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1
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DECISION & ORDER
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EXTRACTED KEY WORDS
COMMISSION MARKETING COMPLAINT BUSINESS FEDERAL TRADE COMMISSION SALES DISCLOSURE CONSUMER REPRESENTATION KALVIN SCHMIDT MARKETING PLAN ENTERPRISES RECRUITS PURCHASERS VIOLATION ADVERTISEMENT EMPLOYMENT PRODUCTIONS AGREEMENT PURPOSES JURISDICTION FACTS INCOME PROMOTOR TERMINATE COMPREHEND MATERIALS APPEALING |
9723308
B247088
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
COMMISSIONERS:
Robert Pitofsky, Chairman
Sheila F. Anthony
Mozelle W. Thompson
Orson Swindle
In the Matter of
Kalvin P. Schmidt, individually, and doing business as DKS
Enterprises, DS Productions, DES Enterprises, www.mkt-america.com, and
www.mkt-usa.com.
Docket NO. C-3834
DECISION AND ORDER
The Federal Trade Commission having initiated an investigation of
certain acts and practices of the respondent named in the caption
hereof, and the respondent having been furnished thereafter with a
copy of a draft complaint which the Bureau of Consumer Protection
proposed to present to the Commission for its consideration and which,
if issued by the Commission, would charge respondent with violation of
the Federal Trade Commission Act; and
The respondent, his attorney, and counsel for the Commission having
thereafter executed an agreement containing a consent order, an
admission by the respondent for purposes of the order of all the
jurisdictional facts set forth in the aforesaid draft complaint, a
statement that the signing of said agreement is for settlement
purposes only and does not constitute an admission by respondent that
the law has been violated as alleged in such complaint, or that the
facts as alleged in such complaint, other than jurisdictional facts,
are true, and waivers and other provisions as required by the
Commission's Rules; and
The Commission having thereafter considered the matter and having
determined that it had reason to believe that respondent has violated
the said Act, and that a complaint should issue stating its charges in
that respect, and having thereupon accepted the executed consent
agreement and placed such agreement on the public record for a period
of sixty (60) days, now in further conformity with the procedure
prescribed in § 2.34 of its Rules, the Commission hereby issues its
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2
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ANALYSIS
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EXTRACTED KEY WORDS
RESPONDENT CONSENT ORDER SCHMIDT COMMISSION WEB SITES DRAFT COMPLAINT AGREEMENT MEGARESOURCE PROGRAMS SALES SCHEME PROMOTION CHAIN PYRAMID MARKETING PROGRAMS PUBLIC RECORD DRAFT COMPLAINT ALLEGES SUBSTANTIATION EARNINGS CLAIMS REPRESENTATIONS PROHIBITED MARKETING PROGRAM PROFITS EMPLOYEES COMPLIANCE BUSINESS ENTERPRISES INTERNET ALLEGATIONS PROPOSED ADMINISTRATIVE CONSENT CONSUMERS DESIGNING |
Analysis of Proposed Consent Order
to Aid Public Comment
___________________________________
The Federal Trade Commission has accepted, subject to final approval,
an agreement containing a consent order from Kalvin P. Schmidt,
individually, and doing business as DKS Enterprises, DS Productions,
DES Enterprises, www.mkt-america.com, and www.mkt-usa.com. Schmidt
promoted Mega$Nets and MegaResource, two high tech versions of
traditional chain or pyramid marketing programs, on web sites he
operated, and in unsolicited e-mail messages he created and sent via
the Internet on his behalf and on the behalf of others. He also
created and hosted web sites for participants in Mega$Nets and
MegaResource programs.
The proposed consent order has been placed on the public record for
sixty (60) days for reception of comments by interested persons.
Comments received during this period will become part of the public
record. After sixty (60) days, the Commission will again review the
agreement and the comments received and will decide whether it should
withdraw from the agreement or make final the agreement's proposed
order.
This matter concerns allegations about Schmidt's promotion and
dissemination of two chain or pyramid marketing programs over the
Internet. The Commission has issued a proposed draft complaint that
sets forth the allegations to be resolved by the proposed
administrative consent order. The draft complaint alleges that
respondent Schmidt misrepresented that all or virtually all consumers
who participate in the Mega$Nets and MegaResource programs earn
substantial amounts of money. The draft complaint also alleges that
respondent Schmidt did not possess a reasonable basis that
substantiated these earnings claims at the time he made those
representations. In addition, the draft complaint alleges that
respondent Schmidt, by creating and designing for others web sites
promoting the Mega$Nets and MegaResource programs, hosting these web
sites, and composing and sending unsolicited electronic mail messages
to consumers directing them to these web sites, violated the law by
providing the "means and instrumentalities" to others to make
unsubstantiated and false earnings claims.
The proposed administrative consent order, published for comment with
this notice, contains prohibitions designed to prevent respondent from
engaging in similar acts and practices in the future. Section I of the
proposed consent prohibits Mr. Schmidt from participating in or
assisting in any manner or capacity whatsoever in any prohibited
marketing program, as defined in the order. The definition of
"prohibited marketing program" is similar to the definition in the
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3
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AGREEMENT CONTAINING CONSENT
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EXTRACTED KEY WORDS
COMPLAINT COMMISSION MARKETING BUSINESS FEDERAL TRADE COMMISSION AGREEMENT PROPOSED RESPONDENT REPRESENTATION KALVIN SCHMIDT DISCLOSURE SALES CONSUMER ENTERPRISES DRAFT COMPLAINT MARKETING PLAN RECRUITS PURCHASERS PRODUCTIONS FACTS ACCEPTANCE ADVERTISEMENT EMPLOYMENT CONSENT ORDER VIOLATION MANNER INCOME PROMOTOR TERMINATE |
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
In the Matter of
Kalvin P. Schmidt, individually, and doing business as DKS
Enterprises, DS Productions, DES Enterprises, www.mkt-america.com ,
and www.mkt-usa.com.
FILE NO. 9723308
AGREEMENT CONTAINING CONSENT ORDER
The Federal Trade Commission has conducted an investigation of certain
acts and practices of Kalvin P. Schmidt, individually, and doing
business as DKS Enterprises, DS Productions, DES Enterprises,
www.mkt-america.com, and www.mkt-usa.com ("proposed respondent").
Proposed respondent, having been represented by counsel, is willing to
enter into an agreement containing a consent order resolving the
allegations contained in the attached draft complaint. Therefore,
IT IS HEREBY AGREED by and between Kalvin P. Schmidt, and counsel for
the Federal Trade Commission that:
1. Proposed respondent Kalvin P. Schmidt is a Minnesota resident
who does business as DKS Enterprises, DS Productions, DES
Enterprises, www.mkt-america.com, and www.mkt- usa.com. He conducts
his business activities out of his home, 911 3rd Street, N.W.,
Waseca, Minnesota 56093.
2. Proposed respondent admits all the jurisdictional facts set
forth in the draft complaint.
3. Proposed respondent waives:
a. Any further procedural steps;
b. The requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law; and
c. All rights to seek judicial review or otherwise to challenge or
contest the validity of the order entered pursuant to this
agreement.
4. This agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If
this agreement is accepted by the Commission, it, together with the
draft complaint, will be placed on the public record for a period
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4
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COMPLAINT
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EXTRACTED KEY WORDS
MEGARESOURCE CONSUMER WEB SITES FEDERAL TRADE COMMISSION REPRESENTATION ACT LISTS PARAGRAPH ENTERPRISES UNSOLICITED ELECTRONIC MAIL MONEY EXHIBIT ALLEGES PROMOTING DISKS DESIGNING BUSINESS COMPLAINT PYRAMID MARKETING PROGRAMS PRACTICES FREE WEBPAGE REPRESENTATION SET CHAIN AFFECTING COMMERCE DOWNLOAD BASIS DIRECTING ACCESS CODES UNLOCK |
9723308
B247088
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
In the Matter of
Kalvin P. Schmidt, individually, and doing business as DKS
Enterprises, DS Productions, DES Enterprises, www.mkt-america.com, and
www.mkt-usa.com.
DOCKET NO. C-3834
COMPLAINT
The Federal Trade Commission, having reason to believe that Kalvin P.
Schmidt, individually, and doing business as DKS Enterprises, DS
Productions, DES Enterprises, www.mkt-america.com, and www.mkt-usa.com
("Respondent"), has violated the provisions of the Federal Trade
Commission Act, and it appearing to the Commission that this
proceeding is in the public interest, alleges:
1. Respondent Kalvin P. Schmidt is a Minnesota resident who does
business as DKS Enterprises, DS Productions, DES Enterprises,
www.mkt-america.com, and www.mkt-usa.com. He conducts his business
activities out of his home, 911 3rd Street, N.W., Waseca, Minnesota
56093.
2. At all times relevant to this complaint, respondent has promoted,
offered for sale, sold, and distributed via the Internet and U.S.
Mail, computer software, and computer disks containing the software,
designed to perpetuate chain or pyramid marketing programs, such as
Mega$Nets and MegaResource.
3. The acts and practices of respondent alleged in this complaint have
been in or affecting commerce, as "commerce" is defined in Section 4
of the Federal Trade Commission Act.
MEGA$NETS and MEGARESOURCE
4. Since July 1997 or earlier, respondent has induced consumers to
participate in Mega$Nets and MegaResource, two chain or pyramid
marketing programs. Respondent promises consumers that by
participating in these programs they can earn substantial profits.
Respondent promotes the Mega$Nets and MegaResource programs on web
sites, such as www.mkt-america.com, and in unsolicited electronic mail
he sends or causes to be sent via the Internet.
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