An oldy but a goodie - Wade even pissed off the FTC.
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE
FEDERAL TRADE COMMISSION, Plaintiff,
v.
WADE COOK FINANCIAL CORP., and WADE COOK SEMINARS, INC., Defendants.
Case No.
COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF
Plaintiff, the Federal Trade Commission ("Commission"), for its Complaint alleges the following:
1. The Commission brings this action under Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. � 53(b) to obtain temporary, preliminary and permanent injunctive relief, rescission, restitution, disgorgement and other equitable relief to redress purchasers of defendants' wealth building seminars for the injury resulting from defendants' deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. � 45(a).
JURISDICTION AND VENUE
2. This Court has subject matter jurisdiction over plaintiff's claim pursuant to 28 U.S.C. �� 1331, 1337(a) and 1345, and 15 U.S.C. �� 45 (a) and 53(b).
3. Venue in the Western District of Washington is proper under 28 U.S.C. � 1391(b) and (c) and 15 U.S.C. � 53(b).
THE PARTIES
4. Plaintiff, the Federal Trade Commission, is an independent agency of the United States Government created by statute. 15 U.S.C. �� 41 - 58. The Commission enforces Section 5(a) of the FTC Act, 15 U.S.C. � 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The Commission may initiate federal district court proceedings to enjoin violations of the FTC Act, and to secure such equitable relief as may be appropriate in each case, including consumer restitution and disgorgement. 15 U.S.C. � 53(b).
5. Defendant Wade Cook Financial Corporation ("WCFC") is a Nevada corporation with its office and principal place of business at 14675 Interurban Avenue South, Seattle, Washington, 98168-4664. WCFC transacts business in the Western District of Washington.
6. Defendant Wade Cook Seminars Inc. ("WCSI"), is a Nevada corporation with its office and principal place of business at 14675 Interurban Avenue South, Seattle, Washington, 98168-4664. WCSI transacts business in the Western District of Washington.
COMMERCE
7. At all times relevant to this complaint, defendants have maintained a substantial course of trade in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. � 44.
DEFENDANTS' COURSE OF CONDUCT
8. Since 1994, defendants have attracted thousands of consumers to their programs by representing in advertisements and other promotional materials that consumers who attend defendants' Wall Street Workshop seminar will learn how to become wealthy trading stocks using the techniques taught at the workshop. The fee for the Wall Street Workshop is between $3,000 and $5,000 depending on the discount and promotion in effect at the time the customer pays to attend the seminar.
9. Typical representations by defendants that they have become wealthy trading in the stock market using the trading formulas taught at the Wall Street Workshop include, but are not limited to, the following:
a. What is our rate of return? I mean, sometimes I don't even want to write these things down because they get so phenomenal. We're talking like 80, 90 percent return, an annualized return of close to 1,000 percent on an annualized basis. And again, if you're not making this kind of money, you need to come along with me and figure out the covered call formula.
b.[F]or every 13 to 14 of these options that we make money on, we lose money on one. . . . Annualized returns: 3,848% and 2,028% . . . if you are not getting these returns, call the number you see on the screen right away.
c. My investment team (Team Wall Street) was earning greater than 300%, often several thousand percent per annum. . . . [We] are an investment instruction team who, as far as I know, net greater returns in the stock market than any other investment group in the country.
10. Typical representations that average consumers who attend the Wall Street Work Shop will make large amounts of money or large returns on their stock market investments by learning and using the trading formulas taught there include, but are not limited to, the following:
a. Our Wall Street Workshop has taught thousands of people how to generate income and win big on Wall Street . . . Our processes are truly what they DO NOT teach at Harvard Business School. They are delivered in such simple and easy-to-understand ways that even teenagers are using them to earn in excess of 20% per month.
b. One of the greatest concerns that I have as an educator is to help people learn how to make money consistently - steady income. Taking $10,000 and learning how to use that money to generate $2,000 or $3,000 of monthly income. Yes I said monthly income.
c. And along comes Wade Cook who says, no, we're going to teach strategies. We're going to teach formulas. We're going to teach a system, a method, a way of consistently and predictably making money.
d. You see, most of my strategies are designed to not lose money. I just hate losing money. . . . Do you? So if you don't like losing money - if you like making lots of money, then come with me as I go through this, but you've got to learn the rules. You've got to learn the formulas or the strategy.
11. Defendants have grossly exaggerated their success trading in the stock market. Defendants have not earned the extremely high rates of return in the stock market that they have claimed in promotional materials. Likewise, defendants have exaggerated the ease with which consumers will be able to earn extremely high rates of return trading in stocks after attending the Wall Street Workshop.
DEFENDANTS' VIOLATIONS OF THE FTC ACT
12. Section 5(a) of the FTC Act prohibits deceptive acts or practices in or affecting commerce.
COUNT I
13. Paragraphs 8 through 11 are incorporated by reference.
14. Defendants have represented, expressly or by implication, that Cook has become wealthy trading or investing in the stock market using the Wade Cook trading formulas that are taught at the Wall Street Workshop.
15. In truth and in fact, Cook has not become wealthy trading or investing in the stock market using the Wade Cook trading formulas that are taught, but from selling seminars and products about trading or investing in the stock market.
16. Therefore, defendants' representation as set forth in Paragraph 14 above is false and misleading and constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. � 45(a).
COUNT II
17. Paragraphs 8 through 11 are incorporated by reference.
18. Defendants have represented, expressly or by implication, that consumers who attend the Wall Street Workshop will earn extremely high rates of return, for example, returns of 20% or more per month, on their stock market investments by learning and using the Wade Cook trading formulas.
19. In truth and in fact, in many instances, consumers who attend the Wall Street Workshop do not earn extremely high rates of return, for example returns of 20% or more per month, on their stock market investments by learning and using the Wade Cook trading formulas.
20. Therefore, defendants' representation as set forth in Paragraph 18 above is false and misleading and constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. � 45(a).
COUNT III
21. Paragraphs 8 through 11 are incorporated by reference.
22. In connection with the representations set forth in Paragraphs 14 and 18, defendants have failed to disclose the actual rates of return earned by defendants and Cook on all stock-related investments.
23. These facts would be material to consumers in their decision to pay the fee to attend the Wall Street Workshop.
24. In light of the representations described in Paragraphs 14 and 18, defendants failure to disclose the actual rates of return earned by defendants and Cook on all stock-related investments, is a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. � 45(a).
COUNT IV
25. Paragraphs 8 through 11 are incorporated by reference.
26. By disseminating promotional materials and advertisements, and conducting Financial Clinics that contain testimonials from the clinic speakers and from former Wall Street Workshop attendees, defendants have represented, expressly or by implication, that the testimonials reflect the typical or ordinary experiences of members of the public who attend the Wall Street Workshop.
27. In truth and in fact, the testimonials from clinic speakers and former Wall Street Workshop attendees do not reflect the typical or ordinary experiences of members of the public who attend the Wall Street Workshop.
28. Therefore, defendants' representation as set forth in Paragraph 26 above is false and misleading and constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. � 45(a).
COUNT V
29. By disseminating promotional materials and advertisements and conducting Financial Clinics in which they make the representations set forth in Counts I, II, and IV defendants have represented, expressly or by implication, that they possessed and relied upon a reasonable basis that substantiated such representations, at the time the representations were made.
30. In truth and in fact, defendants did not possess and rely upon a reasonable basis that substantiated such representations, at the time the representations were made.
31. Therefore, defendants' representation as set forth in Paragraph 29 above is false and misleading and constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. � 45(a).
INJURY
32. Defendants' violations of Section 5 of the FTC Act, as set forth above, have caused and continue to cause substantial injury to consumers. Absent injunctive relief by this Court, defendants are likely to continue to injure consumers.
THIS COURT'S POWER TO GRANT RELIEF
33. Section 13(b) of the FTC Act, 15 U.S.C. � 53(b), empowers this Court to issue a permanent injunction against defendants' violations of the FTC Act, and, in the exercise of its equitable jurisdiction, to order such ancillary relief as preliminary injunction, rescission, restitution, disgorgement of profits resulting from defendants' unlawful acts or practices, and other remedial measures.
PRAYER FOR RELIEF
WHEREFORE the Commission respectfully requests that this Court, as authorized by 15 U.S.C. � 53(b) and pursuant to its own equitable powers:
(1) Permanently enjoin defendants from violating Section 5(a) of the FTC Act;
(2) Award all such relief as the Court finds necessary to remedy the defendants' violations of Section 5(a) of the FTC Act, including but not limited to rescission of contracts, the refund of monies paid and disgorgement; and
(3) Award the Commission the costs of bringing this action, as well as any other equitable relief that the Court may determine to be proper and just.
DATED: ___________, 2000.
Respectfully submitted,
________________________
Eleanor Durham
ATTORNEY FOR PLAINTIFF
FEDERAL TRADE COMMISSION
