The opinion of the court was delivered by: Spatt, District Judge.
An additional sheet in the enclosure headed by the large
darkened letters "Revolutionary Home-Mailing Program"
reiterates that the consumer will be paid $1.00 for every
envelope you stuff plus 50% commission on every sale (up to
$100/order). Again, this page clearly states that the plan
"NEVER requires you to purchase ANY envelopes, postage stamps
or circulars for as long as you stay in the program."
What program? What product? The Court finds that by reading the
initial eight-page inducement ad, a reasonably prudent person
could not ascertain such information.
Also enclosed in the package is the "No-risk Homeworkers
Application". For $25 plus $2.00 for "S & H", or a total of
$27, "Rush me my complete Home-mailing Kit", with the right to
an "immediate refund".
The Court finds that there are a number of false and/or
misleading and/or deceptive statements in the ad.
First, the Court agrees with Inspector McDermott that any
consumer who reads this ad would believe that he or she would
be stuffing envelopes and get paid a commission based on such
envelopes. In actuality, the "program" apparently has nothing
to do with stuffing envelopes.
Second, nowhere in the ad is there any mention of any product
Third, and, significantly, nowhere in the ad does it say that
the consumer will have to spend his or her own money to place
ads in newspapers and periodicals. In fact, the ad implies that
there will be no expense to the consumer ("You never have to
buy stamps, envelopes, circulars or any supplies").
After reading the "come-on" ad (Plaintiff's Exhibit 1), the
unwary consumer sends $27 to Associates and then receives
Plaintiff's Exhibit 2, a brochure entitled, "`Successful
Systems' Home-Mailing Program Procedure Manual, by Lisa
Michaels". Now the consumer is advised that he or she will be a
"registered distributor of our HOTTEST MONEY-MAKERS,
specifically we offer a No-Nonsense way to $550 a day". Still
no mention of the product or the program. On page two of the
manual the consumer is again assured that he or she "never have
to spend one cent on any circulars, envelopes or stamps".
On page two, the consumer is finally advised what to do — "Your
only expense in this program will be for placing one or more
inexpensive classified ads". The consumer is advised to place a
classified advertisement, as follows:
When the consumer places the ad(s) he or she will then receive
replies containing $1.00 in each reply and he or she will stuff
the self-addressed stamped envelope. With what? With circulars
(Plaintiff's Exhibit 3) that advertise "A No-Nonsense way to
$500 a Day". Still no mention of the product to be sold. The
second consumer fills out a coupon and sends $20 to the first
consumer (with immediate refund rights). The coupon states,
"Please rush me a copy of your `ultimate' home business plan".
Still no mention of any product or program; only double-talk
and evasive, confusing language for an anonymous product.
Plaintiff's Exhibit 3 is a document sent to the first consumer
with the manual. In this document there are similar vague and
misleading representations such as:
This flyer again emphasizes the "complete refund" available,
which is the apparent "fail-safe" feature of this operation.
As to the "money" portion of the flyer (Plaintiff's Exhibit 3),
it continues, as follows:
All this verbiage and still no product named nor any
explanation of any program or system.
Nowhere in Plaintiff's Exhibit 3 does it say that the consumer
will have to place and pay for ads. In fact, as quoted above,
the ad specifically states that ". . . the best part is, there
is NEVER anything else to buy for this business from me or
ANYONE ELSE!" (Exhibit 3).
So now we have the first consumer sending $27 to Associates and
advertising, and the second consumer sending $20 to the first
consumer, who keeps $10 and forwards the other $10 to
Associates. All of this transpires without even the mention of
a product, and with only an intentionally vague and unclear
mention of the type of program involved. All of this is
initiated by an implicit no-expense representation, which the
Court finds to be intentionally false.
Plaintiff's Exhibit 3 is headed in large letters with the
proclamation "A NO-NONSENSE WAY TO $500 A DAY". According to
Inspector McDermott the only way a consumer could earn $500 a
day under this plan would be to obtain 40 additional customers
per day (1/2 of $20 is $10 times 50 people is $500 per day) and
"arithmetically you would just run out of people as you get
further down the line from the chain" (Tr. p. 39).*fn1
McDermott further testified that he had two boxes of consumers'
complaints mailed to postal authorities with regard to
"Successful Systems". There were "over 650 (complaints) with
more arriving every day". He reviewed approximately two hundred
complaint letters. There were two major types of complaints.
First, the consumers thought they would be stuffing envelopes
provided by "Successful Systems" and they (the consumers) would
bear no expense. The second major source of complaint was that
the promised refunds were never made. Some of the consumers
wrote to Associates two or three times and did not receive a
refund, as repeatedly and expressly promised in every circular.
When a consumer received the manual he or she discovered that
there was actually no product involved and that further
involvement on their part required the expenditure of money for
ads. Commenting further on the complaint letters, McDermott
testified as follows:
Two of the letters in evidence are from Clara Dillinger
(Plaintiff's Exhibit 4A) and George Ellis (Plaintiff's Exhibit
4B). The Dillinger letter, which is handwritten, reads as
They have not returned my money. I have written them twice.
(emphasis in original).
/s/ George W. Ellis 12/4/89"
Based upon his experience as a postal inspector, in the opinion
of Inspector McDermott, the "Successful Systems" program "is
nothing more than a chain letter pyramid scheme in which no
product is involved, and is only sustained by recruiting other
members to sell in essence the same nothing program" (Tr. p.
Further, in his opinion as a postal inspector, the initial
solicitation sent out by "Successful Systems", Plaintiff's
Exhibit 1, "is filled with deceptions and misrepresentations"
in that: (1) it mentions nothing about advertising costs; (2)
it mentions nothing about the major thrust — to recruit others
to join and sell similar programs; (3) it says nothing about
the product involved; and (4) it promises a refund within
On cross-examination, Inspector McDermott testified that he did
not know how much of the $410,000 in the seized bank account
constituted monies derived from the "Successful Systems"
program. While on cross-examination he summed up his analysis
of the defendants' program as follows:
Although counsel for the defendants vigorously tried to bring
out that the Association was selling two products, namely, (1)
a pamphlet entitled "How to `erase bad credit' and reprint
rights", and (2) mailing lists, McDermott stated:
"A In answering an ad in a way to make $500 a day. That's what
they are answering. They are not answering to buy mail order
lists. Nowhere in that ad does it say send a dollar to buy a
coupon to buy mail order lists, no one would buy it then." (Tr.
"A Sir, when they paid the $27 they were not aware that they
would have to spend additional money for advertising, period."
(Tr. p. 101).
It is significant that while the defendants' fliers state that
they have a way consumers could make $500 per day, they never
mention the report on "How to erase bad credit" as the
product. In sum, for $27, the customer received a brochure
telling them to pay to advertise a nebulous and concealed
b. The Defendants' Case.
The sole witness for the defendants was the defendant William
J. Savran, a duly licensed dentist who was in practice from
1971 to 1986, at which time he left dentistry to enter the
"Medicard ID" business. In November 1987, he incorporated his
business as William Savran & Associates, Inc. Dr. Savran (and,
apparently, Associates) presently have only one commercial bank
account in which he deposits all income received by him from
whatever source derived. Included in the deposits is income
from his Medicard ID business and the "Successful Systems"
business, among other ventures. Also, from this account he pays
all of his business expenses, including rent, salaries,
advertising and postage expenses. In addition, he pays income
taxes, withholding taxes and even his child support from this
single account. Material to this discussion, he also pays
refunds on the Successful Systems "product" from this account.
The payments of these expenses by Associates and Dr. Savran
have been severely disrupted by the seizure and freezing of the
account by the plaintiff.
Dr. Savran admitted that he previously was involved with a
chain letter scheme, when, after a complaint was issued by the
postal inspector, he discontinued the prior plan.
In November 1987 he entered into an oral agreement with Julia
Picard, doing business as Mail Depot, Ltd., to perform "mail
order" work for him, including the mailing of refunds. He
received the consumers' complaints and referred them to Ms.
Picard. On November 1, 1990, Associates purchased Mail Depot
Ltd. from Julia Picard for $35,000. Dr. Savran blames Julia
Picard for the failure to make timely refunds as to the
Successful Systems plan.
As to the "Successful Systems" phase of his business, Dr.
Savran developed the idea in "probably 1988, around the
beginning of 1989". He was looking for distributors "to help me
sell my mailing lists and my other offer of $500 a day" (the
brochure to erase bad debts). Dr. Savran personally prepared
the brochure "How to erase bad credit" over a six week period,
and had obtained a registered copyright.
Dr. Savran explained the purpose of his original letter
(Plaintiff's Exhibit 1), as follows:
"Q And in that letter could you explain, what was the purpose
of that letter?
A To get distributors who would be salesmen for me selling my
Q And what product did you have to sell?
A Well, I had two products.
Q What were the products?
A One was the reports on How to Erase Bad Credit and the other
was mailing lists. I had been selling that report on credit for
several years very successfully. I figured if I get
distributors to do the same thing I would duplicate my efforts.
Q When you did them and you sent them, and they answered your
ads, they contacted you. And what did you send them then? This
A The letter, yes, sir.
Q Was there a fee for them to do something further afterward?
A Yes. If they have [sic] wanted to participate they would have
to send a $27 fee and they would receive the home mailing kit.
Q Now, when they became a distributor how were they to earn any
money on this?
A They would earn money by making sales and getting a
commission on each and every sale.
Q What kinds of sales did they make?
A They made two types of sales. One was for the erase bad
credit program, which is a program that somebody can actually
sell and make money each time they do it. That was one. And the
other thing they could sell if they wish, was the mailing list.
Q Now, in the literature you send to them did you explain to
them anything that they would have to outlay any money for
themselves in order to take part in the program?
Q Now, when they sent out the particular letter in here was
there anything in your original ad that said anything about
A No, there wasn't."
(Tr. pp. 142-43, 147; emphasis supplied).
Although they were not previously advised, in order to continue
in the plan, the consumers were required to place ads at a cost
of from $6 to $100 per week.
In early 1990, Dr. Savran began having problems with Julia
Picard, with regard to consumers who were not getting requested
refunds. According to Dr. Savran, he had no control over the
activities of Julia Picard and she allegedly embezzled his
postage money. When he discovered this problem, he immediately
fired her, wrote out the refunds and eventually purchased her
business. Oddly, even though Ms. Picard failed to make refunds
and stole monies from him, Dr. Savran purchased her business
Dr. Savran testified that he never received a "cease and
desist" order from the Postal Service and that he first became
aware of any complaints when he was arrested (Tr. p. 154). He
testified that Associates made refunds to all of the people
named in the Government's papers. He further stated he had no
intent to defraud anyone or to misrepresent anything to anyone.
He stated that today, people are still ordering and reordering
from him; that "hundreds and hundreds" of people are satisfied
with his products and "several" make good livings from his
mailings (Tr. p. 158).
On cross-examination, Dr. Savran testified that "probably 25
percent" of the proceeds in the seized bank account is
attributable to Successful Systems (Tr. p. 163). He is the only
person who works for Successful Systems although his wife Lisa
Savran helps him once in a while. The "Lisa Michaels" mentioned
in the fliers (Plaintiff's Exhibit 1) and manual is his wife,
who is Vice President of Associates (Tr. pp. 168-69).
Dr. Savran had another bank account at the Roosevelt Savings
Bank which he closed in July 1990 because the bank officials
were concerned about the number of complaints from consumers
who had not received refunds.
As to the initial letter to the consumers (Plaintiff's Exhibit
1), the following testimony of Dr. Savran may help explain the
mysteries of the "Successful Systems" program, and is
"Q Dr. Savran, I would like you to take a look now at a
document marked yesterday as Government Exhibit 1.
(Handed to the witness.)
Q Now, I believe you testified yesterday that this was an
initial letter that Successful Systems sent out to consumers?
Q And I believe you also testified that once the persons paid
$27 to Successful Systems the person would then receive a
document marked Government Exhibit 2 which is entitled,
Successful Systems Home Mailing Program Procedure and Manual?
Q You further testified that enclosed in Government Exhibit 2,
which is the manual, there was an instruction book instructing
the persons how to sell a circular which has been marked as
Exhibit 3, which says a No Nonsense Way to $500 a Day, to other
Q And that's accurate?
Q And you further testified that Government Exhibit 3, a No
Nonsense Way to $500 a Day, was advertising to sell either
mailing lists or a booklet regarding how to prepare your bad
Q And that's all accurate?
A That is correct.
Q Now, addressing your attention again to Government Exhibit 1,
show me where in that letter it says that what is being
offered to the first level of customers is an opportunity to be
a distributor to sell mailing lists or booklets regarding
repairs to credit damage.
A It doesn't say that.
Q It doesn't say that anywhere?
Q You testified yesterday that you spent a month or a
significant period of time carefully writing out Government
Exhibit 1, which is the initial letter from Successful Systems.
If what you are selling is a distributorship to sell mailing
lists and booklets for credit repair why isn't that stated in
your initial letter?
MR. LAMB: Objection, Your Honor.
THE COURT: Overruled.
A Because it wasn't mentioned.
Q Why wasn't it if that's what you were selling?
A Is there a reason it should be?
Q Well, normally isn't it normal when somebody advertising
something to sell, that they describe what is being sold?
A Not all the time.
Q Not all the time.
Did you intentionally draft Government Exhibit 1 so that it
was not clear that what was being sold was a distributorship
for mailing lists or bad credit booklets?
A You have to repeat the question.
MR. RIEGEL: Can I have it read back, please?
THE COURT: Yes
(Whereupon, the court reporter reads the requested material.)
Q You did?
Q Why did you do that?
A It is a technique used in the mail order business.
Q Now you testified that you intentionally drafted this so
that it didn't state what was being sold.
A That is correct" (Tr. pp. 191-94; emphasis supplied).
"Q You did say that you intentionally omitted information from
Government Exhibit 1 as to the very nature of what you were
offering and selling?
MR. LAMB: Objected to, your Honor.
THE COURT: Overruled.
A I left out what the product is, yes" (Tr. p. 218).
"THE COURT: Why did you do it?
THE WITNESS: It is a technique used in selling business
opportunities where people list the advantage of it.
THE COURT: It is a technique not to tell the potential
distributors the product they were supposed to distribute?
THE WITNESS: Correct. And they are free not to buy it.
Q But they don't even know what they are buying; isn't that
Q Let me ask you, would you think a consumer reading this
letter would get from it that what was being sold was a right
to a distributorship to sell mailing lists and credit report?
A Not specifically, no.
Q They would not?
A Correct" (Tr. p. 195; emphasis supplied).
"Q Looking again at Government Exhibit 1, does it state
anywhere in there, directly or indirectly, that a consumer
paying $27 will receive a kit which instructs the consumer to
spend additional money to place ads, or to send out direct mail
in order to sell your products?
A Does it say that anywhere?
A That they have to place an ad, no. But there is always
advertising and promotions for anything you do. It doesn't say
everything in the world would be free. It says the supplies
would be free. There is no intimation that there would be no
other expense for ads or anything else" (Tr. p. 197; emphasis
supplied). (Tr. pp. 191-197; emphasis supplied).
As to the amount Associates was receiving from consumers in the
"Successful Systems" program, Dr. Savran testified that "[i]t
could be as much as $50,000" per month (Tr. p. 203).
Dr. Savran was further questioned about Plaintiff's Exhibit 1
which in the third paragraph states "This is not a get rich
scheme". Yet on page 7 of the Successful Systems Manual, sent
out to consumers who respond to Exhibit 1, it says "Strike it
Dr. Savran further conceded that even in Defendants' Exhibit A,
which is sent in response to the manual, there is no mention of
the "improve your bad credit" pamphlet. It says it is "a
no-nonsense way to $500 a day".
"Q Does it say anywhere to make — the way to make $500 a day, a
No Nonsense Way, was to market Defendant's Exhibit A, How to
Erase Bad Credit and Reprint Rights?
Q Why didn't you say simply in Government Exhibit 3, the way to
make $500 a Day is to try to market a report regarding erasing
A I didn't mention it.
Q Isn't the reason because if you had said it accurately the
amount of response you would have gotten, it would be
negligible compared to what you have gotten?
A I don't know that to be true.
Q With respect to Government Exhibit 1, the initial Successful
Systems letter, isn't it accurate to say that if you had stated
in there the truth of the matter what you were selling would be
the distributorship to sell a bad credit report and mailing
lists, and the amount of mailing you got which you said before
as much as 50,000 a month would be much less than that figure?
MR. LAMB: Objection, your Honor.
Asked and answered. The question was asked before and
THE COURT: Overruled.
A I don't know if it would or wouldn't I never did it the
other way, so I don't know" (Tr. pp. 214, 216-17).
Dr. Savran could not estimate the amount of income he received
from Successful Systems in 1989, although he guesses that it
would be "[m]aybe 25 percent" of his total income (Tr. pp.
224-25). He doesn't think he has any business records that
itemize his income or separately delineate the Successful
With regard to the probability of anyone making $300 or $500 a
day by using the "Successful Systems" program, Dr. Savran
stated the following:
"Q So your statement that they can receive up to $500 a day has
no basis in fact?
A Yes, it does. I was marketing the report and making about
$500 a day or more when I first started marketing it myself.
Q Do you know anyone who is making 300 or $500 a Day [sic]
every day they work on this?
A Personally, no. Myself, yes, sir. I have done it myself.
Q Just yourself?
A Yes" (Tr. p. 230).
III. ADDITIONAL FINDINGS OF FACT
In addition to the findings of fact set forth above, the Court
makes the following further findings:
1. Upon a review of all the fliers, manuals and enclosures
mailed by the defendants in the "Successful Systems" program,
this Court finds that the central thrust of these documents was
to present a vague, confusing and incomprehensible sales
promotion without mentioning the product to be sold or the real
method of distribution. The Court further finds that these
documents were intentionally designed to mislead and to induce
innocent and unwary consumers to part with money — and so, the
documents contain fraudulent misrepresentations. The flyer and
manual solicit people to send in $27 — for what, they could not
2. The defendant intended to create confusion and to
misrepresent the truth in the solicitations, and thereby obtain
a greater number of initial $27 responses from the consuming
3. The solicitation (Plaintiff's Exhibit 3), expressly states
that "there is NEVER anything else to buy for this business
from me or ANYONE ELSE!". This is not only misleading but the
Court finds it expressly false.
4. The unconditional refund offer does not ameliorate this
situation. First, there were a substantial number of unhappy
customers who never received refunds. Second, it is reasonable
to infer that only a small percentage of unsatisfied consumers
even request a refund, so that the defendant is able to retain
many of the $27 payments sent by customers who, after receiving
the manual, do not go to the next step.
5. The use of the mails and United States Postal Service was
and is an integral part of the defendants' business, and the
defendant therefore used the mails in furtherance of the
fraudulent "Successful Systems" plan.
6. The intentional nondisclosures and affirmative
misrepresentations made by the defendants in the "Successful
Systems" solicitations were material.
7. Harm and/or injury to the consuming public was or at least
should have been reasonably foreseeable as a result of the
advertisements and direct mailings and substantial monetary
responses, ranging to as much as $50,000 per month.
IV. THE APPLICABLE LAW
a. Availability of Preliminary Injunctive Relief Under
18 U.S.C. § 1345.
On this motion for a preliminary injunction, the plaintiff
seeks relief under 18 U.S.C. § 1345, which provides in
"Whenever it shall appear that any person is engaged or is
about to engage in any act which constitutes or will constitute
a violation of [the mail fraud statute, 18 U.S.C. § 1341] . . .
the Attorney General may initiate a civil proceeding in a
district court of the United States to enjoin such violation.
The court shall proceed as soon as practicable to the hearing
and determination of such an action, and may, at any time
before final determination, enter such a restraining order or
prohibition, or take such other action, as is warranted to
prevent a continuing and substantial injury to the United
States or to any person or class of persons for whose
protection the action is brought. A proceeding under this
section is governed by the Federal Rules of Civil Procedure,
except that, if an indictment has been returned against the
respondent, discovery is governed by the Federal Rules of
To support an application for a preliminary injunction under
18 U.S.C. § 1345, the Government must demonstrate that "probable
cause" exists to believe that the defendant is currently
engaged or about to engage in a fraudulent scheme violative of
either the mail, wire or bank fraud statutes (see United
States v. Belden, 714 F. Supp. 42, 45-46 [N.D.N.Y. 1987]).
Fraudulent Scheme Must be Ongoing.
Injunctive relief is authorized under section 1345 only when
the alleged fraudulent scheme is ongoing and there exists a
threat of continued perpetration; the statutory equitable
remedy is not available for solely past violations (see United
States v. Cen-Card Agency, No. 88-5764, slip op. at p. 14 [3d
Cir. Mar. 23, 1989] [872 F.2d 411-414 (tables)]; United States
v. New Frontiers Real Estate Co., No. CV-89-2585, slip op.
[E.D.Pa. May 8, 1989] [1989 WL 49519, 1989 U.S.Dist. LEXIS
5073]; United States v. Jones, 652 F. Supp. 1559, 1560
As the evidence adduced at the hearing amply demonstrates, the
alleged violations of mail fraud are ongoing and threaten to
continue. The defendants solicited orders for the Successful
Systems plan, which initially put the alleged pyramid scheme in
motion. Orders from unwary consumers have been and continue to
be placed with Savran. In fact, Savran testified that he still
continues to receive orders. Those consumers who continue to
participate in the scheme, perhaps unwittingly by simply
following Savran's instructions, are ultimately increasing
Savran's receipts from this fraudulent plan and continue to
perpetrate its existence. The defendants are currently
receiving thousands of orders (and dollars) per week in
response to their mailings and advertisements. Finally, the
Court finds it significant that there has been no indication
from counsel for the defendants that the dissemination of
mailings and advertisements would cease pending the outcome of
the related criminal case.
Accordingly, the Court finds that this alleged fraudulent
scheme is ongoing, and therefore preliminary injunctive relief
pursuant 18 U.S.C. § 1345 is available at this juncture.
Irreparable Harm Not Necessary Under Section 1345.
The statute itself is silent as to whether the traditional
elements, including "irreparable harm", must be demonstrated in
order to obtain a preliminary injunction under 18 U.S.C. § 1345.
In view of the plain meaning of the statute, such a
showing is not required. Although it has been stated that
"irreparable harm" need not be demonstrated to obtain an
injunction under section 1345 (see, e.g., United States v.
Belden, supra, 714 F. Supp. at p. 45), the Third Circuit, in an
unpublished opinion, expressly declined to address the issue,
since in that case such harm was actually demonstrated by the
Government (see United States v. Cen-Card Agency, No.
88-5764, slip op. at p. 10 n. 4 [3d Cir. Mar. 23, 1989]
[872 F.2d 411, 414 (tables)]).
The legislative history of section 1345 indicates a
Congressional concern over the possibility that the consuming
public could be victimized by permitting the continuance of a
fraudulent scheme while a related criminal investigation or
prosecution is underway, which, oftentimes could be a rather
lengthy or protracted process:
"While present law provides limited injunctive relief [under
39 U.S.C. § 3005(a) ], this relief is inadequate First, the relief
is restricted to the detention of incoming mail. It does not
reach the situation where letters continue to be sent to
further a scheme and remittances are collected personally from
the customer or to fraudulent schemes which do not entail the
use of the mails. Second, the required administrative
proceedings entail considerable delay which is compounded by
the extra time and energy necessary to bring an injunctive suit
in the district court while the administrative proceedings are
pending. Since the investigation of fraudulent schemes often
takes months, if not years, before the case is ready for
criminal prosecution, innocent people continue to be victimized
while the investigation is in progress.
For these reasons, the Committee has concluded that whenever it
appears that a person is engaged or is about to engage in a
criminal fraud offense proscribed by chapter 63 [including mail
fraud], the Attorney General should be empowered to bring suit
to enjoin the fraudulent act or practices" (S.Rep. 225, 98th
Cong., 2d Sess. 401-02, reprinted
in 1984 U.S.Code Cong. & Admin.News 3182, 3539-40 [footnotes
In United States v. Belden, supra, Chief Judge Munson
observed that courts have traditionally not required a showing
of irreparable harm to obtain a preliminary injunction under
39 U.S.C. § 3007
, rather only "probable cause" need be
demonstrated. The court further noted that 18 U.S.C. § 1345 was
"intended to make it easier for the government to obtain
preliminary injunctions as a means of terminating fraudulent
schemes during the pendency of criminal investigations than had
been possible under 39 U.S.C. § 3007" (United States v.
Belden, supra, 714 F. Supp. at p. 45).
In other areas where Congress has provided for Governmental
enforcement of a statute by way of an injunction, the courts
have consistently held that irreparable harm need not be
demonstrated, and that so long as the statutory conditions are
met, irreparable harm to the public is presumed (see, e.g.,
United States v. Odessa Union Warehouse Co-op, 833 F.2d 172,
175-76 [9th Cir. 1987] [in action under Food, Drug and Cosmetic
Act, Government need not demonstrate irreparable harm to obtain
preliminary injunction]; Government of the Virgin Islands v.
Virgin Islands Paving, Inc., 714 F.2d 283, 286 [3d Cir. 1983]
["when a statute contains, either explicitly or implicitly, a
finding that violations will harm the public, the courts may
grant preliminary equitable relief on a showing of a statutory
violation without requiring any additional showing of
irreparable harm"]; Securities & Exchange Comm'n v. Management
Dynamics, Inc., 515 F.2d 801, 808 [2d Cir. 1975] [in SEC
enforcement action, proof of irreparable harm unnecessary to
obtain injunction]; United States v. Cappetto, 502 F.2d 1351,
1358-59 [7th Cir. 1974] [not necessary to establish likelihood
of irreparable harm in RICO action brought by Attorney
General], cert. denied, 420 U.S. 925, 95 S.Ct. 1121, 43
L.Ed.2d 395 *fn3; United States Postal Serv. v.
Beamish, 466 F.2d 804, 806 [3d Cir. 1972] [common-law
requirement of irreparable harm and likelihood of success are
inapplicable to injunctions sought under 39 U.S.C. § 3007];
United States v. Schmitt, 734 F. Supp. 1035, 1048-52 [E.D.
N Y 1990] [Government not required to demonstrate irreparable
harm to obtain preliminary injunction under Rivers and Harbors
Although the Government must prove that the defendant had a
specific intent to defraud (see, e.g., United States v. Amrep
[2d Cir. 1977], cert. denied,
, 54 L.Ed.2d 759 ), a showing of evil
motive on the part of the defendant is not necessary (see
United States v. Simon,
, 808-09 [2d Cir. 1969],
, 25 L.Ed.2d 420
), and such intent may be inferred through circumstantial
evidence (see United States v. Panza,
, 1149 [2d
For the reasons above set forth at length and in detail in the
Court's findings of fact, this Court finds that the Government
has established that the defendants have engaged and continue
to engage in a scheme or artifice to defraud in violation of
18 U.S.C. § 1341. The Successful Systems plan and the
solicitations in connection with its implementation are
intentionally vague, ambiguous and calculated to create
confusion among unwary consumers in an attempt to fraudulently
obtain $27 by misrepresenting the true nature of the "product"
(if any) and the means to sell the product.
Additionally, the Court finds that this "product" is nothing
more than a pyramid or chain-letter scheme. It is well settled
that such a "pyramid" or "chain-letter" scheme constitutes mail
fraud (see, e.g., United States v. Armantrout, 411 F.2d 60,
61-62 [2d Cir. 1969], citing Blachly v. United States,
380 F.2d 665, 672 [5th Cir. 1967] [other citations omitted]).
Further, evidence that the mails were used to facilitate or
further Savran's "Successful System" business is
uncontroverted. In fact, use of the mails is not merely
"incident", it is the essential nature of the defendant's
business to utilize the mails to solicit and receive orders and
Accordingly, the Court finds that the plaintiff has
demonstrated probable cause to believe that the defendant "is
engaged or about to engage in" mail fraud violative of
18 U.S.C. § 1341, and therefore is entitled to a preliminary
The Court must now fashion an appropriate remedy.
The plaintiff seeks the following ultimate relief in connection
with this action brought pursuant to 18 U.S.C. § 981, 1956 and
1957, 18 U.S.C. § 1345 and 28 U.S.C. § 1355:
1. Preliminary injunction preventing the defendants from
soliciting orders in connection with the Successful Systems
2. Permanently enjoining the defendants from engaging in
fraudulent mailing schemes in the future.
3. Restitution of the monies received from consumers.