Act, to consist of using a wrongful means to achieve a wrongful objective. See id. at 399-400, 93 S. Ct. at 1009.
[59]
To show a wrongful objective, the Government must show that Pendergraft and Spielvogel had no lawful claim to the money they sought. See id. at 400, 93 S. Ct. at 1009-10; United States v. Nell, 570 F.2d 1251, 1258 (5th Cir. 1978). Pendergraft and Spielvogel sought settlement money from Marion County based on threats allegedly made to Spielvogel by a county commissioner. The indictment alleges that these threats never actually occurred. This allegation, if true, shows that Pendergraft and Spielvogel had no lawful claim to the settlement money they sought. The wrongful-objective element of extortion is therefore satisfied. *fn6
[60]
Regarding the wrongful-means element, the question presented is whether their threat to file the lawsuit was "wrongful." The indictment alleges that the defendants unlawfully used false affidavits and made false statements "in an effort to induce the payment of money by the Marion County government through the fear of economic loss." (R.1-1 at 7.) The use of fear can be a wrongful means under the Hobbs Act, and fear includes the fear of economic loss. But the fear of economic loss is an "animating force of our economic system," United States v. Sturm, 671 F. Supp. 79, 84 (D. Mass. 1987), vacated and remanded, 870 F.2d 769 (1st Cir. 1989), and, therefore, is not inherently wrongful. See Hall Am. Ctr. Assocs. Ltd. P'ship v. Dick, 726 F. Supp. 1083, 1095 (E.D. Mich. 1989). We must determine whether the use of economic fear in this case was "wrongful" within the meaning of the Hobbs Act.
[61]
The indictment alleges that Pendergraft and Spielvogel produced perjured affidavits that described threats by Larry Cretul, the Chairman of the Marion County Board of Commissioners. Based on the information in these affidavits, Pendergraft and Spielvogel threatened to amend an existing legitimate lawsuit to include a claim for damages against Marion County. The threat of this additional claim, backed by fabricated evidence, put Marion County in fear of economic loss, and Pendergraft and Spielvogel sought to exploit this fear by obtaining a settlement from Marion County. The bad-faith threat of litigation, according to the indictment, was reasonably calculated to cause fear of economic loss and therefore "wrongful."
[62]
A threat to litigate, by itself, is not necessarily "wrongful" within the meaning of the Hobbs Act. After all, under our system, parties are encouraged to resort to courts for the redress of wrongs and the enforcement of rights. See Boothby Realty Co. v. Haygood, 114 So. 2d 555, 559 (Ala. 1959); 54 C.J.S. Malicious Prosecution § 4 at 525 (1987). For this reason, litigants may be sanctioned for only the most frivolous of actions. These sanctions include tort actions for malicious prosecution and abuse of process, and in some cases recovery of attorney's fees, but even these remedies are heavily disfavored because they discourage the resort to courts. See Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 247, 95 S. Ct. 1612, 1617 (1975); Kelly v. Serna, 87 F.3d 1235, 1241 (11th Cir. 1996); Mims v. Teamsters Local No. 78, 821 F.2d 1568, 1570 (11th Cir. 1987); Delchamps, Inc. v. Bryant, 738 So. 2d 824, 832 (Ala. 1999); Cate v. Oldham, 450 So. 2d 224, 225-26 (Fla. 1984); Day Realty Assocs., Inc. v. McMillan, 277 S.E.2d 663, 664 (Ga. 1981).
[63]
History has taught us that, if people take the law into their own hands, an endless cycle of violence can erupt, and we therefore encourage people to take their problems to court. We trust the courts, and their time-tested procedures, to produce reliable results, separating validity from invalidity, honesty from dishonesty. While our process is sometimes expensive, and occasionally inaccurate, we have confidence in it. When a citizen avails himself of this process, his doing so is not inherently "wrongful."
[64]
Moreover, in this case, we are not dealing with a typical threat to litigate. Instead, we are dealing with a threat to litigate against a county government. The right of citizens to petition their government for the redress of grievances is fundamental to our constitutional structure. See U.S. Const. amend. I. *fn7 A threat to file suit against a government, then, cannot be "wrongful" in itself.
[65]
But, in this case, we have an allegation that Pendergraft and Spielvogel fabricated evidence to support their suit. The fabrication of evidence is certainly not "rightful." The question is whether the fabrication of evidence makes a threat to sue a government "wrongful."
[66]
We recognize that the fabrication of evidence is criminalized by the perjury statute. While the same conduct can violate several statutes, we do not think that Pendergraft and Spielvogel's conduct does. The law jealously guards witnesses who participate in judicial proceedings; witnesses should be "unafraid to testify fully and openly." See Charles v. Wade, 665 F.2d 661, 667 (5th Cir. Unit B 1982). Because the rigors of cross-examination and the penalty of perjury sufficiently protect the reliability of witnesses, see Butz v. Economou, 438 U.S. 478, 512, 98 S. Ct. 2894, 2914 (1978); Charles, 665 F.2d at 667, courts have been unwilling to expand the scope of witness liability, since, by doing so, "`the risk of self-censorship becomes too great.'" Charles, 665 F.2d at 667 (quoting Imbler v. Pachtman, 424 U.S. 409, 440, 96 S. Ct. 984, 999 (1976) (White, J., concurring).
[67]
Criminalizing false testimony via the Hobbs Act would expand the scope of witness liability. Witnesses might decline to provide affidavits in questionable lawsuits against a government, fearing that they could be charged with conspiracy to commit extortion if the lawsuit fails. Such a possibility is unsettling, and we do not believe that Congress intended to expand the scope of witness liability in this way. The fabrication of evidence, then, does not make a threat to sue a government "wrongful" within the meaning of the Hobbs Act.
[68]
While the case before us involves a threat to sue a government, we are troubled by any use of this federal criminal statute to punish civil litigants. Sanctions for filing lawsuits, such as malicious prosecution, lead to collateral disputes and "a piling of litigation on litigation without end." Boothby Realty Co., 114 So. 2d at 559. Allowing litigants to be charged with extortion would open yet another collateral way for litigants to attack one another. The reality is that litigating parties often accuse each other of bad faith. The prospect of such civil cases ending as criminal prosecutions gives us pause.
[69]
Moreover, this addition to the federal criminal arsenal would have other disconcerting implications in the civil arena. As we have noted, the cases rejecting extortion for threats to litigate arise in the civil RICO context when parties attempt to graft a RICO claim on their claims for malicious prosecution. In those cases, the courts express concern about transforming a state common-law action into a federal crime. We share this concern.
[70]
Nevertheless, our holding is a narrow one. We hold that Pendergraft and Spielvogel's threat to file litigation against Marion County, even if made in bad faith and supported by false affidavits, was not "wrongful" within the meaning of the Hobbs Act. Thus, we conclude that the allegations in the indictment for conspiracy to commit extortion and for the substantive offense of attempted extortion fail to charge offenses as a matter of law.
[71]
2. Mail Fraud (Counts One & Three)
[72]
The indictment also charges Pendergraft and Spielvogel with mail fraud and conspiracy to commit mail fraud. When Pendergraft and Spielvogel filed their motion for a preliminary injunction with the district court, they attached their false affidavits in support. A copy of the motion was served by mail on Marion County's attorney, Virgil Wright, and two other lawyers in the case. To commit mail fraud, a person must (1) intentionally participate in a scheme to defraud and (2) use the mails in furtherance of the scheme. See 18 U.S.C. § 1341 (2000); United States v. Smith, 934 F.2d 270, 274 (11th Cir. 1991). The indictment alleges that Pendergraft and Spielvogel intentionally participated in a scheme to extort a monetary settlement from Marion County and mailed the motion with the attached false affidavits in furtherance of that scheme. Pendergraft and Spielvogel argue that their alleged scheme to obtain a settlement did not constitute a "scheme to defraud" for purposes of the mail fraud statute.
[73]
Serving a motion by mail is an ordinary litigation practice. A number of courts have considered whether serving litigation documents by mail can constitute mail fraud, and all have rejected that possibility. See Daddona v. Gaudio, 156 F. Supp. 2d 153, 162-64 (D. Conn. 2000); Auburn Med. Ctr., Inc. v. Andrus, 9 F. Supp. 2d 1291, 1300 (M.D. Ala. 1998); Von Bulow v. Von Bulow, 657 F. Supp. 1134, 1142-47 (S.D.N.Y. 1987); Paul S. Mullin & Assocs., Inc. v. Bassett, 632 F. Supp. 532, 540 (D. Del. 1986); Am. Nursing Care of Toledo, Inc. v. Leisure, 609 F. Supp. 419, 430 (N.D. Ohio 1984). As in the Hobbs Act context, these courts have rejected this mail-fraud theory on policy grounds, recognizing that such charges are merely "artfully pleaded claims for malicious prosecution." Auburn Med. Ctr., Inc., 9 F. Supp. 2d at 1297. Again, prosecuting litigation activities as federal crimes would undermine the policies of access and finality that animate our legal system. Moreover, allowing such charges would arguably turn many state-law actions for malicious prosecution into federal RICO actions.
[74]
But, as always, we are primarily concerned with the language of the statute, not its policy implications. While both the mail-fraud and wire-fraud statutes use the phrase "scheme to defraud," neither statute defines what a "scheme to defraud" is. See Weiss v. United States, 122 F.2d 675, 681 (5th Cir. 1941); United States v. Lemire, 720 F.2d 1327, 1335 (D.C. Cir. 1983). Instead, the meaning of "scheme to defraud" has been judicially defined. See Lemire, 720 F.2d at 1335. Courts have defined the phrase broadly, allowing it to encompass deceptive schemes that do not fit the common-law definition of fraud. See Hammerschmidt v. United States, 265 U.S. 182, 188, 44 S. Ct. 511, 512 (1924); United States v. Brown, 79 F.3d 1550, 1557 (11th Cir. 1996). Nevertheless, Congress did not strip the word "defraud" of all its meaning, see Brown, 79 F.3d at 1557; the word still signifies "the deprivation of something of value by trick, deceit, chicane, or overreaching." See Hammerschmidt, 265 U.S. at 188, 44 S. Ct. at 512.
[75]
There are limits to the types of schemes that the mail-fraud statute encompasses. See Brown, 79 F.3d at 1556. Indeed, it has long been recognized that, "broad as are the words `to defraud,' they do not include threat and coercion through fear or force." Fasulo v. United States, 272 U.S. 620, 628, 47 S. Ct. 200, 202 (1926); see also Hammerschmidt, 265 U.S. at 188, 44 S. Ct. at 512 ("[The words `to defraud'] do not extend to theft by violence."); Naponiello v. United States, 291 F. 1008, 1010 (7th Cir. 1923) ("[T]hreats which the victim believes will be carried into execution unless he acquiesces in the demands are not deceits."); United States v. McKay, 45 F. Supp. 1007, 1011 (E.D. Mich. 1942) ("[R]egardless of how broad an interpretation is put upon the words `to defraud' they do not include threats and coercion through fear or force.")
[76]
In this case, the indictment alleges that Pendergraft and Spielvogel sought to extort money from Marion County by exploiting their fear of economic loss. This fear was caused by Pendergraft and Spielvogel's threat to sue and was aggravated by their production of false affidavits. Once Pendergraft and Spielvogel filed these documents with the court, as attachments to their motion for a preliminary injunction, and served Marion County with the motion, Marion County knew that their threats to lie were serious. The possibility of an unfavorable verdict, based on perjurious testimony, may have caused Marion County to fear the lawsuit. But fear is different from fraud. A scheme to frighten is simply not criminalized by the mail-fraud statute.
[77]
However, the use of fear does not immunize particular actions from mail-fraud charges; if deceit, as well as fear, is intended, then the actions may be criminal. See Huff v. United States, 301 F.2d 760, 765 (5th Cir. 1962). In support of their suit against Marion County, Pendergraft and Spielvogel authored affidavits that falsely accused Cretul of making threats. Such falsity might have deceived some, but it could not deceive Marion County. Cretul, after all, was the Chairman of the Marion County Board of Commissioners, and Pendergraft and Spielvogel were aware of Cretul's position. They knew that Cretul would deny making these threats, and they knew that their affidavits would not trick Cretul into admitting otherwise. If they knew that they could not deceive Marion County, then they could not have had an intent to deceive. See Pelletier v. Zweifel, 921 F.2d 1465, 1499 (11th Cir. 1991) ("A defendant cannot possibly intend to deceive someone if he does not believe that his intended `victim' will act on his deception."); Norton v. United States, 92 F.2d 753, 755 (9th Cir. 1937) ("There can be no intent to deceive where it is known to the party making the representations that no deception can result.").
[78]
Since there was no intent to deceive, there was no "scheme to defraud," and we hold that Pendergraft and Spielvogel's mailing of litigation documents, even perjurious ones, did not violate the mail-fraud statute. The allegations in the indictment for conspiracy to commit mail fraud and for the substantive offense of mail fraud therefore fail to charge offenses as a matter of law.
[79]
3. Multiple-Object Conspiracy (Count One)
[80]
The indictment also alleges, in Count One, that Pendergraft and Spielvogel agreed to author perjured affidavits testifying to threats made by Cretul. They both, in fact, submitted affidavits: Spielvogel's claims that he received a threatening phone call in Pendergraft's presence, and Pendergraft's claims that he witnessed Spielvogel receiving the phone call. The indictment alleges that this threatening phone call never, in fact, occurred. These allegations, if true, can support a conviction for conspiracy to commit perjury.
[81]
However, in Count One, the indictment charges conspiracy to commit extortion and mail fraud along with conspiracy to commit perjury, and the jury returned a general verdict of guilty. When a jury returns a general verdict of guilty in a multiple-object conspiracy, the verdict may be set aside if one of the conspiracy theories is contrary to law. See Griffin v. United States, 502 U.S. 46, 59, 112 S. Ct. 466, 474 (1991); Yates v. United States, 354 U.S. 298, 312, 77 S. Ct. 1064, 1073 (1957). Therefore, because two of the theories asserted in Count One, conspiracy to commit extortion and conspiracy to commit mail fraud, were legally insufficient, we vacate the conviction on Count One.
[82]
We must nevertheless determine what the disposition of Count One should be. If the Government presented sufficient evidence of a conspiracy to commit perjury, we must remand this charge for a new trial. However, if the Government failed to present sufficient evidence, the constitutional prohibition against double jeopardy prevents a retrial on this charge. Therefore, we must determine whether the Government presented sufficient evidence of a conspiracy to commit perjury to support a conviction.
[83]
To prove a conspiracy, the Government must show (1) the existence of an agreement among two or more persons, (2) that the defendant knew the general purpose of the agreement; and (3) that the defendant knowingly and voluntarily participated in the agreement. See United States v. Simpson, 228 F.3d 1294, 1298 (11th Cir. 2000). In this case, the Government's conspiracy theory was that Pendergraft and Spielvogel agreed to author perjured affidavits to provide evidence in pursuit of a settlement with Marion County. These affidavits would state that Spielvogel received threats from Cretul over the telephone and that Pendergraft was present and observed Spielvogel's fear after receiving these threats.
[84]
When reviewing the sufficiency of the evidence, we are obligated to draw inferences in the Government's favor. See United States v. Perez-Tosta, 36 F.3d 1552, 1556 (11th Cir. 1994). While the Government presented no direct evidence of an agreement, there was circumstantial evidence from which a jury could infer an agreement.
[85]
During the Government's case, it introduced the affidavits and statements of Spielvogel and Pendergraft. These statements indicated that Cretul threatened Spielvogel on January 29 and that Pendergraft observed Spielvogel receiving these threats. The Government offered evidence that Cretul did not, in fact, make the threats on January 29. Cretul testified that he never made the threats asserted by Spielvogel, and, on the FBI tapes of Cretul's conversations with Spielvogel, Cretul never made the threats that Spielvogel asserted in his affidavit. This demonstrated that Spielvogel's statements were false. Furthermore, Spielvogel was at home when he spoke with Cretul on January 29. The Government and Pendergraft stipulated that Pendergraft was not at Spielvogel's home during Spielvogel's conversation with Cretul on January 29. This was evidence that Pendergraft did not observe what he said he observed. From this circumstantial evidence, the jury could infer that Pendergraft and Spielvogel agreed to fabricate the threats and Pendergraft's observation of the threats.
[86]
And there was further evidence from which a jury could infer an agreement. Spielvogel testified that he staged the phone call with Cretul and pretended to be afraid so that Pendergraft would believe that Cretul made the threats. Pendergraft testified that he witnessed Spielvogel's fear and did not know that the phone call was staged. During cross-examination, the Government raised some doubt regarding whether Pendergraft could have observed Spielvogel's staged phone call when he said he did. Furthermore, both Pendergraft and Spielvogel testified that there was no agreement. When a defendant testifies, the jury is allowed to disbelieve him and to infer that the opposite of his testimony is true. See United States v. Allison, 908 F.2d 1531, 1535 (11th Cir. 1990). There was sufficient evidence to support a conviction on the conspiracy to commit perjury charge.
[87]
Since there was sufficient evidence to support a conviction for conspiracy to commit perjury, this part of Count One is remanded for a new trial. *fn8
[88]
B. SHUCK & JIVE
[89]
Pendergraft and Spielvogel also argue that the prosecutor injected racial prejudice into his closing argument by twice stating that Pendergraft, who is black, "shucked and jived" on the witness stand. *fn9 (R.25 at 472 & 486.) Since Pendergraft was convicted on legally insufficient charges, this issue is moot regarding his convictions. However, since Spielvogel was also convicted on Counts Four and Five, and these charges were not legally insufficient, we must determine whether this comment entitles him to a new trial on these counts.
[90]
Since neither party made a contemporaneous objection to the "shuck and jive" statements, we review this issue for plain error. To constitute plain error, the comment must be an error that is plain and affects substantial rights. See United States v. Olano, 507 U.S. 725, 732, 113 S. Ct. 1770, 1776 (1993). We have discretion to correct such errors only when the error seriously affects the fairness, integrity, or public reputation of the judicial proceeding. See id.
[91]
We believe there may have been error. "Shuck and jive" is a phrase with racial origins. See Smith v. Farley, 59 F.3d 659, 664 (7th Cir. 1995). It began as slang adopted by American blacks to describe a situation where blacks lie to whites to stay out of trouble. See 15 Oxford English Dictionary 388 (2d ed. 1989). There is some debate regarding whether this slang has crossed over into mainstream usage. See Smith, 59 F.3d at 664. However, even if the phrase is not entirely of a racist character, it is not the sort of characterization that should be employed by an assistant United States Attorney, whose interest is not that he "shall win a case, but that justice shall be done." Berger v. United States, 295 U.S. 78, 88, 55 S. Ct. 629, 633 (1935); see also Handford v. United States, 249 F.2d 295, 296 (5th Cir. 1958).
[92]
Nevertheless, despite the unsettling nature of the comment, we conclude that it did not affect Spielvogel's substantial rights. First, it was used in reference only to Pendergraft, not to Spielvogel, who is white. Pendergraft was not charged in Counts Four and Five, and any prejudice towards him would not have affected the jury's verdict on these counts. Second, Spielvogel admitted, on the stand, that he lied to the FBI and in his affidavit, and these lies provided the factual basis for the charges in Counts Four and Five. We find no plain error and no abuse of discretion in the denial of Spielvogel's motion for a new trial on Counts Four and Five. *fn10
[93]
C. SENTENCING ERRORS
[94]
Pendergraft and Spielvogel also contend that the district court erred in sentencing on extortion by finding a demand amount from an event that occurred prior to the charged conspiracy. See United States Sentencing Commission, Guidelines Manual, §2B3.3 (Nov. 2000). Because we set aside the sentences, we do not need to reach this issue.
[95]
However, we do note a technical error in the sentencing of Pendergraft and Spielvogel. Instead of imposing sentence on each count of conviction, the district court gave Pendergraft a single sentence of 46 months (R.21 at 91; R.5-151 at 2); similarly, the district court gave Spielvogel a single sentence of 41 months (R.21 at 91; R.5-152 at 2). When sentencing on multiple counts, the Sentencing Guidelines require the district court to divide the sentence among the counts and to specify whether the sentences on each count are to run consecutively or concurrently. See USSG §5G1.2. This technical error is now moot with regards to Pendergraft, but the district court should re-sentence Spielvogel on Counts Four and Five once the conspiracy to commit perjury charge is finally resolved.
[96]
V. CONCLUSION
[97]
Pendergraft and Spielvogel were found guilty of conspiring to commit extortion, mail fraud, and perjury. Since both the extortion and mail-fraud charges were legally insufficient, we reverse the district court's denial of their motion for judgment of acquittal and vacate the Count One conspiracy convictions. We acquit Pendergraft and Spielvogel on the charges of conspiracy to commit extortion and mail fraud but remand the charge of conspiracy to commit perjury for a new trial.
[98]
Counts Two and Three charged Pendergraft and Spielvogel with attempted extortion and mail fraud respectively, and they were found guilty. Again, because these charges are legally insufficient, we reverse the district court's denial of their motions for judgment of acquittal, reverse the convictions, and enter a judgment of acquittal.
[99]
In Counts Four and Five, only Spielvogel was charged with perjury and making a false report to the FBI. We affirm Spielvogel's convictions on these counts. However, because Spielvogel was not properly sentenced on these counts, we remand them for re-sentencing.
[100]
AFFIRMED IN PART; REVERSED AND RENDERED IN PART; VACATED AND REMANDED IN PART.

Opinion Footnotes

[101]
*fn1 Because we are determining whether the actions of Pendergraft and Spielvogel are legally sufficient to support their convictions, we state the evidence in the light most favorable to the Government.
[102]
*fn2 We have recharacterized some of the issues to focus on the rulings we are asked to review.
[103]
*fn3 Pendergraft also raises the following issues on appeal: (1) whether the district court erred by denying his motion for a judgment of acquittal because there was evidence that he believed he had a valid claim-of-right against Marion County; (2) whether the district court abused its discretion by admitting a tape of a civil-suit settlement conference; (3) whether the prosecutor improperly vouched for Government witnesses during closing argument; (4) whether the district court erred by enhancing his sentence for extortion based on a monetary demand that was outside the scope of the charged acts; and (5) whether, if a new trial is granted, the trial should be held outside of Ocala. Spielvogel also raises one additional issue: whether the district court erred by precluding his diminished capacity defense. We review each of these issues as well.
[104]
*fn4 Only Spielvogel was charged in Counts Four and Five, and he does not challenge the legal sufficiency of these substantive counts.
[105]
*fn5 RICO is an acronym for the Racketeer Influenced and Corrupt Organizations Act, codified at 18 U.S.C. § 1961 et seq.
[106]
*fn6 Because the jury, from evidence introduced at trial, could have rejected Pendergraft's claim-of-right defense, he was not entitled to judgment of acquittal on the basis of his claim-of-right defense.
[107]
*fn7 The State of Florida provides extra security for this right by forbidding state officials or state entities from suing citizens for malicious prosecution. See Cate v. Oldham, 450 So. 2d 224, 225-26 (Fla. 1984). In Florida's view, such suits "can only result in self-censorship. Potential critics of official conduct would be foreclosed from bringing suit because of doubt that they would be permitted to, or could prove the facts, or for fear of the expense for having failed to do so." Id. at 227 (quoting Board of Education v. Marting, 217 N.E.2d 712, 717 (Ohio Ct. Com. Pl. 1966)).
[108]
*fn8 Pendergraft and Spielvogel assert that the district court abused its discretion by admitting a videotape of the settlement negotiation in which they participated. Though this issue is moot with regard to the extortion and mail-fraud convictions, it is likely to arise again on the conspiracy-to-commit-perjury charge. Rule 408 makes evidence of settlement negotiations inadmissible only when it is offered to prove liability for, invalidity of, or amount of a claim. See Fed. R. Evid. 408; CNA Fin. Corp. v. Brown, 162 F.3d 1334, 1338 (11th Cir. 1998). Since the videotape was offered as evidence of Pendergraft and Spielvogel's cooperation, and not for a purpose forbidden by Rule 408, the district court did not abuse its discretion by admitting it. Furthermore, Pendergraft and Spielvogel request, on appeal, a prospective transfer of their proceedings from Ocala. This is an issue properly addressed to the district court on remand. See Fed. R. Civ. P. 21.
[109]
*fn9 Pendergraft and Spielvogel further claim that the prosecutor vouched for the credibility of Government witnesses. We do not think these comments, read in context, rise to the level of plain error.
[110]
*fn10 Spielvogel also contends that he should have been allowed to introduce evidence of his diminished capacity to negate his mens rea. Spielvogel offered the testimony of Dr. Glenn Ross Caddy, a forensic psychologist, to show that Spielvogel suffered from a personality disorder that made him easily intimidated. However, even if Spielvogel was truly afraid after his conversations with Cretul, this fear in no way shows that Spielvogel did not intend to lie when he made up details about Cretul's threats and reported them to the FBI and in his affidavit. The district court, then, did not abuse its discretion by barring Caddy's testimony. See United States v. Cameron, 907 F.2d 1051, 1067 (11th Cir. 1990).
20020716

Here's what the CRA CEOs should get:

Trouble is that the U.S. is in on the scam and refuses to prosecute the CRAs and their executives.

"Descent was indicted on fifty-seven counts of conspiracy, mail fraud, and money laundering *fn1 for participating in a scheme in which telemarketers contacted elderly citizens and falsely claimed that they were entitled to proceeds from the Canadian lottery. The victims were informed that they could not collect the proceeds until various taxes or fees were paid, and they were instructed to send the payments either to Canada or to a company in Florida that was controlled by Descent. Descent transferred these funds between the accounts of several companies, as well as the accounts of his wife's business, and used the funds to pay personal and business expenses.

Following trial, a jury returned verdicts finding Descent guilty on all fifty-seven counts and finding that $1,688,845.41 was subject to forfeiture as property involved in or traceable to his money laundering offenses. Denying Descent's request to group the fraud and money laundering counts for sentencing purposes, the district court sentenced Descent to a total of 120 months' imprisonment, to be followed by a three-year term of supervised release. The district court also sentenced Descent to pay a $5,700 assessment, to pay $1,512,774.82 in restitution, and to forfeit property in the amount of $1,688,845.41."

The entire ruling:

United States v. Descent, 292 F.3d 703 (11th Cir. 05/28/2002)
[1]
U.S. Court of Appeals, Eleventh Circuit
[2]
No. 01-14735
[3]
292 F.3d 703, 2002.C11.0000164
[4]
May 28, 2002
[5]
UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
SERGES JACQUES DESCENT, A.K.A. JACK DESCENT, DEFENDANT-APPELLANT.
[6]
Appeal from the United States District Court for the Middle District of Florida D. C. Docket No. 00-00186-CR-T-30
[7]
Before Carnes, Hull and Cox, Circuit Judges.
[8]
The opinion of the court was delivered by: Per Curiam
[9]
[PUBLISH]
[10]
Non-Argument Calendar
[11]
Serges Jacques Descent appeals his convictions and sentences for mail fraud, money laundering, and conspiracy. Finding no error in the district court's denial of Descent's motion for judgment of acquittal, and concluding that the district court was correct in not grouping the money laundering and fraud counts for purposes of sentencing, we affirm those decisions. Because the district court erred in modifying the jury instructions related to forfeiture, however, we vacate the forfeiture judgment and remand for entry of a new forfeiture judgment.
[12]
I. Background
[13]
Descent was indicted on fifty-seven counts of conspiracy, mail fraud, and money laundering *fn1 for participating in a scheme in which telemarketers contacted elderly citizens and falsely claimed that they were entitled to proceeds from the Canadian lottery. The victims were informed that they could not collect the proceeds until various taxes or fees were paid, and they were instructed to send the payments either to Canada or to a company in Florida that was controlled by Descent. Descent transferred these funds between the accounts of several companies, as well as the accounts of his wife's business, and used the funds to pay personal and business expenses.
[14]
Following trial, a jury returned verdicts finding Descent guilty on all fifty-seven counts and finding that $1,688,845.41 was subject to forfeiture as property involved in or traceable to his money laundering offenses. Denying Descent's request to group the fraud and money laundering counts for sentencing purposes, the district court sentenced Descent to a total of 120 months' imprisonment, to be followed by a three-year term of supervised release. The district court also sentenced Descent to pay a $5,700 assessment, to pay $1,512,774.82 in restitution, and to forfeit property in the amount of $1,688,845.41. Descent appeals.
[15]
II. Issues on Appeal
[16]
Descent raises three issues on appeal: (1) whether the district court erred by denying his motion for judgment of acquittal pursuant to Fed. R. Crim. P. 29; (2) whether the district court erred by modifying the jury instructions with regard to forfeiture after deliberations had commenced; and (3) whether the district court erred by not grouping the money laundering counts and the fraud counts for purposes of sentencing, pursuant to United States Sentencing Commission, Guidelines Manual, ("USSG") § 3D1.2.
[17]
III. Discussion
[18]
A. Motion for Judgment of Acquittal
[19]
Descent contends that the district court should have granted his motion for judgment of acquittal because the evidence was insufficient to prove that he had the requisite intent to commit the crimes with which he was charged. We review de novo the district court's denial of a motion for judgment of acquittal, applying the same standard used in reviewing the sufficiency of the evidence, meaning that we view the facts and draw all inferences in the light most favorable to the Government. See United States v. Hansen, 262 F.3d 1217, 1236 (11th Cir. 2001); United States v. Ward, 197 F.3d 1076, 1079 (11th Cir. 1999). To uphold the denial of a Rule 29 motion, "we need only determine that a reasonable fact-finder could conclude that the evidence established the defendant's guilt beyond a reasonable doubt." Hansen, 262 F.3d at 1236 (internal quotations and citation omitted). Having considered the briefs and the relevant portions of the record, we find no error in the district court's denial of Descent's motion for judgment of acquittal, and we affirm that denial without further discussion. See 11th Cir. R. 36-1.
[20]
B. Modification of Forfeiture Instructions
[21]
Descent also contends that the district court erred by modifying the jury instructions, after the jury had commenced deliberations, to permit a forfeiture judgment of up to $1,688,845, rather than the $1,288,140 that was permitted under the court's original instructions. Specifically, Descent argues that the modification violated Fed. R. Crim. P. 30 and constituted a constructive amendment to the indictment. We conclude that the district court did not constructively amend the indictment, but we agree that the district court violated Rule 30.
[22]
"A constructive amendment to the indictment occurs where the jury instructions so modify the elements of the offense charged that the defendant may have been convicted on a ground not alleged by the indictment." United States v. Poarch, 878 F.2d 1355, 1358 (11th Cir. 1989). A constructive amendment to the indictment is reversible error per se. See id. Descent asserts that, because the indictment sought forfeiture only of property involved in or traceable to the money laundering counts, pursuant to 18 U.S.C. § 982(a)(1), and because only $1,288,140 were involved in or traceable to those counts, the modified instructions impermissibly broadened the scope of the indictment and permitted the jury to find him guilty of an offense not charged therein. We disagree. "Decisions relating to forfeiture are matters of sentencing, and are thus separate from the determination of guilt." United States v. Hill, 177 F.3d 1251, 1253 (11th Cir. 1999). Therefore, a change in the jury instructions concerning forfeiture does not affect the determination of guilt or innocence and, accordingly, does not modify the elements of the offense charged. For these reasons, the district court's modified jury instructions did not constructively amend the indictment.
[23]
The modification, however, did violate Rule 30, which requires the district court to inform counsel of its proposed action upon requested jury instructions prior to closing arguments. See Fed. R. Crim. P. 30. This court requires substantial compliance with Rule 30, "and a defendant must show prejudice before his conviction will be reversed." United States v. Clark, 732 F.2d 1536, 1541 (11th Cir. 1984). Such prejudice occurs when the change in the instructions is substantial, when the instructions repudiate counsel's arguments, or when the instructions impair the effectiveness of those arguments. See id.; see also United States v. White, 27 F.3d 1531, 1538 (11th Cir. 1994).
[24]
In this case, the district court sustained Descent's pre-argument objection to the forfeiture amount alleged in the indictment and ruled that only $1,288,140 was subject to forfeiture. In accordance with this ruling, Descent's counsel addressed that amount in his closing argument, and the district court instructed the jury that the Government was seeking forfeiture in that amount. After the jury commenced deliberations, however, it submitted a question to the court asking if it could increase the amount of forfeiture to $1,688,845, representing the total loss to the victims of the fraud. After discussing the question with the parties, the court changed its previous ruling with regard to the amount of forfeiture and instructed the jury that it could find any amount up to $1,688,845.41. The jury returned a forfeiture verdict in that amount.
[25]
We agree with Descent, and the Government concedes, that the court's modification prevented Descent's counsel from addressing in his closing argument the entire amount found by the jury, and it thus impaired the effectiveness of that argument. We disagree with Descent, however, as to the proper remedy for the district court's error. Descent asserts that we should vacate the forfeiture judgment and remand the case to the district court for further proceedings on that issue. As the Government points out, however, Descent does not challenge the district court's initial ruling that $1,288,140 was subject to forfeiture, and the jury necessarily included that amount in its verdict. We therefore vacate the district court's forfeiture judgment and remand to the district court with instructions to enter a new judgment of forfeiture in the amount of $1,288,140.
[26]
C. Grouping of Money Laundering and Fraud Counts
[27]
Finally, Descent contends that the district court erred by not grouping the money laundering counts with the fraud counts for sentencing purposes under USSG § 3D1.2. Specifically, Descent argues that Amendment 634 to the sentencing guidelines, see USSG Supp. to App. C, amend. 634, at 229-36 (2001), applies to this case and requires grouping of his money laundering and fraud convictions. Reviewing de novo the district court's application of the sentencing guidelines, see, e.g., United States v. Rodriguez, 279 F.3d 947, 951 (11th Cir. 2002), we find no reversible error.
[28]
When reviewing the district court's application of the sentencing guidelines, we apply the version of the guidelines in effect on the date of the sentencing hearing. See United States v. Steele, 178 F.3d 1230, 1237 (11th Cir. 1999). Subsequent amendments that clarify the guidelines, however, should be considered on appeal regardless of the date of sentencing. See United States v. Gunby, 112 F.3d 1493, 1499 n.9 (11th Cir. 1994). "Clarifying amendments do not effect a substantive change, but provide persuasive evidence of how the Sentencing Commission originally envisioned application of the relevant guideline." Burke v. United States, 152 F.3d 1329, 1332 (11th Cir. 1998). Because Amendment 634 became effective on November 1, 2001, after the date of Descent's sentencing hearing, we must decide whether it clarifies USSG § 2S1.1 or substantively changes it.
[29]
Although this is an issue of first impression in our circuit, three of our sister circuits have concluded that Amendment 634 effects a substantive change to the guidelines. See United States v. King, 280 F.3d 886 (8th Cir. 2002); United States v. McIntosh, 280 F.3d 479 (5th Cir. 2002); United States v. Sabbeth, 277 F.3d 94 (2d Cir. 2002). We agree with the reasoning of these decisions.
[30]
Amendment 634, among other things, added the following application note to USSG § 2S1.1: "In a case in which the defendant is convicted of a count of laundering funds and a count for the underlying offense from which the laundered funds were derived, the counts shall be grouped pursuant to subsection (c) of § 3D1.2 (Groups of Closely-Related Counts)." USSG § 2S1.1, comment. (n.6) (2001); see also USSG Supp. to App. C, amend. 634, at 235-36 (2001). Arguing that Amendment 634 is a clarifying amendment, Descent focuses on the above-quoted Application Note 6 in support of his argument that his money laundering and fraud convictions should be grouped. By focusing on this application note alone, however, Descent misunderstands the significance of the amendment as a whole. Amendment 634 does not simply provide for grouping; rather, as explained by the Second Circuit, it "redefines the way in which the offense level associated with the crime of money-laundering is calculated, so that the offense level for money-laundering may now be dependent upon the offense level assigned to the underlying offense." Sabbeth, 277 F.3d at 97.
[31]
The prior version of USSG § 2S1.1 set the base offense level for money laundering at either 23 or 20, depending upon which subsection of 18 U.S.C. § 1956 provided the basis for conviction. See USSG § 2S1.1(a) (1998). The base offense level was not in any way dependent on the underlying offense from which the funds were derived. Additionally, the former guidelines contained a separate sentencing provision, setting the base offense level at 17, for engaging in monetary transactions in violation of 18 U.S.C. § 1957. See USSG § 2S1.2(a) (1998). The current version, however, deletes § 2S1.2 in its entirety and provides a single guideline for violations of both 18 U.S.C. § 1956 and 18 U.S.C. § 1957. Under this new guideline, the base offense level for money laundering is the offense level for the underlying offense, provided the defendant committed that offense and the offense level can be determined. See USSG § 2S1.1(a) (2001). Thus, under the current guidelines, the offense level for money laundering is related directly to the underlying offense, and Application Note 6 simply reflects that substantive change by providing for grouping under § 3D1.2(c). See USSG § 3D1.2(c) (2001) (providing for grouping "[w]hen one of the counts embodies conduct that is treated as a specific offense characteristic in, or other adjustment to, the guideline applicable to another of the counts").
[32]
Moreover, the commentary to Amendment 634 does not state that it is intended to be a clarifying amendment. Rather, the commentary explains that the amendment addresses concerns that the prior penalty structure, by failing to account for the underlying offense, did not adequately reflect the culpability of the defendant or the seriousness of the money laundering activity. See USSG Supp. to App. C, amend. 634, at 233-34 (2001). To alleviate those concerns, the amendment "is designed to promote proportionality by providing for increased penalties for defendants who launder funds derived from more serious underlying criminal conduct . . . ." Id. at 234. These statements reflect a substantive change in the punishment for money laundering offenses. See McIntosh, 280 F.3d at 485. Finally, we note that Amendment 634 is not included in the list of amendments to be applied retroactively, see USSG § 1B1.10(c) (2001), further indicating that it is not intended to be a clarifying amendment.
[33]
For the foregoing reasons, we conclude that Amendment 634 effects a substantive change in the guidelines, rather than simply clarifying them, and does not apply retroactively to this case. The district court properly applied the guidelines in effect at the time of Descent's sentencing.
[34]
IV. Conclusion
[35]
We affirm the district court's denial of Descent's motion for judgment of acquittal and its application of the sentencing guidelines. We vacate the district court's judgment of forfeiture, however, and remand with instructions to enter a new forfeiture judgment in the amount of $1,288,140.
[36]
AFFIRMED IN PART; VACATED AND REMANDED IN PART.

Opinion Footnotes

[37]
*fn1 Specifically, Descent was charged with: one count of conspiracy to commit mail and wire fraud in violation of 18 U.S.C. § 371 and 18 U.S.C. § 2326; twenty-six counts of mail fraud in violation of 18 U.S.C. § 1341, 18 U.S.C. § 2326, and 18 U.S.C. § 2; one count of conspiracy to commit money laundering in violation of 18 U.S.C. § 1956(h); twenty-four counts of money laundering in violation of 18 U.S.C. § 1957 and 18 U.S.C. § 2; and five counts of money laundering in violation of 18 U.S.C. § 1956(a)(1) and 18 U.S.C. § 2.
20020528

How would you like to spend 3.5 months in prison ...

... for drugs in a car you bought at a United States Marshals Service ("USMS") auction?

Was looking for something else, but this sure is an interesting case.

"Although rare, on occasion, we see arguments that simply fail the straight-face test. The United States' assertion that the "detention of goods" exception to the sovereign immunity waiver under the Federal Tort Claims Act applies to its negligent failure to remove 119 pounds of marijuana hidden in a car it sold to Jose Aguado Cervantes, whom it later incarcerated for "transporting" those very drugs, is one. Although we agree with the district court that Cervantes cannot recover damages for false imprisonment or false arrest because the customs agents had reasonable cause to believe his arrest was lawful, the United States' defense to his negligence claim is patently without merit. We therefore affirm the district court's order dismissing Cervantes's false imprisonment and false arrest claims, and reinstate Cervantes's negligence claim."

The entire opinion:

Cervantes v. United States, 330 F.3d 1186 (9th Cir. 06/02/2003)
[1]
U.S. Court of Appeals, Ninth Circuit
[2]
No. 01-56929
[3]
330 F.3d 1186, 2003.C09.0000335, 3 Cal. Daily Op. Serv. 4562, 2003 Daily Journal D.A.R. 5874
[4]
June 02, 2003
[5]
JOSE AGUADO CERVANTES, PLAINTIFF-APPELLANT,
v.
UNITED STATES OF AMERICA, DEFENDANT-APPELLEE.
[6]
Appeal from the United States District Court for the Southern District of California Judith N. Keep, District Judge, Presiding D.C. No. CV-01-00128-JNK
[7]
Counsel
[8]
Stephen J. Estey, Estey & Bomberger, Llp, San Diego, California, for the appellant.
[9]
Patrick K. O'Toole, United States Attorney; Tom Stahl, Assistant United States Attorney, Chief, Civil Division; Peter J. Sholl, Assistant United States Attorney, San Diego, California, for the appellee.
[10]
Before: James R. Browning, Alex Kozinski and Kim McLane Wardlaw, Circuit Judges.
[11]
The opinion of the court was delivered by: Wardlaw, Circuit Judge
[12]
FOR PUBLICATION
[13]
OPINION
[14]
Argued December 6, 2002
[15]
Submitted December 13, 2002
[16]
Pasadena, California
[17]
OPINION
[18]
Although rare, on occasion, we see arguments that simply fail the straight-face test. The United States' assertion that the "detention of goods" exception to the sovereign immunity waiver under the Federal Tort Claims Act applies to its negligent failure to remove 119 pounds of marijuana hidden in a car it sold to Jose Aguado Cervantes, whom it later incarcerated for "transporting" those very drugs, is one. Although we agree with the district court that Cervantes cannot recover damages for false imprisonment or false arrest because the customs agents had reasonable cause to believe his arrest was lawful, the United States' defense to his negligence claim is patently without merit. We therefore affirm the district court's order dismissing Cervantes's false imprisonment and false arrest claims, and reinstate Cervantes's negligence claim.
[19]
I. Standard of review
[20]
We review de novo a district court's dismissal of an action pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. See Fireman's Fund Ins. Co. v. City of Lodi, 302 F.3d 928, 939 (9th Cir. 2002). In determining whether dismissal was properly granted, we assume all factual allegations are true and construe them in the light most favorable to the plaintiff. See id.
[21]
II. Background
[22]
At a United States Marshals Service ("USMS") auction held in San Diego, California on July 15, 1999, Cervantes, a 67-year-old Mexican national and resident, purchased the vehicle that would lead to his first and, according to the record before us, only experience with criminal law enforcement. Some four months earlier, the vehicle had been seized by the Immigration and Naturalization Service ("INS") in connection with its use in transporting undocumented aliens. Cervantes alleges that neither the INS nor the USMS properly searched the vehicle prior to its sale at auction and that, if they had, they would have discovered 119 pounds of marijuana secreted in its bumpers. Cervantes remained similarly unaware of the contraband until its discovery by United States Customs agents as he attempted to cross the United States border on October 22, 1999. Although Cervantes denied knowledge of the marijuana and informed the agents that he had purchased the vehicle at a USMS auction, he was arrested and incarcerated for importing illegal drugs into the United States. The United States moved to dismiss all charges, according to Cervantes, after it realized that it had failed to remove the marijuana after the vehicle's initial seizure. He was released on February 9, 2000, having spent three and onehalf months in prison.
[23]
III. Discussion
[24]
A. The Federal Tort Claims Act
[25]
[1] The United States can be sued only to the extent that it waives its sovereign immunity from suit. See United States v. Orleans, 425 U.S. 807, 814 (1976). The Federal Tort Claims Act ("FTCA"), 28 U.S.C. §§ 1346(b), 2671-2680, sets forth the circumstances under which the federal government waives this immunity. In general, the FTCA provides federal liability for tort claims "in the same manner and to the same extent as a private individual under like circumstances." Id. § 2674.
[26]
[2] The FTCA's broad waiver of sovereign immunity is limited, however, by exceptions enumerated in § 2680, "a statutory reservation of sovereign immunity for a particular class of tort claims." Gager v. United States, 149 F.3d 918, 920 (9th Cir. 1998). The Supreme Court has explained that these exceptions:
[27]
[1] ensur[e] that "certain governmental activities" not be disrupted by the threat of damages suits; [2] avoid[ ] exposure of the United States to liability for excessive or fraudulent claims; and [3] [avoid] extending the coverage of the Act to suits for which adequate remedies were already available. Kosak v. United States, 465 U.S. 848, 858 (1984).
[28]
Where a § 2680 exception applies, the United States has not waived its immunity from suit, and a court lacks jurisdiction over such claims.
[29]
B. False arrest and false imprisonment
[30]
[3] Cervantes's claims for false arrest and false imprisonment are barred by his lawful arrest upon probable cause, i.e., the discovery of contraband in his vehicle by Customs agents at the United States border. California law, applicable here under 28 U.S.C. § 1346(b)(1), protects a law enforcement officer from liability for false arrest or false imprisonment where the officer, acting within the scope of his or her authority, either (1) effects a lawful arrest or (2) has reasonable cause to believe the arrest is lawful. See Cal. Penal Code § 847(b); see also Pierson v. Ray, 386 U.S. 547, 555 (1967) (an "officer who arrests someone with probable cause is not liable for false arrest simply because the innocence of the suspect is later proved"), overruled on other grounds, Harlow v. Fitzgerald, 457 U.S. 800 (1982); Cabrera v. City of Huntington Park, 159 F.3d 374, 380 (9th Cir. 1998). Cervantes's presence in a vehicle carrying illegal drugs was sufficient probable cause for his arrest. See United States v. Carranza, 289 F.3d 634, 641 (9th Cir. 2002). Therefore, the district court properly dismissed his claims for false arrest and false imprisonment.
[31]
C. Negligence
[32]
Cervantes's claim for negligence is an entirely different matter. We are compelled to note that the United States' assertion, as its sole defense, that this claim is barred by the "detention of goods" exception is so off-the-mark as to be embarrassing.*fn1
[33]
[4] The "detention of goods" exception provides that the FTCA shall not apply to "[a]ny claim arising in respect of the assessment or collection of any tax or customs duty, or the detention of any goods . . . by any officer of customs or excise or any other law-enforcement officer." 28 U.S.C. § 2680(c) (emphasis added). The Supreme Court has explained, in a different context, that "the crucial portion of the provision[,] 'any claim arising in respect of' the detention of goods[,] means any claim 'arising out of' the detention of goods." Kosak, 465 U.S. at 854.
[34]
[5] We conclude from our review of Kosak and other applicable authority that Cervantes's claim does not "aris[e] in respect of . . . the detention" of the vehicle because the alleged negligence had nothing at all to do with the car's detention, but only its subsequent sale. The government may have obtained the car from the detention, but that misses the point: The negligent act was the government's decision to sell the car without first inspecting it, an independent and intervening event from the detention itself. The source of the car may have increased the chance something was wrong with it, but it did not cause the wrong; if anything, it makes the failure to inspect all the more egregious.
[35]
[6] Case law interpreting the detention of goods exception clarifies that it applies only where goods are damaged during or because of the detention. See Kosak, 465 U.S. at 849-50, 854, 862 (barring claim for damage to plaintiff's art collection that occurred during detention); Matsushita Elec. Co. v. Zeigler, 158 F.3d 1167, 1168 (11th Cir. 1998) (barring claim that Customs officer damaged imported machine during inspection); Gasho v. United States, 39 F.3d 1420, 1433-34, 1436 (9th Cir. 1994) (barring claims for emotional distress and abuse of process arising from detention and seizure of plaintiff's aircraft); Goodman v. United States, 987 F.2d 550, 551-52 (8th Cir. 1993) (barring claim for damage caused by customs official's negligent unloading, inspection, and reloading of freight container). The exception does not protect the government, whatever it does with a once-detained good, for the rest of that good's existence. The plain text of the statute says the claim must relate to the detention, not to any activity that happened to involve a once-detained item. The government cites a Fifth Circuit case, Solus Ocean Systems, Inc. v. United States Customs Service, 777 F.2d 326 (5th Cir. 1985), which reasoned that "[t]he sale [of detained goods] was the result of the goods having remained with Customs for well over a year and was merely part of the natural progression of Customs' detention." Id. at 328. As a preliminary matter, we are not bound by the Fifth Circuit. More importantly, the Fifth Circuit's "natural progression" approach, the validity and extent of which we need not address, does not even apply here, where the harmful act was independent of and subsequent to the detention. The text of the exception is limited to claims arising from the detention, not independent activities subsequent to it; and the purpose of the exception is to immunize government activities associated with the detention, again, not independent activities subsequent to it.
[36]
The government's citation to cases applying § 2680(c)'s exemption for tax assessment or collection is similarly unavailing because, unlike here, the harm alleged in those cases occurred during or because of the assessment or collection efforts. See Perkins v. United States, 55 F.3d 910, 912-13 (4th Cir. 1995) (barring claim for wrongful death that occurred during recovery from coal mine of delinquent taxpayer's property); Capozzoli v. Tracey, 663 F.2d 654, 658 (5th Cir. 1981) (barring invasion of privacy claim arising from IRS agent's photographing plaintiffs' residence because agent was taking photos as part of investigation into plaintiffs' claimed casualty loss). Indeed, Cervantes does not complain about the manner in which the vehicle was detained or seized, only about the condition in which it was sold.
[37]
Our view that § 2680(c) does not apply is consistent with Kosak's articulation of the rationale underlying the FTCA's exceptions. First, Kosak counsels that a broad interpretation of § 2680(c) is appropriate to protect the government's interest in enforcing its laws from disruption by suits for damages, a concern not present in Cervantes's case. Specifically, the Court noted that imposing liability would impede the enforcement of customs laws:
[38]
One of the most important sanctions available to the Customs Service in ensuring compliance with the customs laws is its power to detain goods owned by suspected violators of those laws. Congress may well have wished not to dampen the enforcement efforts of the Service by exposing the Government to private damages suits by disgruntled owners of detained property. 465 U.S. at 859 (footnote omitted).
[39]
We see no analogous dampening effect of Cervantes's suit on the Customs Service's ability to protect our borders.
[40]
Second, Kosak explained that an exception would be appropriate where it limited the United States' exposure to excessive or fraudulent claims. See id. at 858. Such exception is proper given the exigencies of border patrol:
[41]
The Customs Service does not have the staff or resources it would need to inspect goods at the time it seizes them. Lacking a record of the condition of a piece of property when the Service took custody of it, the Government would be in a poor position to defend a suit in which the owner alleged that the item was returned in damaged condition. Id. at 859.
[42]
The government may have similar problems finding people to inspect cars and make records before selling the cars at auction. But Kosak was not creating a safe harbor for all government activity; rather, it was explaining the rationale behind Congress's enumerated exceptions. Cervantes's suit, if it presents any danger of excessive or fraudulent claims, does so because the government decided to auction off cars, not because it detained or inspected goods.
[43]
Third, our result is consistent with Kosak's explanation that Congress did not intend the FTCA to provide recovery where adequate remedies exist. See id. at 858. Cervantes is entitled to recover, if at all, only under the FTCA.
[44]
[7] In asserting the detention of goods exception as its defense, rather than compensating a plaintiff it has seriously wronged, the United States thumbs its nose at its obligation to see that justice is done. The Supreme Court long ago pronounced the special obligation of the United States Attorney to serve the interests of justice:
[45]
The United States Attorney is the representative not of an ordinary party to a controversy, but of a sovereignty whose obligation to govern impartially is as compelling as its obligation to govern at all; and whose interest, therefore, in a criminal prosecution is not that it shall win a case, but that justice shall be done. . . . [H]e is in a peculiar and very definite sense the servant of the law, the twofold aim of which is that guilt shall not escape or innocence suffer.
[46]
Berger v. United States, 295 U.S. 78, 88 (1935). In asserting a last-ditch, far-fetched defense in this case, the United States Attorney failed to meet this obligation. We trust that this is but a momentary lapse.
[47]
AFFIRMED IN PART, REVERSED IN PART, and REMANDED.

Opinion Footnotes

[48]
*fn1 It is for this reason that, during oral argument, we commented on the lack of merit of the government's defense and ordered the parties to immediately discuss settlement, deferring submission of the case for a week. We were advised that settlement discussions were unproductive.
20030602

My reply to the FTC & FCC Motion to Dismiss

I posted my filing and the table of exhibits at http://forum.creditcourt.com/discus/messages/803/3419.html - still have to scan a bunch of the defendants' motions, hopefully next week.

Am working on my reply to TU CEO Gambill's motion to dismiss. Of course he knows NOTHING and thinks he can't be touched. That's what some of those Enron execs thought, and they're going to the Grey Bar Hotel. Not long enough, as far as I'm concerned, but it's a start.

The CEOs and the Feds may well be dismissed, but how are they going to answer the next suit with "I didn't know?"

The more research I do, the clearer it becomes that a CRIMINAL investigation is in order.

The regulators are not only protecting the CRAs, but are actively promoting their products instead of enforcing consumer protection legislation. Looking around the FTC site almost makes me physically ill.

It is so obvious that the Feds WANT credit reporting to be exactly what it is, to keep a good 30% of the population at "sub prime" credit scores.

This is bigger than slavery, the perfect way to have many millions working crummy jobs for nothing but crappy food, with all the disposable income (and more) going to banksters and insurers, and of course CRAs.

US Attorney Paul K. Charlton doesn't know what the problem is with T-Mobile refusing cancellations and Pacific Bell refusing to credit payments after receiving proof of payment and then selling the account for collections?

(I deleted my comment about where his head seems to be.)

Fair Isaac sent me an ad today, telling me that the FTC recommends that I should check my credit reports. I actually would, if I could. Tried again a few days ago, both Trans Union and Equifax had my file blocked.

Docket update

Had to get the proof of service for Fair Isaac and their people mailed 3 times until I finally got it and as I posted previously, the process server for Equifax had failed to include the proof of service for the CEO.

Nothing's ever easy.

Docket to 1/27/04:

District Web PACER (v2.4)

[ SELECT EVENTS FROM THE DOCKET REPORT FOR CASE: 3:03cv00525
FOR THE PERIOD 01/09/2004 to 01/27/2004 ]

1/16/04 108 MOTION (Request) for Permission of Telephonic Appearance
by pla [108-1] (sat) [Entry date 01/20/04]

1/16/04 109 MOTION to Dismiss Defendant Providian Financial
Corporation With Prejudice as to dft Providian by pla
[109-1] (sat) [Entry date 01/20/04]

1/16/04 110 RETURN OF SERVICE EXECUTED summons/complaint upon Cayward
Wiggins for dft Equifax Credit on 12/5/03 (sat)
[Entry date 01/20/04]

1/16/04 111 RETURN OF SERVICE EXECUTED summons/complaint upon dft Barry
Paperno on 9/24/03 (sat) [Entry date 01/20/04]

1/16/04 112 RETURN OF SERVICE EXECUTED summons/complaint upon dft
Thomas J Quinn on 9/22/03 (sat) [Entry date 01/20/04]

1/16/04 113 RETURN OF SERVICE EXECUTED summons/complaint upon Nancy
Fraser for dft Thomas G Grudnowski on 9/25/03 (sat)
[Entry date 01/20/04]

1/16/04 114 RETURN OF SERVICE EXECUTED summons/complaint upon Nancy
Fraser for dft Fair Isaac & Company on 9/22/03 (sat)
[Entry date 01/20/04]

1/21/04 115 MOTION for admission pro hac vice as to Lewis P. Perling,
atty for dft Equifax Credit [115-1] (sat)
[Entry date 01/22/04]

1/23/04 -- Pro Hac Vice $25 Fee Paid as to Lewis P Perling (bas)
[Entry date 01/23/04]

1/23/04 116 MINUTE ORDER: The Court Orders setting oral argument as to
defendant's, Capital One, Motion to Dismiss [92-1] on
Monday, April 5, 2004 at 11:00 a.m., which is the same date
and time set for oral argument as to defendants', Federal
Reserve Bank and James McAfee, Motion to Dismiss [98-1].
(cc: RCB, all counsel) [116-1] (kbet) [Entry date 01/23/04]

1/26/04 117 MINUTE ENTRY before Judge Robert C. Broomfield. ECR: Vicki
Reger. Appearances: Plaintiff, Christine Baker, is
present telephonically. Defense counsel, Robert Bruno and
Steven Rathfon (telephonically), are present. Motion
Hearing re: defendants', Fair Isaac & Company, G
Grudnowski, Barry Paperno, and Thomas J Quinn, Motion to
Dismiss [63-1], and defendant, Pacific Bell, Motion to
Dismiss Complaint for Lack of Personal Jurisdiction [43-1]
held. IT IS ORDERED taking these matters under advisement.
[cc: RCB] [117-1] (kbet) [Entry date 01/26/04]

Limitations

Lots of GREAT stuff at EPIC

ACLU and EPIC v. Department of Justice

Wished I'd seen that a year ago, but, better late than never.

It's reassuring to see that I'm not the only person concerned with privacy and consumer protection.

EPIC filed for FTC enforcement

Complaint and Request for Injunction, Investigation and for Other Relief

"1. This complaint concerns the marketing practices of Experian, a credit reporting agency. As set forth in detail below, ConsumerInfo.com, a subsidiary of the credit reporting agency Experian and supplier of Equifax, Experian and TransUnion reports, engages in deceptive marketing practices affecting commerce, a violation of 15 U.S.C. § 45(a)(1)."

That was filed in September, I found nothing at the FTC site. Wonder what happened?

Such great timing! Am in the final stages of my FTC objections and will attach this. I guess that's how I should have sent all my complaints to the FTC.

Below is the entire filing, in case the link dissappears.

Before the
Federal Trade Commission
Washington, DC

In the Matter of Experian

Complaint and Request for Injunction, Investigation and for Other Relief

INTRODUCTION

1. This complaint concerns the marketing practices of Experian, a credit reporting agency. As set forth in detail below, ConsumerInfo.com, a subsidiary of the credit reporting agency Experian and supplier of Equifax, Experian and TransUnion reports, engages in deceptive marketing practices affecting commerce, a violation of 15 U.S.C. § 45(a)(1). ConsumerInfo.com violates the law by deceptively advertising through a television advertisement a "free" credit report that upon order locks consumers into a high-cost, long-term subscription service without adequate notice of the terms of service, including opt-out procedures.[1] Further, the credit reporting agency profits from raising fears of inaccuracies in reports, thus driving consumers to request the reports or monitoring service via its Web site.[2] EPIC urges the Federal Trade Commission ("the Commission") to take immediate action to investigate these practices by credit reporting agencies, to enjoin the offending credit reporting agencies and their subsidiaries from violating 15 U.S.C. § 45(a)(1), and require all credit reporting agencies to provide credit monitoring services to consumers without charge.

PARTIES

2. The Electronic Privacy Information Center ("EPIC") is a non-profit research organization incorporated in the District of Columbia. EPIC's activities include the review of government and private sector polices and practices to determine their possible impact on the individuals' rights. Among its other activities, EPIC has prepared reports on online privacy practices[3] and presented testimony before Congress and administrative agencies on the Fair Credit Reporting Act ("FCRA") and business practices with regards to the Act.[4]

3. Experian, a GUS P.L.C. subsidiary, is one of the three biggest credit reporting agencies in the world. The company sells credit and demographic information on 205 million consumers and 15 million businesses in the United States.[5] Experian has corporate headquarters at 475 Anton Blvd., Costa Mesa, CA 92626.[6]

4. ConsumerInfo.com, an Experian subsidiary,[7] "is the leading supplier of online credit reports, scores and related information to consumers in the United States."[8] ConsumerInfo.com's address is One City Blvd. West, Suite 1000, Orange, CA 92868.[9] Founded in 1995,[10] ConsumerInfo.com is linked to at least three sites that provide the type of service discussed in this complaint: www.FreeCreditReport.com, www.FreeCreditReports.com, and Qspace.Iplace.com.[11] While all these sites self-promote their services-a "free" credit report tied to a subscription service that provides online credit monitoring and credit content for an annual fee of $79.95-www.FreeCreditReport.com also draws consumers via a televised commercial.[12]

FAIR AND TRUTHFUL MARKETING PRACTICES ARE ESSENTIAL TO MAINTAIN A HEALTHY MARKET.

5. Congress explicitly recognized the importance of regulating misleading marketing claims when it granted the Commission the authority to challenge deceptive advertising that harmed market competition in 1914.[13] In addition, by 1938, the Commission had acquired the power to regulate deceptive advertising that hurt consumers, with the requirement of showing of economic harm to the market.[14] The expansion of the Commission's regulation authority over false advertising signals that not only is marketing regulation necessary to maintain healthy market competition,[15] but also to safeguard consumers from personal harm. Consumers are directly affected when they rely on a fraudulent or misleading claim that influences their buying behavior, likely costing additional money, time and loss of trust. The Commission must ensure that consumers are able to participate in the market absent the fear that advertisers will extend offers with hidden conditions and terms that the consumer is not likely to become aware of during the course of the transaction.

6. Marketing practices by credit reporting agencies that exploit consumer fear of inaccurate credit reports-the accuracy of which the credit reporting agency itself is responsible-are unethical. ConsumerInfo.com, a subsidiary of a credit reporting agency, Experian,[16] provides "free" Equifax credit reports, and Experian and TransUnion credit reports for an additional charge. The company markets their service with an advertisement that plays on consumer fears of inaccurate credit reports and pushes their credit monitoring service as necessary to maintain accuracy. In other words, here is a credit reporting agency promoting its subscription service by capitalizing on its own failure to adequately fulfill its statutory responsibility to maintain the maximum possible accuracy of credit reports.[17] It is unethical for a company to market itself by suggesting that it is not doing a satisfactory job fulfilling its government-regulated responsibilities and requiring consumers to pay for an additional subscription service to ensure proper protection.

PRIVACY AND ACCESS ARE ESSENTIAL TO ACCURATE CREDIT REPORTING.

7. Under a myriad of interlaced companies, as that of which Experian is a part, the practice of affiliate sharing further raises risks that will exacerbate the privacy of credit reports and undermine the purpose of the FCRA.[18] Mergers have resulted in sometimes thousands of affiliates linked under one umbrella-company.[19] These conglomerates threaten consumers' personal privacy because consumers' information can be shared among the various subsidiaries, sometimes even foreign controlled companies, based on their affiliate status.[20] Studies have shown that an overwhelming number of consumers are against the sharing of their personal information for reasons other than the transaction for which it was gathered.[21] Regardless, when consumers transact with a credit service monitoring subscription provider, who acquires the consumers' personal information to validate their identity as a requestor, the provider also acquires the ability to share that information with any and all affiliates.[22] The consequence of a subscription service, like the one described here, is that consumers seeking to maintain the protection of their information-its privacy and thus follows its accuracy-relinquish all ability to protect their privacy.[23] In essence, consumers seeking subscription services to obtain control over their information, greater privacy protection and increased credit accuracy, actually impede all of those outcomes.

THE COMMISSION HAS JURISDICTION OVER DECEPTIVE MARKETING PRACTICES.

8. Section 5 of the Federal Trade Commission Act ("FTCA") prohibits deceptive practices in or affecting commerce.[24] As a guide to acceptable conduct, the Commission put forth the "Guide Concerning Use of the Word 'Free' and Similar Representations" (hereinafter "the Regulations") which states that, in order to use the term "free" in advertisements for products or services, the advertisement much make clear any terms that exist by virtue of the retention that product or service. Specifically, any "conditions and obligations upon which receipt and retention of the '[f]ree' item are contingent should be set forth clearly and conspicuously at the outset of the offer so as to leave no reasonable probability that the terms of the offer might be misunderstood." [25] In other words, "all of the terms, conditions and obligations should appear in close conjunction with the offer of '[f]ree' merchandise or service."[26] While a violation of the Regulations does not itself establish that a company has acted illegally, it is a strong indication of questionable practices that may likely violate the FTCA.

9. Another indication of questionable activity is a practice that resulted in settlement with the Commission. The Commission has settled with companies engaging in similar deceptive practices as those of ConsumerInfo.com-the offering of free products or services that are tied to a subscription service without adequate notice. Those settlements stand for the proposition that companies must sufficiently prominently disclose at the onset any conditions of a no-cost provisional membership, any cancellation policies and any automatic charges that will be incurred if a consumer fails to opt-out.[27]

CONSUMERINFO.COM ENGAGES IN DECEPTIVE MARKETING PRACTICES.

10. Deception occurs when there is a (1) representation that (2) is likely to influence the purchasing decision (3) of a reasonable consumer.[28] ConsumerInfo.com engages in deceptive marketing practices by failing to notify consumers that the offer for a "free" credit report has strings attached-customers will be charged if they fail to opt-out of the subscription service. Even reasonable consumers may not notice the fine print discretely placed at the bottom of the last page of the online registration process. Moreover, the ConsumerInfo.com's television commercial does not even refer to the subscription service at all. Undoubtedly, consumers will be harmed when they send off for a "free" credit report and, one month later find themselves locked into a high-cost, long-term subscription service.

ConsumerInfo.com's Television Commercial Deceives Consumers.

11. ConsumerInfo.com's television commercial for www.FreeCreditReport.com is a representation that is likely to mislead a reasonable consumer. ConsumerInfo.com's television commercial depicts a cartoon stick figure that is asked several questions which suggest that credit reports may not be very accurate or secure. The commercial, stressing the urgency of obtaining a credit report to calm these fears, directs the character and viewing consumers to the Web site www.FreeCreditReport.com in order to obtain a "free" credit report. The tone, frame of the questions, and lack of any reference to the subscription service create a representation by omission that is likely to cause a reasonable consumer to expect the offer to come with no additional terms.

12. First, ConsumerInfo.com makes a representation with their television ad. According to a policy statement the Commission's put forth regarding deception: "Most deception involves written or oral misrepresentation, or omissions of material information."[29] The Commission defines omissions as "material information, the disclosure of which is necessary to prevent the claim, practice, or sale from being misleading."[30] ConsumerInfo.com's television commercial offers consumers a "free" credit report, but fails to make any mention of the subscription service. Yet, ConsumerInfo.com does not offer a "free" credit report without the coinciding the subscription service. Without knowing of the subscription service, consumers are being mislead about the extent of their acceptance of the offer; they are unaware that accepting the offer means not just accepting a credit report, but accepting a service that they will be charged for if they do not opt-out before the trial period ends. ConsumerInfo.com's omission of the subscription service from the television commercial meets the representation requirement.

13. Second, ConsumerInfo.com's representation is material. The Commission defines a material representation as "one which is likely to affect a consumer's choice of or conduct regarding a product."[31] The omission from the television commercial is likely to affect whether or not a consumer will send off for the "free" credit report. If a consumer knew of the high-cost, long-term subscription service that comes as part of the "free" credit report, the consumer would likely think twice about requesting the report from www.FreeCreditReport.com since there are other outlets for obtaining a credit report at a lower cost. ConsumerInfo.com's omission of the terms of the subscription offer is a representation that would likely affect consumer behavior if it was properly included in the offer.

14. Lastly, even a reasonable consumer would be misled by ConsumerInfo.com's television commercial under the circumstances. According to the Commission: "The test is whether the consumer's interpretation or reaction is reasonable."[32] It is reasonable for a consumer, after viewing the commercial, to think that the report was free-no strings attached-because there is no indication otherwise. Furthermore, the commercial frames its offer in an atmosphere of fear. The commercial voiceover taunts the consumer: "Do you have good credit? Or do you only think you have?" The commercial also suggests that unauthorized persons may have accessed the consumer's report. "Who's been checking [your report]?" the voiceover prods. In an environment of instant credit and stolen identity, and after ConsumerInfo.com's television commercial instills doubt into consumers' minds by playing on anxiety about unstable credit, consumers are likely to feel that they must obtain a "free" credit report from www.FreeCreditReport.com. It is also reasonable for consumers not to expect to be locked into a subscription service of which the television commercial makes no mention-all the better for ConsumerInfo.com because if consumers do not know about the service, they cannot know to opt-out.[33]

15. Under the Regulations, use of the term "free" must not confuse the consumer into believing that there are not further terms of the offer when there actually are; those additional terms must be just as clear and prominent as the "free" offer.[34] ConsumerInfo.com's television commercial is in clear violation of the Commission's guidelines. Moreover, ConsumerInfo.com's television commercial qualifies as deceptive because the company omits pertinent information, and that representation is likely to mislead reasonable consumers about the terms of the "free" credit report offer.

ConsumerInfo.com's Web Site Deceives Consumers.

16. ConsumerInfo.com's Web site, www.FreeCreditReport.com, is a representation that is likely to mislead a reasonable consumer.[35] A consumer visiting www.FreeCreditReport.com is immediately greeted with a colorful and bold headline that reads: "Get your free credit report in seconds!" In the headline, the word "free" is capitalized and set off in a different color font from the majority of the text. There is no asterisk in the headline indicating any additional term of the offer. In fact, the only indication that an annual subscription service is even linked to the offer of the "free" credit report is found in one of the paragraphs below the headline, set in significantly smaller font. It reads: "Plus, along with your FREE credit report, we'll give you a 30-day FREE trial of the CreditCheck Monitoring Service membership with no obligation." However, this mention of the service does not relay that the service is an annual service, that there is $79.95 charge for the service, or that customers will be automatically billed for the service unless they affirmatively opt-out of the transaction. On the contrary, the offer continues: "So what's the catch? There isn't one! But we're convinced that once you've tried the CreditCheck Monitoring Service on a FREE trial basis, you won't want to be without it! But if you don't realize the value of the service, there's no obligation and no commitment to keep the membership." Not only does this text indicate that there are no terms to the offer, but it can be reasonably interpreted by a consumer that she would have to opt-in in order to keep the subscription service.

17. If a consumer decided to begin the registration process, the only notice that the consumer would receive that the offer of a "free" credit report coincides with a subscription service comes at the very end of the process. However, this notice is far from prominent. The announcement is placed in very small print at the bottom of the second of a two-page registration process, accessible only by a consumer who has started the registration process by submitting personal information to the company, including name, e-mail and one or more addresses (if recently moved). Further, not only is the fee quote overshadowed by the surrounding more prominent text, but its meaning is muddled by the company's message that the customer must "do nothing" in order to "continue [the service] without interruption," assuring a partial "money-back guarantee" in the case of cancellation.[36] Amid other distracting messages and splashy colors created to draw attention away from the payment requirement, the small notice presented on the very last page of registration is neither clear nor conspicuous. It is only accessible when a consumer has decided to register and is likely to mislead reasonable consumers about the terms of the offer.

18. First, ConsumerInfo.com makes a representation by omission on www.FreeCreditReport.com. As stated above, an omission can be a representation if, without the omitted material, the consumer may be mislead.[37] Although the high-cost, long-term service is a significant term of the agreement, ConsumerInfo.com omits any adequate explanation of the subscription service. Of the two references to the service, one is misleading and the other vague. This omission meets the representation requirement.

19. Second, the representation on www.FreeCreditReport.com is material. If a consumer was aware of the terms of the agreement-that the "free" credit report comes with a high-cost, long-term subscription service automatically billable upon failure to opt-out-it is likely that the consumer would reconsider ordering a report from www.FreeCreditReport.com. A consumer would likely consider other options which include obtaining a credit report from another service, even one that charges a nominal fee, as long as there are no strings attached. Since the omission significantly affects the substance of the offer, it is likely to affect the consumer's behavior, meeting the requirement of materiality.[38]

20. Lastly, even a reasonable consumer would be misled by www.FreeCreditReport.com's offer under the circumstances. A consumer may have no knowledge that ConsumerInfo.com is locking them into a subscription service unless they opt-out because there is neither a clear nor prominent notice that this outcome will occur. On the first page of the Web site there is an indication that along with the "free" credit report a consumer will also get "free" access to the service, but there is no explanation that the consumer will be billed for the service after the trial period ends if the consumer fails to opt-out. Further, if the consumer chooses to click to the first page of the registration process, there is absolutely no indication that the consumer is getting anything other than a "free" credit report by placing an order. It is only on the second and last page of the registration process that there is an indication that the subscription service costs a substantial amount and that the consumer is not obligated to keep the service. However, not only is the notice in fine print, but it does not clearly indicate that the burden is on the consumer to opt-out. Because the notice of additional terms is virtually hidden and confusing, it is likely that a reasonable consumer would not understand the terms of the offer and may change behavior with this knowledge, the last requirement is met.

21. ConsumerInfo.com attempts to hoodwink consumers by suppressing the terms of the "free" credit report offer. The obligation placed on the consumer to opt-out of the service is not "set forth clearly and conspicuously at the outset of the offer" as the Regulations state.[39] In fact, it is not indicated anywhere in the offer that opt-out is required. ConsumerInfo.com's Web site www.FreeCreditReport.com constitutes a deceptive marketing practice because by omitting essential information it is likely to mislead a reasonable consumer into accepting the offer without being aware of all the terms.

IN THE INTEREST OF "MAXIMUM POSSIBLE ACCURACY," CREDIT REPORTING AGENCIES SHOULD BE REQUIRED TO PROVIDE CREDIT MONITORING SERVICES TO CONSUMERS WITHOUT CHARGE.

22. Consumer access to credit reports is necessary in order to maintain the accuracy of credit reports. Consumers have very little incentive to access their credit report unless they fear inaccuracy. Credit reporting agencies have seized on consumer fear to market their monitoring services and their services are benefited by these possible inaccuracies. The more inaccuracies or chance of inaccuracies a report, the more the credit service provider can persuade the consumer that the service is necessary because no one can prove or correct an inaccuracy without accessing a report. Credit agencies require that a consumer have an actual report with them before being able to talk to a consumer service person at the agency.

23. Credit reporting agencies are required to pursue reasonable procedures to guarantee "maximum possible accuracy."[40] By continuing to market by exacerbating consumer fear and charging for a service to monitor their own mismanagement of credit data, credit reporting agencies are violating this "very high standard set by statute."[41] Far from charging consumers for the credit monitoring service, credit reporting agencies should be providing it for consumers without charge. In order to fulfill the statutory requirement of maximum possible accuracy, credit reporting agencies are duty-bound to provide consumers with a way to ensure the accuracy of their reports. By the mere existence of the credit monitoring services, it is shown that such services are technologically and economically feasible to convey to consumers the status of their credit on an on-going basis. Thus, the credit reporting agencies are aware that there are steps available to improve and assure the accuracy of the reports they maintain, and with this awareness comes the obligation to take such steps.[42] Consumers must have constant access to their reports if credit reporting agencies continue to share information and update credit files based on affiliate sharing or other information sources. Consumers should not be required to compensate credit reporting agencies for fulfilling their statutory duty, especially because the monitoring service infrastructure is already in place and functioning, operated by the credit reporting agencies themselves. Therefore, in order to assure accuracy-the maximum possible accuracy required by statute-credit reporting agencies should cease their statutory infringing practices and provide credit monitoring services to consumers without charge.

REQUEST FOR RELIEF

Because deceptive marketing practices can be linked to the credit reporting agencies, the Complainants request that the Commission:

Order ConsumerInfo.com to provide free credit reports to consumers upon request;

In the alternative, order ConsumerInfo.com to immediately discontinue airing their television commercial promoting www.FreeCreditReport.com, and order ConsumerInfo.com to immediately discontinue their offer for a "free" credit report as it appears on www.FreeCreditReport.com;

Order credit reporting agencies to provide credit monitoring services to consumer without charge;

Monitor how credit reporting agencies promote their report-providing services;

Monitor how credit reporting agencies shift inaccuracy costs to consumers;

Provide such other relief as the Commission finds necessary to redress injury to consumers resulting from credit reporting agency practices as described herein.

Respectfully Submitted,

Chris Jay Hoofnagle
Associate Director

Tiffany Stedman
Law Fellow

ELECTRONIC PRIVACY INFORMATION CENTER
1718 Connecticut Ave., N.W.
Suite 200
Washington, DC 20009
(202) 483-1140

September 16, 2003

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1 A digital copy of the television advertisement is attached as Exhibit A, and is available online at http://privacy.org/experianexhibita.mpg. A transcript of the television advertisement is attached as Exhibit B.
2 PDF copies of the referenced Web pages are attached. See Exhibit C for ConsumerInfo.com's Web site index page at http://www.FreeCreditReport.com.
3 See Electronic Privacy Information Center, Surfer Beware III: Privacy Policies without Privacy Protection (1999), available at http://www.epic.org/reports/surfer-beware3.html; EPIC, Surfer Beware II: Notice is Not Enough (1998), available at http://www.epic.org/reports/surfer-beware2.html; EPIC, Surfer Beware: Personal Privacy & the Internet (1997), available at http://www.epic.org/reports/surfer-beware.html.
4 See EPIC, The Fair Credit Reporting Act (FCRA) & the Privacy of your Credit Report, at http://www.epic.org/privacy/fcra.
5 Experian, "Media Fact Sheet" at http://www.experian.com/corporate/factsheet.html.
6 California Secretary of State, California Business Search for "Experian Services Corp.," at http://kepler.ss.ca.gov/corpdata/ShowAllList?QueryCorpNumber=C2218743.
7 The Great Universal Stores, P.L.C. - 2002 Ann. Rep. & Accounts, ICC Rep. No. 322087 (2002), LEXIS, 2002 ICC Online Ltd. 1, at *1.
8 Id. at *10.
9 California Secretary of State, California Business Search for "ConsumerInfo.com," at http://kepler.ss.ca.gov/corpdata/ShowAllList?QueryCorpNumber=C1828996.
10 ConsumerInfo.com, About ConsumerInfo.com, at http://qspace.iplace.com/qspace/popups/about.asp (attached as Exhibit D).
11 ConsumerInfo.com's services are also marketed on Experian's Web site directly, all except for the "free" credit report offer. Experian, "Your Credit" at http://www.experian.com/yourcredit (attached as Exhibit E).
12 The subscription fee is first mentioned on the bottom of the second page of the registration process. Registration is available via http://www.FreeCreditReport.com and to reach the fee quote requires the input of a consumer's personal information, see the first page and second page of registration as Exhibit G and H, respectively.
13 Federal Trade Commission Act, ch. 311, 38 § 717 (1914) (codified as amended at 15 U.S.C. §§ 41-58 (1976)); See also FTC v. Winstead Hosiery Co., 258 U.S. 483 (1922).
14 Wheeler-Lea Act, ch. 49, § 3, 52 Stat. 111, 111-14 (1938) (codified as amended at 15 U.S.C. § 45 (1982)).
15 Cal. Dental Ass'n v. FTC, 526 U.S. 756, 773 n.9 (1999) (citing FTC v. Algoma Lumber Co., 291 U.S. 67, 79-80, 78 L. Ed. 655, 54 S. Ct. 315 (1934), to support the proposition "[t]hat false or misleading advertising has an anticompetitive effect, as that term is customarily used, has been long established.").
16 Supra, n.3.
17 15 U.S.C. § 1681(e)(b) (2002).
18 Hearing on "Affiliate Sharing Practices and Their Relationship to the Fair Credit Reporting Act" Before the Senate Committee on Banking, Housing and Urban Affairs, 108th Cong. 8 (2003) (statement of Joel R. Reidberg, Fordham law professor and authority on the regulation of fair information practices in the private sector) [hereinafter "Reidenberg's testimony"].
19 For example, Citigroup, Inc., a financial service provider, is comprised of around two thousand entities. Hearing on "Affiliate Sharing Practices and Their Relationship to the Fair Credit Reporting Act" Before the Senate Committee on Banking, Housing and Urban Affairs, 108th Cong. 3 (2003) (testimony of Martin Wong, General Counsel for Citigroup Global Consumer Group). Bank of America Corporation, another financial service provider, has nearly fifteen hundred entities. Attorneys General, Comments to the United States Department of the Treasury, "Comments on the GLBA Information Sharing Study" 16 (May 1, 2002) (citations omitted), available at http://www.ots.treas.gov/docs/95421.pdf.
20 For example, ConsumerInfo.com is a subsidiary of Experian North America which is a subsidiary of the GUS plc, a retail and business services group in the United Kingdom that has other subsidiaries worldwide, including Europe, Asia and Africa. See The Great Universal Stores, PLC - 2002 Ann. Rep. & Accounts, supra, n.3; see also GUS P.L.C. 2003 Ann. Rep. at http://www.gusplc.com/gus/investors/reportsaccounts/ar2003; About GUS/History at http://www.gusplc.com/gus/about/history (noting GUS' company acquisitions and sales, and the principle's several name changes); accord Reidenberg's testimony, supra, n. 16 at 8.
21 Harris Interactive/Privacy & American Business Poll, Privacy On and Off the Internet: What Consumers want, 39 (Feb. 7, 2002), available at http://www.aicpa.org/download/webtrust/priv_rpt_21mar02.pdf (95% of those polled expressed concern that companies would use information gathered from one transaction for reasons other than that transaction-"for example, to offer . . . other products and services.").
22 The privacy policy governing www.FreeCreditReports.com offers the prime example of affiliate sharing. According to the policy, the company will share any information it acquires with its agents (including but not limited to Responsys, Mediaplex, Advertising.com and DoubleClick), for promotional offers, in business transfers, with law enforcement or any company under the guise of "fraud protection and credit risk reduction," and after an opt-out notice has been given regarding ConsumerInfo.com intention to share the information with any third party. See ConsumerInfo.com, Privacy/Sharing at http://qspace.iplace.com/cobrands/187/privacy_cic.asp (attached as Exhibit F).
23 See State AG Comments on the GLBA Information Sharing Study (May 3, 2002) available at http://www.epic.org/privacy/financial/ag_glb_comments.html.
24 15 U.S.C. § 45(a)(1) (2002). The FTC has the authority to enforce violations of the FTCA under 15 U.S.C. § 45(a)(2)(2002).
25 FTC Guide Concerning Use of the Word "Free" and Similar Representations, 16 C.F.R. § 251.1(c) (2003) (emphasis added), available at http://www3.ftc.gov/bcp/guides/free.htm [hereinafter "the Regulations"].
26 Id.
27 See In the matter of Juno Online Services, Inc., No. 002-3061 (2001) (requiring Juno to make all offers and cancellation policies clear), available at http://www.ftc.gov/os/2001/05/junoconsent.pdf; In the matter of America Online, Inc. No. 952-3331 (1997), (requiring that America Online "shall not represent, expressly or by implication, that . . . [its s]ervice is offered 'free,' 'without risk,' 'without charge,' 'without further obligation,' or words of similar import denoting or implying the absence of any obligation on the . . . [customer] to pay for the . . . [s]ervice unless [the company] discloses clearly and prominently any obligation of the [customer] to cancel or take other affirmative action to avoid charges for use of the . . . [s]ervice") available at http://www.ftc.gov/os/1997/05/ameronli.htm.
28 Letter from the Federal Trade Commission to Rep. Dingell, Chairman of Comm. on Energy and Commerce (Oct. 14, 1983) (setting for the Commission's policy on deception), available at http://www.ftc.gov/bcp/policystmt/ad-decept.htm.
29 Id.
30 Id. (citations omitted).
31 Id. (citations omitted).
32 Id. & n.20 (citing Heinz W. Kirchner, 63 F.T.C. 1282 (1963), the Commission states, "[a]n interpretation may be reasonable even though it is not shared by a majority of consumers in the relevant class, or by particularly sophisticated consumers. A material practice that misleads a significant minority of reasonable consumer is deceptive.").
33 See Exhibits A and B.
34 The Regulations at § 251.1(c), supra, n.23.
35 Attached as Exhibits C-H.
36 See Exhibit C.
37 Letter from the Federal Trade Commission to Rep. Dingell, Chairman of Comm. on Energy and Commerce, supra, n.26 (citations omitted).
38 Id. (citations omitted).
39 The Regulations at § 251.1(c), supra, n.23.
40 15 U.S.C. § 1681(e)(b) (2002).
41 Andrews v. TRW Inc., 225 F.3d 1063 (9th Cir. 2000), rev'd on other grounds, 534 U.S. 19 (2001).
42 FTC Official Staff Commentary § 607 item 3B (1995).

CreditExpert crashed - Experian "special handling"

Wanted to include today's Experian as exhibit to my FTC/FCC reply, but CreditExpert has been seriously down for hours.

Tried Experian directly, and got:

"Your report requires special handling. Please call us at 1 800 493 1058. Be sure to tell us that you received this message that your report requires special handling."

Unocal dismissed by FTC

UNITED STATES OF AMERICA
BEFORE THE FEDERAL TRADE COMMISSION

BRIEF OF AMICUS CURIAE EXXON MOBIL CORPORATION
IN SUPPORT OF COMPLAINT COUNSEL'S APPEAL OF THE
INITIAL DECISION AND ORDER DISMISSING THE COMPLAINT

This is a 1/14/04 brief about the dismissal of the complaint against Unocal:

"A. Unocal's Anticompetitive Conduct. ......................................................................... 3
1. Unocal's Use of Deception to Acquire Market Power
..................................................................... in the Fuels Technology Market.. 3
2. Unocal's Exploitation of Its Market Power over the California Fuels
Technology Market .......................................................................................... 6
....................................................... B. The ALJ7s Decision Dismissing the Complaint 9

-------------------------------------------------------------

In case you don't know, a former Unocal consultant is now the leader of Afghanistan.

If you sent mail to bayhouse.com recently ....

VPScenter.com was the host for my bayhouse.com mail since VentureOnline.com shut off my mail after a spammer used bayhouse.com as return address in early December. Last Saturday I got this mail:

"your VPS will be automatically stopped between 11:45PM and 12:00AM. (If you're currently in an SSH session right now, please save your work and logout!)

As stated in the last 'upgrade schedule' email, we expect all services to be back up and running at 1:30AM."

When the server wasn't back up by Sunday afternoon, I started looking into moving the BayHouse mail. I do have accounts with 3 other web hosts, and I finally started getting all my mail by Monday eve.

I'd forgotten that I didn't have the "catch all" for bayhouse.com enabled previously, and couldn't understand why I was getting SPAM practically as fast as I deleted it.

While I slept, I received almost 5,000 SPAMS! That's about 14,000 spams a day going to the BayHouse domain.

Greg Dolley from VPScenter.com sent me a rather mean mail, telling me that I should have expected the 2 days of down time and trying to scare me into not closing my account. Not a good move.

He also distributed the email addresses of his other 50 accounts with his e-mails, not very bright. I'm amazed at the low standards of web hosts. If I wanted to be in the web hosting business, I think I'd have 50 new accounts right there :)

Anyway, some of your mails bounced back, but on Sunday my own test messages weren't returned - if you didn't hear from me by now, I didn't get your mail and please resend it. Sorry about that!

It's too bad I missed the "State of the Union address"

Of course the only way to watch it is by following the drink rules:

http://www.drinkinggame.us/

Thanks, Randy, got a badly needed laugh outta that one, even without the speech. My drink of choice would be tequila.

PrivacyGuard = National City???

I noticed the new green color right away at http://www.privacyguard.com

I checked the press releases at http://www.trilegiant.com/media/press_release.cgi/Corporate/ and http://www.trilegiant.com/about/contact.html also had no mention of National City, so why does it say "National City" at PG?

Citigroup: Earnings in the fourth quarter almost doubled to $4.76bn ...

Citigroup earnings hit $18bn full-year record

"Citigroup, the world's biggest financial services group, on Tuesday underlined the benefits of size and diversity by reporting a 17 per cent jump in annual net income to $17.85bn, a record for a publicly traded company."

...

"Citigroup International, which operates in 95 countries outside the US, increased annual net income by 18 per cent to $4.91bn.

The group's record annual net income topped the $17.72bn Exxon Mobil earned in 2000. But the record may not stand for long. Exxon Mobil, which reports earnings at the end of the month, earned $14.86bn in the first three quarters of 2003.

Wells Fargo and Bank One also reported an improved fourth quarter on Tuesday. Bank One reported net income up 16 per cent at $978m, while Wells Fargo enjoyed a 10 per cent rise in net income to $1.6bn."

Back in 95 or so, a lender rep told me that Congress was considering statutory damages for incorrect credit reporting, and Citi announced that they would stop lending. That was the end of statutory damages.

.

Looks like the court only mails to ME

I had included a SASE and the request to mail a copy of a stamped motion directly to the defendant, but that must be one of the things they don't do. So they sent the SASE and copies back to me instead.

Court hearings by brief?

Stephen Rathfon, the Pacific Bell attorney in the SF Bay Area, sent me a fax, inquiring whether I would attend the 1/26 hearing.

"I am about to make travel arrangements for the hearing on Pacific's motion to dismiss, but thought that before doing so I should inquire whether you intend to appear ot to submit the matter on briefs. If you choose to submit on the briefs, I will do likewise and so advise the court. ..."

I don't know why he didn't see my request for telephonic appearance as he apparently received the rest of the mailing.

But here's what I don't get: A hearing by brief? What the heck kind of hearing is that?

What's the purpose?

They already submitted their position, is there anything new? I thought the judge might ask some questions, but is he just going to sit at the hearing by himself, reading more of the same?

And that's why I requested that the court grant permission to attend telephonically. I don't want to make a 500 mile round trip to attend a hearing that I did not request and that might be cancelled.

FTC incompetence, or they didn't LIKE the submissions?

On 1/16/04, the FTC announced at http://www.ftc.gov/opa/2004/01/healthcareresubmit.htm:

"The Federal Trade Commission and the Department of Justice today requested that any person who submitted electronic comments regarding the agencies’ joint antitrust hearings on Health Care and Competition Law and Policy between June 1, 2003, and October 22, 2003, resubmit those comments. Comments submitted during that time were not received due to technological errors. ..."

If anyone can explain HOW they could lose all submissions for almost 5 months, please post a comment.

"Technological errors?" Stupidity? Or they didn't like the submissions?

Adverse Actions defined: EVIL bankers wrote the ECOA

From the FTC Latour opinion letter:

"Under the ECOA, and Regulation B promulgated by the Board of Governors of the Federal Reserve System to implement the ECOA, that term means "a refusal to grant credit in substantially the amount or on substantially the terms requested in an application unless the creditor makes a counteroffer (to grant credit in a different amount or on different terms) and the applicant uses or expressly accepts the credit offered." Regulation B, 12 C.F.R. §202.2(c)(1)(i) (emphasis added). In the circumstances described, you would be entitled to the "adverse action" notice required by Section 615(a) if you applied for credit on particular terms, were offered credit only on less favorable terms (e.g., lower credit limit, higher interest rate) based on information in a consumer report, and refused to accept those terms or use the credit offered. However, if you did not apply for credit on particular terms or if you were offered credit and accepted, you are not entitled to the notice because you did not suffer "adverse action" as defined in Section 603(k)(1)(A)of the FCRA."

Those morons are saying that when you go to buy a house, and due to your credit you get a 10% rate instead of the 7% rate, you did NOT suffer an adverse action.

Are they stupid? It makes no difference whether you pay $20,000 or $14,000/year in interest on a mortgage?

Of course they're not stupid, they are EVIL.

The BANKS wrote the ECOA and they're only interested in their profits. When consumers are NOT informed that their high rate is based on their bad credit, they aren't going to review their reports and dispute the incorrect data.

And the consumers will most likely continue to pay higher interest rates and insurance premiums.

Sometimes things seem really hopeless ...

I'm trying to decide which issues to address in my objection to the FCC and FTC motion to dismiss. It's not really about getting them not dismissed, as I know nothing about suing the government and it's not one of the things that particularily interest me.

I just want to put the FTC and FCC on notice, and list and explain why it is important that they enforce consumer protection laws. I want to establish that they KNOW the problems, fail to do anything for consumers, and that Congress needs to establish a Federal CONSUMER Commission because the Federal TRADE Commission represents only the interests of the banks, merchants and CRAs.

Then Richy posted about Capital One Fraud and I just wonder why I even waste my time.

There are many millions like him. Little education, not exactly bright, beyond help ....

Class Action: McDonough v Risk Management Alternatives, Inc.

McDonough v Risk Management Alternatives, Inc.

"..... According to the consumers, Risk Management has engaged in intentional and willful violations of both state law and the federal Fair Debt Collections Practices Act. Consumers allege that Risk Management has made false representations, used intimidation and has engaged in unauthorized activity in the pursuit of collecting debts from Massachusetts residents. Examples of this conduct include threatening legal action when none will be taken, demanding payments in an intimidating manner, presenting postdated checks for payment prior to the agreed upon date of negotiation, presenting unauthorized checks for payment, claiming a false sense of urgency in order to force consumers to pay quickly and without verification and generally employing unfair and deceptive practices in order to collect debts. The consumers allege that the use of any misleading or intimidating tactics in order to collect a debt violates both
state and federal law. ...."

I know from my own contacts with RMA that the allegations are true and there should be a national class action.

IL Class Action against ConsumerInfo.com (Experian)

As I read the info at http://classactionamerica.com/cases/goldInfo.asp?lngCaseId=2973&intCategoryID=4 - this suit applies ONLY to Illinois residents.

"A statewide class action has been filed in Illinois against credit giant Experian Information Services as a result of allegedly fraudulent activities revolving around Experian's offer of free credit reports through its consumerinfo.com website. According to consumers, the offer a "free" credit report is, in fact, a scam to get consumers to sign up for Experian's $79.95 CreditCheck service. The action is brought on behalf of all residents of the state of Illinois who, since November 5, 2000, utilized Experian's offer for a free credit report by entering their credit card or debit card information, and who were charged for Experian's CreditCheck service as a result and have not received a full refund of charges for this service.

The action is brought under Illinois consumer protection statutes and seeks unspecified compensatory damages, injunctive and declaratory relief as well as disgorgement of all profits and compensation obtained by the defendants through their alleged fraudulent activities.

..."

Somebody needs to file a nationwide class action!

Please post your disputes at http://forum.creditcourt.com/discus/messages/3301/3301.html

Bank of America/FleetBoston Federal Hearings Recognize Lack of Bank Lending

What New York Groups Need to Know About the Bank of America-Fleet Merger

Bank of America/FleetBoston Federal Hearings Recognize Lack of Bank Lending

January 15, 2004 — SAN FRANCISCO, CA - The Federal Reserve Bank, in an unprecedented move, will hold hearings in San Francisco on January 16, 2004, regarding Bank of America's application to merge with FleetBoston. While hearings on a merger application are rare, a hearing outside the impact area is unheard of: "This is the first Federal Reserve hearing since 1999 and the first in memory ever outside of the newly impacted area. Californians have spoken out because the new Bank of America has little connection to our diverse communities. This may be Californians last chance to be heard," said Alan Fisher, Executive Director of the California Reinvestment Committee (CRC).

Half of the letters received by the Federal Reserve protesting the proposed merger came from community organizations, public officials and concerned citizens of California. Those testifying at the San Francisco hearing in protest of the merger will be requesting that the Bank initiate specific changes in their lending and investment products. The hearings will begin at 8:30 a.m., this Friday, January 16th at the Federal Reserve at 101 Market Street in San Francisco. A press conference will be held at 10 a.m. by California Reinvesment Committee and Greenlining Institute.

In 1998, California Reinvestment Committee and its members vigorously protested NationsBank acquisition of the former California based Bank of America. Community organizations were fearful that this monolithic merger with its distant headquarters would decrease lending, investment and services in under served communities: "The real impacts of a merger are seen later on. Since BofA's last merger, we have seen that they can't retain staff and that their level of service and commitment declines. Communities need to think forward about how the merger will change the bank that they are used to," said Michael Banner, Executive Director of the Los Angeles Local Development Corporation, Inc.

CRC and its members are asking the Federal Reserve to mandate Bank of America to implement a specific California commitment with the following in place:

Increase charitable contributions to 2% of pre-tax income and focus charitable giving on community development activities Develop a low cost deposit account that works for low income people which includes 5 free money orders Stop financing predatory mortgages that rob consumers of hard earned equity Increase small business lending to low income and people of color in underserved communities Increase purchasing from minority owned businesses Develop a multifamily affordable housing loan product combining construction and permanent credit CRC and it members are concerned that Bank of America will continue to pull away from California, regardless of the fact that currently one-third of all of Bank of America's deposits reside in this state. Paul Ainger of Community Housing Opportunities Corp. in Davis, CA voiced his concern: "Bank of America was the leading lender in rural California. Since the merger (with NationsBank), they have disappeared from many rural communities and no longer take a leadership role in rural California."

When NationsBank acquired Bank of America in 1998, they announced a $350 billion lending and investment strategy. Community advocates argued that the pledge was created unilaterally without communities' input and was too ambiguous to respond to the specific needs of California's diverse communities: "Since the merger with NationsBank, Bank of America does not participate on a local level. We don't see their personnel on the street," said Clarence Williams of California Capital Small Business Development. Furthermore, they have not honored local commitments that were made before the merger: "Bank of America has neglected San Diego. They have chosen to ignore a commitment that was made in 1992 in San Diego and have not agreed to renew that commitment. They have become too big to respond to local needs," said Jim Bliesner of San Diego City-County Reinvestment Task Force.

On January 7, 2004, Bank of America announced a 10 year $750 billion lending and investment strategy for community economic development. This commitment has even fewer specifics and does not break out by state what their specific lending and investment strategies are. Community organizations are particularly concerned because Bank of America's strategies lean toward cookie-cutter products. Those calling for specific community commitments include, U.S. Senator Barbara Boxer, U.S. Representative Barbara Lee California, U.S. Representative Maxine Waters, California Assemblymember Jackie Goldberg and Los Angeles Councilman Dennis Zine.

"CRC members are dissatisfied with the Bank's lack of response to community needs. In general, community organizations would like for the Bank to improve its community relations and have more of a presence in the community," said Rhea Serna of California Reinvestment Committee.

CRC is a statewide organization of more than 200 non-profit organizations and public agencies working for equal access to financial institutions for low income people and people of color. CRC has comprehensive community reinvestment agreements with major California banks and savings & loans.

Source: Company Press Release

Bank One and Chase merging to become largest credit card issuer

$60 billion Merger to Create Largest Credit Card Issuer

"... In the nearly $60 billion merger with Bank One, JP Morgan Chase gains a retail business big in credit cards, mortgages, asset management and treasury services. The deal will also add to J.P. Morgan Chase's financial prowess, creating an institution with $1.1 trillion in assets, rivaling the nation's largest financial services conglomerate, Citigroup, which has $1.21 trillion in assets.

The union will also create the largest credit card issuer in the US, according to David Robertson, publisher of The Nilson Report, an industry newsletter. Bank One is currently the third-largest credit card issuer with more than $70 billion of loans outstanding, trailing only Citigroup and MBNA Corp. ..."

You know what that means: More powerful legal departments and less choices for consumers.

Docket update

12/31/03 105 NOTICE of Trans Union and Harry Gambill Mailings to
Incorrect Address for Plaintiff by pla (sat)
[Entry date 01/06/04]

12/31/03 105 MOTION (Request) for Extension of Time until 1/29/04 to
Respond to Harry Gambill's Motion to Dismiss by pla
[105-1] (sat) [Entry date 01/06/04]

1/8/04 106 RESPONSE by dft Trans Union LLC, dft Harry Gambill to
Plaintiff's Motion (Request) for Extension of Time until
1/29/04 to Respond to Harry Gambill's Motion to Dismiss by
pla [105-1] (sat) [Entry date 01/13/04]

The DEATH of justice - mandatory arbitration

Arbitration is expensive for consumers and many arbitrators are biased towards the corporations. First USA/Bank One just filed their motion to compel arbitration as per the card agreement in Randy's case.

I think the inquiries w/o the permissible purpose are a good angle to oppose, since they have NOTHING to do with Randy's closed and discharged account and the cardholder agreement.

Not to mention the expense and the fact that Randy would have to litigate in federal court AND arbitrate and learn BOTH rules and procedures.

There's nothing wrong with mediation, but secret and expensive proceedings are totally uncalled for when it comes to the outrageous FUSA/Bank One credit reporting practices.

"RULE 4. Confidentiality.

Arbitration proceedings are confidential, unless all Parties agree otherwise. Arbitration Orders and Awards are not confidential and may be disclosed by the Parties. A Party who improperly discloses confidential information shall be subject to Sanctions. The Arbitrator and Forum may disclose case filings, case dispositions, and other case information as required by a Court Order."

THAT is the one of the most evil part of mandatory arbitration. Not only do you no longer have the right to a jury, but the proceedings are SECRET.

"In keeping silent about evil, in burying it so deep within us that no sign of it appears on the surface, we are implanting it, and it will rise up a thousandfold in the future. When we neither punish nor reproach evildoers... we are ripping the foundations of justice from beneath new generations."

- Alexander Solzehnitsyn

Some Montanans irritated to be dunned by Texas agency

State hires agency for collections

"... GC Services, headquartered in Houston, won a contract last October to collect the back taxes for the state of Montana, and gets to keep 18.9 percent of what it collects. It's the first time the Montana Revenue Department has hired an outside agency to collect taxes.

The company began trying to collect on $29 million in past-due accounts for individual income taxes five weeks ago, but so far has taken in only $93,000, a revenue official says.

Yet the firm also has raised hackles among citizens and accountants, who've been hearing from clients who feel the bills are in error.

Other clients also have said the bill collectors, who are calling from Oklahoma, are none too civil when challenged about the bill or its amount.

"The problem is they have been rude to people who are trying to clarify their amount," says Jane Egan, executive director of the Montana Society of Certified Public Accountants. ..."

And:

"However, a search of the Web for GC Services also turned up a site titled "badbusinessbureau.com," which has a feature called "Rip-off Report," with customers' complaints about allegedly unscrupulous operators. The Rip-off Report has reports from nine different people in the past six months, complaining about GC Services.

Most of the complaints, filed by people who use only their first names, complain of rude, overbearing treatment by GC Services callers.

GC Services did not return a message asking for comment.

Ray Young, a Great Falls accountant, says he's heard from clients and fellow CPAs about people who got calls from GC Services, and who felt the calls were in error and said the caller treated them rudely when they objected."

There are two items worth noting:

1) They did a web search and found complaints
2) GC Services did not return a message asking for comments.

The only way to get these collectors to respond is to file suit.

American Agencies new topic at CreditCourt

Due to the large number of comments and e-mails with American Agencies complaints, I started a new topic at CreditCourt.

FNANB (Circuit City) suit over inquiries without permissible purpose

From CreditCourt:

After 8 months of unsuccessfully trying to get these two HARD inquiries recoded to soft inquiries, Crystal filed suit in Maryland small claims court.

To my amazement, bank counsel Kenneth H. Edwards wrote on 12/22/03 that they have a permissible purpose to obtain the credit after the discharge. It appears that he claims that a notification of a former customer's bankruptcy filing provides FNANB with a permissible purpose. Apparently FNANB subscribes to a service that notifies it of all filings and FNANB then runs the credit for all accounts even when they were previously closed or discharged and no monies are owed to FNANB.

Crystal's only account with FNANB was discharged in 1996. It may well be that FNANB continued to report the outstanding balance and never closed the account thoughout all those years. That's not unusual as you'll see when you read Randy's suit against First USA/Bank One. Very often this incorrect credit reporting causes the exploitation of consumers by predotory lenders as the credit scores are destroyed by this practice. Discharged accounts not reported as closed no later than the discharge date and with NO balance prevent consumers from obtaining market rate financing even with perfect payment history many years after the bankruptcy.

FNANB counsel Edwards also repeatedly refers to "credit bureau" instead of "credit report" and apparently is lacking the most basic understanding of credit reporting concepts.

A class action might also be appropriate, as apparently there were and will be other consumers subjected to inquiries without permissible purpose.

If FNANB isn't willing to pay the $2,000 in statutory damages within the next couple of weeks, Crystal should retain an attorney to seek statutory, actual and punitive damages. After all, she has been trying to get a mortgage and she wasted a tremendous amount of time on FNANB prior to filing suit.

The scans of the FNANB letters and inquiries

My e-mail to FNANB counsel Kenneth Edwards:

Kenneth Edwards
Bank Counsel FNANB

January 12, 2004

Re: Case # 080400244132003, Edwards v. FNANB Circuit City

Dear Mr. Edwards:

I posted your letters and settlement offer at my web site at http://forum.creditcourt.com/discus/messages/3337/3337.html and prior to taking further actions I would like to confirm the authenticity of the posted documentation and I want to make sure that I understand the facts correctly.

While you state in your 12/22/03 letter that FNANB did have a permissible purpose to access the credit file, I don't understand what you think the permissible purpose is.

I am not aware of a permissible purpose after a bk notification, if I overlooked this FCRA exemption, please do let me know where it is. As literally thousands of creditors receive bankruptcy filing notifications, it would be absurd if they all ran the consumers' credit. Why would or should they do that if there are no open accounts or delinquent balances?

However, this seems to be the FNANB practice, and if so, there must be many consumers whose credit files FNANB accessed after a bk notification without a permissible purpose and if you continue to claim that this is a legitimate practice, a class action should be filed.

It is especially disturbing that FNANB lowered those consumers' credit scores with HARD inquiries, causing ACTUAL damages through lower credit scores.

In your 12/29/03 letter you offer to delete these inquiries for dismissal with prejudice:

1) Inquiries can not legally be deleted as the FCRA requires that a record of all inquiries be kept.

2) The inquiries should have been recoded to "soft" inquiries after Crystal's first contact with FNANB, to ensure that they would no longer lower her FICO credit scores. To offer deletion now is not only illegal, but too little too late. Fair Isaac lowers the scores for hard inquiries only for 12 months, FNANB damaged the credit scores required for a mortgage since 3/03.

It is truly astounding that instead of immediately recoding the inquiries upon receipt of the suit to cease inflicting further damages, you require dismissal with prejudice.

Please do let me know whether there is a reason for me not to publicize the FNANB business practices and to inspire a class action as well as individual suits against FNANB. I don't think that Crystal's suit should be in small claims and my advice to her is to retain an attorney to file a new complaint in federal court.

Sincerely,

Christine Baker
http://www.creditsuit.org/

c: Crystal Edwards
posted at http://forum.creditcourt.com/discus/messages/3337/3337.html
posted at http://www.creditsuit.org/blog/archives/000302.html

Capital One reports new account with balance HIGHER than "most owed"

I got the Equifax notification of the reporting of my new $7,500 Capital One Visa. I didn't want to buy a new Equifax to see how it's reported, and since I subscribe to PrivacyGuard, I checked there. While it's a very incomplete report, it does provide the limits.

As USUALLY, Capital One didn't report the limit. And as OFTEN, it reported a balance HIGHER than the "most owed."

So for all those new to credit scoring and the Balance/Limit ratio, let's do the calculation:

(click here for the full posting with the screenshot of the reporting)

Since the LIMIT = N/A, Fair Isaac utilizes the "Most Owed."

The B/L ratio as utilized by Fair Isaac: 99/50 = 198%

The CORRECT B/L ratio: 99/7500 = 1.3%

If this new Cap One account was my ONLY revolving account, the difference in FICO credit scores could be well over 50 points.

The screen shot from PrivacyGuard:

The real sad part is that most Americans are unable to calculate their B/L ratio. Heck, most people working a cash register can't figure out how to give change without a calculator. America is going STUPID!

Please don't take that personal, if you WANT to learn, the tools are here:

More explanations and sample spreadsheets.

American Agencies SUSPENDED again

http://kepler.ss.ca.gov/corpdata/ShowAllList?QueryCorpNumber=C2206381

Don't know what's going on.

Talked with Gloria at Providian again

The answer is due tomorrow, after 6 months of extensions.

My previous postings on Providian

Gloria relayed to me their $1,500 settlement offer, with a confidentiality agreement. Yeah, when hell freezes over.

The Providian attorney in charge thinks it's $1,000 per violation. I don't look at it that way, but considering the number of disputes, their offer should have been much higher according to their own method of calculating.

$500 of their offer was for legal fees, the work I do myself. What they and most others probably don't realize is that I already have over $3K in actual expenses for legal resources and services.

I really would like to find out WHY this discharged account just could not be reported correctly, why my direct dispute with Providian was ignored, why they reported the account to Equifax twice, why the bk dates were reported incorrectly (that's also a Capital One issue) and why the account was all of a sudden reported delinquent (screenshot in previous posting) and reaged!

Those are the things I'd like to know and Providian has no answers. They can't locate their records.

The CRAs claim that they only report what creditors submit.

My conclusion:

The Providian credit reporting procedures MUST be flawed. The only other explanation is that they purposely reported incorrectly just on my credit. And that's unlikely. Especially since I've seen my share of Providian ridiculous reportig on my readers' and clients' reports.

Well, since Gloria is such a nice person, I gave them another week and I offered to settle for $12K with a confidentiality agreement.

But I just the same have Providian answer and find out through discovery what their procedures are and what the heck is going on.

Longtime Columbia political dissenter Brett Bursey fined $500

Bursey found guilty, fined $500

"... During a two-day trial in November, Bursey argued that the federal government sought to muzzle his opposition by insulating Bush from political opposition while allowing his supporters closer access. A sign Bursey carried proclaimed, "No more war for oil."

Signs for Republican candidates were allowed in the restricted area, Bursey and his witnesses said. People with tickets were screened by police and allowed inside a hangar at Columbia Metropolitan Airport to hear Bush promote S.C. Republican candidates. ..."

Makes PERFECT sense to me: Dissidents obviously intend to hurt whoever they protest against.

It is logical to prohibit and punish all dissent. And if you can't prohibit all dissent, at the very least send the dissenters where nobody sees them and their signs.

Judge Accused Of Saying Women Ask To Get 'Smacked Around'

Judge Accused Of Saying Women Ask To Get 'Smacked Around'

"... Hamley was accused of telling a victim of domestic violence in court that such cases are "dragged out" and a "waste of the court's time." He also was accused of telling a state trooper that most women enjoy being abused and they asked to get "smacked around," according to the commission.

...

Hamley resigned the day before his state hearing would have begun. He could not be reached as his home telephone number.

....

Hamley was also accused of taking over two traffic cases pending in another court and improperly discussing cases with a defendant and the mayor of Hunter, then improperly disposing of the cases."

I try not to imagine how much crap goes on in the courts. I'm sure that many judges feel that if you didn't pay all your debts on time, you deserve to get screwed by the CRAs.

Billionaires for Bush

There's nothing like a little humor at the end of a long day.

A few samples from the store:

Docket Update

12/22/03 101 MOTION to dismiss as to dft FTC, dft FCC for lack of
subject matter jurisdiction, on grounds of sovereign
immunity by FTC, FCC [101-1] (lsb) [Entry date 12/30/03]

12/23/03 102 REPLY by dft Capital One Bank to response to motion to
Dismiss as to dft Capital One by dft Capital One [92-1] (lsb)
[Entry date 12/31/03]

12/23/03 103 MOTION to dismiss case and memorandum of points and
authorities by dfts Equifax Credit Information Services,
Tom Chapman [103-1] (lsb) [Entry date 12/31/03]

12/23/03 104 Notice of filing original AFFIDAVIT of James McAfee, Esq.
in support of motion to Dismiss Plaintiff's Complaint as to
dfts Federal Reserve Bank of Richmond, James McAfee by dft
Federal Reserve Bk R, dft James McAfee [98-1] by dft
Federal Reserve Bk R, dft James McAfee (lsb)
[Entry date 12/31/03]

[END OF DOCKET: 3:03cv525]
---------------------------------------------------------------------------
PACER Service Center
Transaction Receipt

01/06/2004 02:38:48

Didn't get the proof of service for Equifax CEO

Called Atlanta Legal Services because they sent the Proof of Service for Equifax, but not for CEO Thomas Chapman.

While they charged $35 for the first and $20 for the 2nd serving, they invoiced me for $55 for serving Equifax.

Was told that you can't serve a CEO, asked whether I'm pro se, and informed me that "that's why we don't do a lot of work for pro ses." How offensive!!!!

He finally agreed to send the proper proof of service and invoices, required to get the expenses of serving reimbursed since they refused to sign the waivers.

Atlanta Attorney Services is the first process server to screw up, and then they had the nerve to insult me. I won't hire them again, try to find someone with a little respect and who knows what they're doing. Anyone can make a mistake, but those morons didn't even apologize and blamed me for their incompetence. Just like the CRAs.

What Ever Happened To Peace On Earth

From Willie Nelson for Kucinich:

Willie says: "I am endorsing Dennis Kucinich for President because he stands up for heartland Americans who are too often overlooked and unheard. He has done that his whole political career. Big corporations are well-represented in Washington, but Dennis Kucinich is a rare Congressman of conscience and bravery who fights for the unrepresented, much like the late Senator Paul Wellstone. Dennis champions individual privacy, safe food laws and family farmers. A Kucinich Administration will put the interests of America's family farmers, consumers and environment above the greed of industrial agribusiness.

I normally do not get too heavily involved in politics, but this is more about getting involved with America than with politics. I encourage people to learn more about Dennis Kucinich at his website and I will be doing all I can to raise his profile with voters. I plan to do concerts to benefit the campaign."

Tonight's Austin sold out concert webcast

Willie wrote What Ever Happened To Peace On Earth on Christmas, 2003, and will perform it for the first time at the Kucinich for President fundraising concert in Austin, Texas, on Jan. 3, 2004.

The lyrics:

What Ever Happened To Peace On Earth

There's so many things going on in the world
Babies dying
Mothers crying
How much oil is one human life worth
And what ever happened to peace on earth

We believe everything that they tell us
They're gonna' kill us
So we gotta' kill them first
But I remember a commandment
Thou shall not kill
How much is that soldier's life worth
And whatever happened to peace on earth

(Bridge)
And the bewildered herd is still believing
Everything we've been told from our birth
Hell they won't lie to me
Not on my own damn TV
But how much is a liar's word worth
And whatever happened to peace on earth

So I guess it's just
Do unto others before they do it to you
Let's just kill em' all and let God sort em' out
Is this what God wants us to do

(Repeat Bridge)
And the bewildered herd is still believing
Everything we've been told from our birth
Hell they won't lie to me
Not on my own damn TV
But how much is a liar's word worth
And whatever happened to peace on earth

Now you probably won't hear this on your radio
Probably not on your local TV
But if there's a time, and if you're ever so inclined
You can always hear it from me
How much is one picker's word worth
And whatever happened to peace on earth

But don't confuse caring for weakness
You can't put that label on me
The truth is my weapon of mass protection
And I believe truth sets you free

(Bridge)
And the bewildered herd is still believing
Everything we've been told from our birth
Hell they won't lie to me
Not on my own damn TV
But how much is a liar's word worth
And whatever happened to peace on earth

American Agencies corporation active again

Corporate status

I was worried they'd go out of business before I can collect the judgment I expect to get eventually.

Attorneys have also been looking into class actions, but they obviously won't waste their resources on a company that's out of business.

So, it's time for some new suits against American Agencies!