A PROFESSIONAL CORPORATION

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stgeorge@stgeorgelaw.com                                                                                                                                                           Tempe, Arizona  85282-5216

June 18, 2010

Specialty Merchandise Corporation

996 Flower Glen St.

Simi Valley, CA 93065

Attn: Mr. Mark Schwartz, President

        Re: Your e-mail to SMC “customers” re Business Recovery Services

Dear Mr. Schwartz,

        This office represents Business Recovery Services, LLC. As such, your e-mail of June 16^th, 2010, apparently entitled “WARNING: SCAMMER TARGETS SMS MEMBERS!” has been forwarded to this office for response.

        Apparently, you wish to throw down a gauntlet to Business Recovery Services (“BRS”).  We relish the opportunity to display to your customers the deliberate misstatements, half-truths, and lies that you have published about BRS.  The only reason you would have published such a slanderous statement is out of desperation at the number of refunds to your “members” that SMC is currently being forced to make because of BRS’ efforts on behalf of dissatisfied “members” of SMC (we have over $175,000 in documented recoveries, and we calculate the actual value to exceed $200,000!).

        Let’s address your misstatements one at a time.  First, the most obvious, intentional, and reckless lie is that “Business Recovery Services is a shameless scam.”  We’re at a loss as to the basis for your claim.  SMC has visited BRS’ website, www.businessrecoveryservices.net, on many occasions, and that resulted in a letter from SMC’s legal staff regarding alleged trademark and/or trade name infringement.  When we challenged your false allegations, we never heard from SMC again.

As this serves as evidence that SMC regularly scrutinizes BRS’ website, you certainly know that BRS has assisted hundreds of clients recover over $1,000,000 (almost $200,000 from SMC alone) from many questionable home-based businesses.  Your BRS fraud alert fails to mention these facts.  It is inexcusable that you have intentionally misled your own clients about BRS’ activities by electing not to provide all of the information.  SMC must fear that their clientele can make intelligent and informed decisions.

Of course, this begs the question that “If BRS has assisted people in recovering money, then how is this activity fraudulent in the first place, much less worthy of a fraud alert?”  In contrast, what percentage of SMC’s clients who utilized the services of SMC’s sister company, E-Merchant Club (EMC), can say that they have made a net profit from EMC’s website?

Second, you misstate BRS’ business practices by suggesting that “the business model is to make a lot of money sending you a packet of form letters that you’re directed to fill out and file.  The truth of the matter is, you can file on your own, for free.”  To separate fact from fiction, in fact BRS advises every single client that they could perform this whole money recovery activity absolutely for free if they elect to do so.  To suggest that BRS is not upfront about the fact that clients could do everything to file their complaints for free and that BRS is attempting to “hoodwink” their clients by not mentioning “the free option” is 100% false.

Third, you again have elected to misinform your clients by stating “Kind of interesting that a company charging to file complaints with the BBB has been expelled from its own BBB, isn’t it?”  BRS has no idea how anyone gets expelled or excommunicated from the BBB.  However, since you have elected to bring the BBB into the conversation, let’s discuss both BRS’ and SMC’s relationship with the BBB.

Your clients should know the truth, which is that SMC used to be a BBB accredited member with zero complaints.  Once BRS made the BBB aware of SMC’s business practices through both its own voice and those of thousands of unsatisfied consumers, SMC was no longer an accredited business.  So, it appears that if anyone got expelled from the BBB, it was SMC, and not BRS. 

On the other hand, BRS has never been an accredited business with the BBB because BRS does not believe in paying for a better rating.  Therefore, BRS could not possibly have been expelled from the BBB.  Since the consumer can file complaints with the BBB for free, BRS believes that the BBB should permit accreditation status to companies based on their merits, and not based on the size of their checkbook.  To date, you cannot become an accredited member of the BBB without paying money to the BBB.  See http://www.bbbroundup.com/LosAngelesBBB.html for more information on this inherent contradiction within the BBB.

Fourth, you misstate the contents of the “Do-It-Yourself” Business Recovery Kits. You state “The complaints filed by Business Recovery Systems take the form of templates.  The complaints are generalized and non-specific, so you actual individual issue is not presented clearly.”  Let’s get the facts straight.  The letters outline the same basic pattern that SMC clients tend to experience.  Of course, every case is different.  BRS recommends that clients write a short summary of the specific events that happened to them and attach it to the letter sent to each of the agencies.

Fifth, you have misled your clientele by implying that the “Do-It-Yourself” Business Recovery Kits are ineffective.  You state “In fact, the BBB now recognizes these “form letter” complaints, and is treating them accordingly.”  The fact is that many of SMC’s former clients are realizing voluntary refunds from SMC because of the “form letter” they have sent to the BBB!  I guess the BBB is treating them accordingly, because this specific letter is triggering SMC to refund clients.  Of course, you can always contact our mutual clients at www.brstestimonials.com/SMC_RECOVERIES.html if you have any doubts about these facts.

        History proves that, on many occasions, SMC has excelled at deceiving and misinforming its clients.  My clients believe that they experienced this very same deception.  I wonder what Tom Bosley would think about his likeness being used for such unscrupulous business practices. 

Therefore, you have two choices: 1.) Either prove the scurrilous accusations made in your newsletter, or 2.) make a complete public retraction of ALL the statements made in said email and fully apologize to BRS for your misstatements, with complete evidence showing that you have sent such an apology to each of your “members” who received said e-mail.

         Failure to do so within 10 days of the date of this letter will cause this office to file a complaint in state or federal court requiring you to prove your allegations and pay damages, fees, and costs for making such outrageous, slanderous and false statements.  You WILL pay for your conduct.

        We hereby pick up the gauntlet.  We brandish it willingly.  Your conduct is outrageous.  Give us the opportunity to prove it.

        PLEASE!  Ignore this letter (at your peril).

                                        Sincerely,

                                        MICHAEL E. ST. GEORGE