COURT OF THE STATE OF
M. CUOMO, Attorney General of the State of
JAGUAR SALES, LLC d/b/a/ JAGUAR SALES,
ANN SIBISKI, DAVID SIBISKI, TOM SIBISKI, ADAM CARLISLE, STEPHEN BARCEL, TIM BROWN, D.J. WARREN, KELLY “DOE”and PREMIER SALES,
Index No. 2007-
The People of the State of
1. Petitioners bring this special proceeding against respondents for repeated and persistent fraud and illegality in the recruitment of salespersons for door-to-door sales of magazines subscriptions and in the payment of wage commissions to those salespersons. Respondents recruited young salespersons from throughout the country with promises of bonuses and earned commissions. Instead, many of the salespersons found themselves working long hours and receiving only minimal spending money and no commissions.
2. Petitioners bring this proceeding pursuant to (a) Executive Law §63(12), which authorizes the Attorney General to maintain a special proceeding for injunctive relief, restitution, damages, and costs against any person or business entity that has engaged in repeated fraudulent or illegal acts or otherwise engaged in persistent fraud or illegality in the conduct of business; (b) General Business Law (“GBL”) Article 22-A which authorizes the Attorney General to enjoin any business that engages in deceptive practices in the conduct of any business in New York or engages in false advertising; and (c) Labor Law §190 et seq. governing the payment of wages to commission salespersons and Labor Law §193 prohibiting deductions from wages.
3. Venue for this proceeding is in
1. The Attorney General of the State of New York, on behalf of the People of the State of New York, is empowered under Executive Law §63(12) to seek to enjoin the continuance of repeated or persistent illegality in the transaction of business in the State of New York and to recover restitution and damages for all victims.
Jaguar Sales, LLC d/b/a Jaguar Sales is registered as a Limited Liability
Company in the State of
Sibiski is a resident of
4. David Sibiski is a resident of
Sibiski is a resident of
6. Premier Sales is an entity affiliated with Jaguar Sales and works with Jaguar Sales to sell magazine subscriptions door-to-door.
Carlisle is a resident of
Barcel is a resident of
9. Tim Brown is a manager and supervisor of Jaguar Sales. Tim Brown personally carries out the business of Jaguar Sales.
10. D.J. Warren is a manager and supervisor of Jaguar Sales. D.J. Warren personally carries out the business of Jaguar Sales.
11. Kelly “Doe” is a manager and supervisor of Jaguar Sales. Kelly “Doe” personally carries out the business of Jaguar Sales.
RELEVANT STATUTORY PROVISIONS
12. Executive Law §63(12) provides that “[w]henever any person shall engage in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting or transaction of business, the attorney general may apply, in the name of the people of the State of New York, to the supreme court of the State of New York...for an order enjoining the continuance of such business activity or of any fraudulent or illegal acts, directing restitution and damges.”
13. Labor Law §190(1) defines “wages” as “the earnings of an employee for labor or services rendered, regardless of whether the amount of earnings is determined on a time, piece, commission or other basis.” Labor Law §190(2) defines “employee” as “any person employed for hire by an employer in any employment”. Labor Law §2 (7) defines “employed” as “includes permitted or suffered to work”.
14. Labor Law §190(6) defines “commission salesman” as “any employee whose principal activity is the selling of any goods, wares, merchandise, services, real estate, insurance or any article or thing and whose earnings are based in whole or in part on commissions.”
15. Labor Law §191(c) provides that “a commission salesman shall be paid in wages, salary, drawing account, commissions and all other monies earned or payable in accordance with the agreed terms of employment, but not less frequently than once in each month and not later than the last day of the month following the month in which they are earned...”
16. Labor Law § 193 provides that no “employer shall make any deductions from the wages of an employee, except deductions which:
(a) are made in accordance with the provisions of any law or
any rule or regulations issued by any government agency; or (b) are expressly
authorized in writing by the employee and are for the benefit of the employee;
provided that such authorization is kept on file on the employer’s premises. Such authorized deductions shall be limited
to payments for insurance premiums, pension or health and welfare benefits,
contributions to charitable organizations, payments for
17. GBL Article 22-A prohibits any persons engaged in business in
18. GBL § 130(1)(b) prohibits any person, if a limited liability company, from carrying on, conducting or transacting business in New York unless it files, together with appropriate fees, an appropriate certificate with the New York Secretary of State.
19. Respondent, Jaguar Sales, LLC is a foreign limited liability company conducting business in New York without filing the appropriate fees and certificates with the New York Secretary of State.
advertise in various newspapers throughout the
21. When young adults call responding to these ads, respondents tell them it is a sales job, but reveal nothing more about the terms other than what is in their ads. If queried about the commissions, respondents say that the caller will make 40% of all sales. They encourage the caller by telling him or her they would be good at the job or that the job is easy. They offer to pay for bus fare to transport the caller to some state far away from where they are calling and urge them to come immediately.
22. Many young adults respond positively to the ads and the initial phone recruiting done by respondents and leave home to try to make the easy money promised.
23. When the new recruits arrive at the pre-paid location, respondents will meet them and tell them for the first time that their earnings will be based entirely on commissions from the sale of magazine subscriptions going door-to-door, that the commission is not 40% of the price of the subscriptions they sell, but some lesser figure, that they will not get travel fare to return home until they have worked for respondents for at least 30 days, and that they are to start virtually at once with little training, much less the one month of paid training. Absolutely no earnings are guaranteed. Respondents say nothing about free training or the sign-on bonus unless asked in which case they make clear that the recruit will only get $20 per day for meals and expenses which will be deducted, along with some amount for their board, from any commissions they earn.
24. Many recruits, who have no money to get home on their own, or who are otherwise willing to try to sell become salespersons employed by respondents. They sign several documents, one of which set forth that they will not get travel fare home until working for respondents for at least 30 days; another sets forth the commissions, but key parts of it are blank; and another which is some IRS tax form which respondents tell the salesperson that they will fill in. The salespersons are not given copies of what they sign and are told to ask other salespersons if they have questions about the job.
25. Salespersons are hastily taught the sales pitch, part of which is that they are to sell themselves and tell customers that they are involved in a competition, the prizes for which are $5,000 and trips to cities around the world. They are given identification that also announces the contest in which they are participating. The day after arriving at respondents’ current location, recruits are put to work. Respondents drive them, together with up to ten other salespersons, in a van operated by respondents. Respondents drop each salesperson off in a neighborhood and pick them up a few hours later to be taken to another neighborhood. The salespersons are told to go door-to-door selling the magazines by selling themselves and the contest.
26. Salesperson are required to work six days a week from approximately with one break for a meal. Repeatedly, salespersons and respondents will be stopped by police who cite them for violating local ordinances prohibiting soliciting without a license. Respondents make no attempt to comply with these laws and put the salespersons back to work immediately in a neighboring town after they are released by the police.
27. Salespersons are kept ignorant of their earnings. They are not paid weekly or even monthly. On the job they learn that there are onerous fines or financial penalties for such things as staying out late or not making any sales. They are told that they must sell at least 30 magazine subscriptions in a week to make “agent,” which either entitles them to their commissions or to some higher commission. Their commissions are allegedly kept in a book by respondents and they are not told what they have earned, in part because they will earn no commission should their customer stop payment on the magazine order. Finally, the salespersons learn that selling magazines not only may lead to arrest the way respondents conduct business, but that their employers drive them hard each day to make sales.
28. By witholding payment of commissions and the signing bonus, respondents keep the salespersons dependent on them and severely limit their option to quit. Nevertheless, salespersons quit before earning their travel fare home and are not paid any commission from any of the sales they made. Others quit after the 30 days required to earn their fare home, but are then told that the fare home will be deducted from any earnings.
AS AND FOR A FIRST CAUSE OF ACTION: FRAUD AND FALSE ADVERTISING
29. Repeatedly and persistently respondents deceived, misrepresented, and concealed the terms of employment with their sales persons in advertising and verbally until the salespersons left home without means to return until at least thirty days employment passed and continued to deceive, misrepresent and conceal additional terms and conditions from them thereafter in violation of General Business Law Article 22-A and Executive Law § 63(12).
AS AND FOR A SECOND CAUSE OF ACTION: ILLEGALITY
30. The salespersons employed by respondents are “Commission Salesmen” as that term is defined in Labor Law §190(6) and are employees as that term is defined in Labor Law §190 (2). Repeatedly and persistently, respondents failed to pay commission wages earned by its salespersons in violation of Labor Law § 191 (c).
31. By repeatedly and persistently violating Labor Law § 191 (c), respondents violated Executive Law § 63(12).
AS AND FOR A THIRD CAUSE OF ACTION: ILLEGALITY
32. Repeatedly and persistently, respondents failed to pay employees one month of paid training and sign-on bonuses in violation of Labor Law § 191 (c).
33. By repeatedly and persistently violating Labor Law § 191 (c), respondents violated Executive Law § 63(12).
AS AND FOR A FOURTH CAUSE OF ACTION: ILLEGALITY
34. Repeatedly and persistently, respondents violated Labor Law §193 by deducting expenses and fines from the commission wages of its salespersons.
35. By repeatedly and persistently violating Labor Law § 193, respondents violated Executive Law § 63(12).
AS AND FOR A FIFTH CAUSE OF ACTION AGAINST
JAGUAR SALES, LLC: ILLEGALITY
36. GBL § 130(1)(b) prohibits any person, if a limited liability company, from carrying on, conducting or transacting business in New York unless it files, together with appropriate fees, an appropriate certificate with the New York Secretary of State.
37. As set forth above, respondent, Jaguar Sales, LLC conducts or transacts business in New York in violation of GBL § 130(1)(b).
38. Its violation of GBL § 130(1)(b) constitutes repeated and persistent illegality in violation of Executive Law § 63(12).
WHEREFORE, petitioners request that this court grant relief pursuant to Executive Law § 63(12), Labor Law §§ 191 (c) and 193, and General Business Law Article 22-A against respondent by issuing an order and judgment:
1. Permanently enjoining respondents, their agents, representatives, employees and any corporation in which they are a principal owner, officer or manager from violating Executive Law § 63(12), Labor Law §§ 191(c) and 193, and General Business Law Article 22-A and from engaging in the fraudulent, deceptive and illegal practices alleged herein;
2. Permanently enjoining respondents, their agents, representatives, employees and any corporation in which they are a principal owner, officer or manager, from engaging in the magazine sales business within the State of New York until a $200,000.00performance bond is filed with the Attorney General by a surety or bonding company licensed by and in good standing with the New York State Department of Insurance, guaranteeing that respondents comply with any injunction which may be entered herein, the proceeds of that bond to provide a fund for restitution, civil penalties and costs should employees be defrauded or damaged by the future conduct of respondents;
3. Directing respondents to provide a full accounting of all employees who worked in New York from August 1, 2001 to the present, the dates of their employment, their earnings, and the dates of payment of their earnings, the terms of their employment, and any taxes or earnings witheld;
4. Directing respondents to make full monetary restitution for unpaid commission wages, bonuses or any other remuneration earned in New York State to its commission sales persons, including 25% liquidated damages provided by law, since August 1, 2001;
5. Directing respondents to provide a full accounting of all advertising they have done through any media from August 1, 2001 to the present, including the content of all ads, each media outlet in which ads were placed and the dates each ad were published;
6. Directing respondent to pay a civil penalty in the sum of
$500 to the State of
7. Awarding petitioners statutory costs in the amount of $2,000 pursuant to New York Civil Practice Law and Rules §8303(a)(6);
8 Authorizing petitioners to docket as a money judgment any order issued by the Court in this proceeding directing the payment of money by respondent including restitution, civil penalties and costs, pursuant to CPLR § 2222;
9. Permanently enjoining respondent Jaguar Sales, LLC from doing business in New York unless and until it files the appropriate certificate with the New York Secretary of State; and
10. Granting petitioners such other and further relief as this Court finds just and proper.
Attorney General of the State
Attorney for Petitioner
G. Nicholas Garin and Barry Kaufman
Assistant Attorneys General, of counsel