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October 8, 1999

Cathy Noe/ John Trollinger/Carolyn Cheezum

For Immediate Release

410-965-8904 FAX 410-966-9973

Social Security Online


News Release

Social Security Commissioner Kenneth S. Apfel Announces
Federal Record Service Corporation Settlement

Federal Record Service Corporation, a New York Corporation, has agreed to a permanent injunction barring it from mailing out solicitations in violation of law that prohibits deceptive Social Security-related mailings, Kenneth S. Apfel, Commissioner of Social Security, announced today.

As a part of the agreement, Federal Record Service Corporation will also pay a $195,000 penalty within 30 days of the settlement date and a percentage of its pre-tax income over the next 10 years, up to $650,000.

"For far too long, the Federal Record Service Corporation has been swindling the American public out of their hard earned money for services the Social Security Administration provides for free," said Commissioner Apfel. "The combined efforts of the Social Security Administration's Office of General Counsel, our Inspector General and the U.S. Attorney's office sends a strong message to companies like the Federal Record Service Corporation that their deceitful activities will not be tolerated by the U.S. Government."

The company's mailings have long been the target of complaints from consumers who were duped into paying a $15 fee for a service that SSA offered without charge.

Action by the SSA's Offices of General Counsel and Inspector General and the Office of the U.S. Attorney in Manhattan led to a preliminary injunction issued last May by a federal judge from the U.S. District Court for the Southern District of New York that effectively shut down Federal Record Service Corporation operations.

"This case sends a clear message to the direct mailing industry," SSA Acting Inspector General James G. Huse, Jr., said. "Bilking consumers under Social Security's good name will not be tolerated. Fighting deceptive mailings involving SSA's trademarks and logos will continue to be a top investigative priority for our office."

In addition to monetary fines, Federal Record Service Corporation also agreed to additional terms:

· Federal Record Service Corporation, the New York Corporation, will be dissolved according to New York corporate law;

· Federal Record Service Corporation will not sell, give or transfer any personal information they have received from consumers to any person, corporation or other entity;

· Federal Record Service Corporation will not to have any involvement of any kind, including financial or consultative involvement, in any other business that offers services to consumers related to Social Security.

The settlement covers two of the four named defendants, Federal Record Service Corporation, the New York Corporation, and its president, Darrin Gleeman. Proceedings against the third and fourth named defendants are still pending.

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