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Court Decisions

Court Proceedings, Judgments and Court Orders — 2007

To protect confidential information, the Bureau does not reveal the names of the companies involved unless they were otherwise made public.

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Premier Fitness Clubs

Date: 2007-11-27
Event: Registration of Consent Agreement
Court: Competition Tribunal
Court Number Files: CT-2007-009
Parties: Premier Fitness Clubs
Provision(s): 74.01(1) of the Competition Act - Deceptive Marketing Practices, Misrepresentations to the public
Products: Fitness club memberships

Summary: The Competition Bureau has reached a consent agreement with Premier Fitness Clubs, resolving the Bureau's concerns over some of the company's advertising practices from 1999 to 2004. The agreement was registered in 2007 with the Competition Tribunal.

Under the terms of the 10-year consent agreement, Premier Fitness Clubs is required to pay an administrative monetary penalty of $200,000.00, publish a corrective notice in three Ontario daily newspapers (the Toronto Sun, the Toronto Star, and the Ottawa Citizen) and display a corrective notice in its clubs and on its Web site. The company has also agreed to implement a new corporate compliance policy to cover its marketing practices, and abstain from making false or misleading representations in future promotional materials.

Announcement:
Premier Fitness Undisclosed Fees Investigation Successfully Concluded

Court document: Consent Agreement

(PDF; 720.4 KB; 17 Pages)
* available in french only

(PDF; 570.47 KB; 16 Pages)

(3051014)

Pacific Liberty et al.

Date: 2007-09-05
Event: Guilty Plea/Order of Prohibition
Court: Ontario Court of Justice
Court File Number:05-10008601-01
Parties: Oleg Oks, Aleksandr Oks
Provisions: Subsection 52.1(3) of the Competition Act - Deceptive Telemarketing
Product: Credit Cards/Gifts

Summary: Oleg Alex Oks and Aleksandr Oks pleaded guilty to criminal charges of deceptive telemarketing under the Competition Act involving advance fees of $319.00 (U.S.) for a Visa or MasterCard, along with free gifts such as cell phones while connected to the company Pacific Liberty. Both received jail time and prohibited from engaging in telemarketing for 10 years.

Announcement:
Competition Bureau Investigation Results in Jail Sentence For Deceptive Telemarketer

(3099048)

International Business Directories

Company Names: Commercial Business Supplies, Merchant Transaction Supplies, Merchant Supplies Services and International Business Directories.
Date: 2007-05-29
Event: Sentencing of Michael Mouyal
Court: Court of Quebec, Montreal
Court File Number: 500–73-1866-025 and 500–73-1866-0257
Parties: Michael Mouyal and the companies of the Mouyal Corporate Group
Provision(s): Sections 52 (False or Misleading Representations) and 52.1 (Deceptive Telemarketing) of the Competition Act
Product(s): Office Supplies and Business Directories

Summary: Summary: Mme Justice Corté of the Court of Quebec, Penal and Criminal division, sentenced Michael Mouyal following his guilty plea. Mouyal was sentenced to a fine $1,000,000 for his role in a deceptive telemarketing scam that generated over $136-million in deceptive sales during a six-year period. He also received two years probation, 240 hours of community service and a 10-year prohibition order prohibiting him from engaging in telemarketing sales of office supplies or business directories.

The scam operated from boiler rooms in Toronto, Montreal, and St. John's Not-for-profit organizations, businesses and government agencies in Canada, the United States and the United Kingdom were contacted by telemarketers who claimed to be their regular supplier of office supplies or business directories and were calling to renew previous orders from the victims. The scam was based on creating false and misleading impressions that a previous business relationship existed between the telemarketing operation and its victims. Businesses would then receive overpriced office supplies or virtually useless business directories that they would not have ordered were it not for the false and misleading representations.

Announcement:
2007-05-27 — Telemarketer Fined $1-million

Court Documents: Judgement

(108572)

NSV Nutrinautes Ltd. (Cocooning Club)

Date: 2007-04-27
Event: 8 year Prohibition Order
Court: Superior Court of Quebec
Court File Number: 550-73-021-023, 200-73-005483-055

Parties: NSV Nutrinautes Ltd.

Richard Guertin
Richard Arsenault
Marc Delisle

Provision(s): 52(1), 52(5), 55(2), 55(2.1), 55(3), 55.1(2) and 55.1(3) of the Competition Act — Multi-level Marketing and Pyramid Selling Schemes
Products: Multi-level marketing plan selling Online Software, Diet Plans

Summary: In March 2002, 11 charges were laid against NSV Nutrinautes Ltd., operating as Cocooning Club, under the misleading representation, multi-level marketing and scheme of pyramid selling provisions of the Act. In July 2002, the same 11 charges were laid against each of the devising parties: Arsenault and Guertin. In November 2002, the company solicitor, Delisle, was also charged with the same 11 counts.

Following preliminary hearings in May 2003 and January 2004, all parties were put on trial. Following negotiations, NSV Nutrinautes pled guilty to four counts under the general Misleading Representation, Multi-level Marketing and Scheme of Pyramid Selling provisions of the Act and was fined $75,000. The vice-president, Richard Arsenault, also pled guilty and was given a conditional sentence of two years less a day and a 10-year Prohibition Order. Charges against Marc Delisle were dropped. As part of the 2005 settlement, Mr. Guertin agreed to personally pay $50,000 of the company's fine in exchange for the dismissal of four charges against him. The fine has been paid and as such the charges against Mr. Guertin have been dismissed. Further, the Superior Court of Quebec has imposed an eight-year prohibition order under the Competition Act on the former President of NSV Nutrinautes Inc., Richard Guertin. The order prohibits him from engaging or becoming involved in any future multi-level marketing plans.

Announcement:
2007-04-27 — Multi-level Marketing Operator Banned from Industry

(108657)

Polar Spas

Date: 2007-04-12
Event: Default Judgment
Court: Federal Court
Court File Number: T-2069-06
Parties: 732311 Alberta Ltd.
Polar Spas (Edmonton) Ltd.
Polar Spas Inc. (British Columbia)
Ken Nickel
Provisions: 74.01(1)(a) False or misleading representations
74.12 Consent agreement
Products: Hot tubs, home leisure products

Summary: The Commissioner of Competition was granted a default judgment against Polar Spas, an Alberta-based hot tub dealer, and Ken Nickel, the company’s president, for breaking their commitments to pay monetary penalties under the terms of a consent agreement negotiated between the parties in August 2006.

In the consent agreement, Polar Spas gave an undertaking to cease making false or misleading representations, and to disclose all material conditions and restrictions that apply to offers of cash back and rebates. The company ran a “cashable vouchers” promotion in 2004 and 2005 using advertisements, radio commercials and verbal representations made by sales staff. These ads conveyed the impression that customers were guaranteed to get 75% of their purchase price back in cash, provided they passed a “financial memory test” and remembered to apply for the rebate three years from the date of purchase. However, there were other stringent conditions that had to be met, and the final value of the voucher was contingent on the number of claims filed.

The company was to pay an administrative monetary penalty of $35,000 and Ken Nickel was to pay a penalty of $10,000. Registration of the agreement with the Competition Tribunal was contingent on payment of the monetary penalties, which was due 20 days after execution of the agreement. As payment was not received, the agreement has not been registered and the Commissioner subsequently filed a statement of claim in Federal Court. Neither the company nor its president filed a defence.

Announcement:
2007-04-12 — Bureau obtains judgment against Polar Spas in deceptive marketing case

Court documents:
Statement of Claim
Motion for Default Judgement
Order - Federal Court file T-2069-06

(3082256)

Edward Harry Leefe, Lexcan International Corp.

Company Name: Company:Lexcan International Corp. (Ontario Corporation Number 1038191- also doing business as The Calcom Business Centre and Lexam International Corp.), MPL, and H & P Communications Inc. (Ontario Corporation Number 1038192).

Date: 2007-03-30
Event: Guilty Plea/Prohibition Order
Court: Ontario Superior Court of Justice
Court File Number: F609/05
Parties: Edward Leefe, Lexcan International Corp, H&P Communications Inc., Shirley Herrell
Provision(s): 52.1 (2) (a); 52.1 (2) (b); 52.1 (3) (a) - Deceptive Telemarketing provisions of the Competition Act, 52(1) (a) - False or Misleading Representations provision of the Competition Act, (precedes 1999 telemarketing amendments), 380 (1) (a) - Fraud Over $5,000 provision of the Criminal Code, 354 (1) (a) - Possession of Proceeds of an Indictable Offence provision of the Criminal Code, and 145(5.1) - Failure to Comply with an Undertaking provision of the Criminal Code.
Products: toner products

Summary: The Competition Bureau began an investigation into the telemarketing operations of Lexcan International Corp. and H&P Communications after complaints surfaced regarding the promotion and collection of fees for the sale of toner products to businesses that had not placed an order for such products.

Based on false and misleading representations, the operation, owned by Edward Leefe, persuaded victims to pay exorbitant prices for toner products and re-manufactured cartridges by means of aggressive collection practices and the threat of court action.

Mr. Leefe pleaded guilty to Competition Act and Criminal Code charges, and the Superior Court of Ontario imposed a $50,000 fine and an 18-month conditional sentence on Mr. Leefe. An additional fine of $1.5 million was levied against Lexcan International Corp. and H&P Communications, and over $78,000 worth of seized cheques were ordered to be returned to the victims. Mr. Leefe and the corporations are prohibited from engaging in any form of telemarketing for a period of 10 years.

Agreed Statement of Facts & Judges Reasons for Sentencing (attached)

Announcement:

Competition Bureau investigation leads to sentencing for deceptive telemarketing operation

(PDF; 1,31 MB; 23 Pages)
(PDF; 379.2 KB; 13 Pages)

(167668)

Ambus Registry Inc.

Company Name: Ambus Registry Inc.
Date: 2007-01-30
Event: Guilty Plea
Court: Provincial Court of Alberta
Court File Number: 060772282P10104
Parties: Sarah Catherine Schaefer
Provision(s): s. 52.1(3) of the Competition Act - Deceptive telemarketing.
Products: Business Directory on CD Rom

Summary: Sarah Schaefer (a.k.a. Juliet Schafer) pled guilty before Mr. Justice Delong on Thursday, January 30, 2007 at 2:00 p.m. in Courtroom #310. Her guilty pleas were to counts 7 and 8 of the INFORMATION before the Court which were:

telemarketing that was false or misleading with respect to whether an order had previously been made (count 7 – s. 52.1(3)(a) CA); and
telemarketing that was false or misleading with respect to whether an order was subject to a 30-day guarantee (count 8 – s. 52.1(3)(a) CA).

A joint submission for a $15,000 fine (in default 10 months) with a request of 6 months to pay. A transcript of the sentencing hearing and the decision of the Judge has been ordered. A letter to all remaining counsel is being sent advising of the guilty pleas. An agent for the Attorney General of Alberta Ms. Photini Papadatou registered an Agreed Statement of Facts.

Sarah Schaefer is one of seven individuals charged in this case.

Announcement:
2006-06-15 — Albertans Charged for Scamming American Businesses

(3019012)

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