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Perkins School for the Blind Sues Maxi-Aids
by Barbara Pierce
In the December 2001 issue of the Braille Monitor we reported on the motion filed by Independent Living Aids (ILA) against Maxi-Aids, alleging behavior that constituted contempt of court. One of the claims made by ILA was that Maxi-Aids had illegally diverted charitably subsidized Perkins Braillers from South Africa and had sold them in the United States in violation of Perkins's policies.
During the proceedings leading up to the court hearing of the ILA motion, Elliot Zaretsky, the patriarch of the Zaretsky family, submitted a sworn affidavit disputing ILA's claims and including the statement, "I respectfully submit that, if anyone has the right to complain about Maxi-Aids's purchases of these Perkins Braillers, it is only either Howe Press or the Perkins School."
At the hearing before the judge the attorney for Maxi-Aids and the Zaretskys stated in open court, "I would submit to your Honor that it is Howe Press's business to enforce their rights, not the plaintiff's [ILA's] business to enforce their rights."
Mr. Zaretsky and his attorney have gotten their wish since the Perkins School for the Blind has now responded to their challenge by filing action in the United States District Court for the Eastern District of New York. Perkins has sued Maxi-Aids as well as Elliot Zaretsky, Mitchel Zaretsky, Harold Zaretsky, and Pamela Zaretsky Stein.
The lawsuit filed by Perkins is based largely on information developed by ILA in its contempt-of-court motion, which was reported in considerable detail in the December 2001 edition of the Braille Monitor. To summarize that information, it should be noted that the price of Perkins Braillers in the United States is $640 each, and for overseas customers it is $660. In an effort to reduce the price to blind people in developing countries, Perkins and its Howe Press division developed a program in conjunction with the South African National Council for the Blind (the SANCFB) through which Perkins would ship component parts to SANCFB for assembly by blind workers in a sheltered workshop in South Africa. This would result in a lower assembly labor cost, which was supplemented by a grant of $100 a machine from the Hilton Foundation, a charitable organization established by the Hilton Hotels Corporation. The net effect of the lower labor cost and the charitable subsidy was to bring the price down to $375 for Braillers sold to blind people and organizations in developing countries. Perkins was clear: its intent was that these machines were to be sold to customers in developing countries.
Elliot Zaretsky apparently learned about these charitably subsidized Braillers and attempted to place an order for them. His attempt was rebuffed, and the director of the SANCFB sent him a fax advising that it could not ship these Braillers to the United States. At the same time Kevin Lessard, the director of the Perkins School, personally called Elliot Zaretsky and informed him that Braillers assembled by the SANCFB were intended for sale only to individuals and entities in developing countries, for use by blind people in those countries. He also told him that, if he or Maxi-Aids wanted to purchase standard Perkins Braillers, the Braillers would have to be purchased directly from the Howe Press for $640 each.
Apparently the price differential of $265 per machine ($640 from Perkins versus $375 from the SANCFB) was more than the Zaretskys and Maxi-Aids could resist. The ILA motion and now the Perkins lawsuit allege that Elliot Zaretsky masterminded a scheme to obtain subsidized Braillers despite the admonitions of SANCFB and Perkins. Both the ILA motion and the Perkins lawsuit claim that Zaretsky had a confederate in South Africa who placed orders, using the names of legitimate organizations serving blind people in countries such as Botswana, Mozambique, Kenya, and even Lebanon and then picked up the Braillers at the SANCFB warehouse and shipped them to Maxi-Aids in New York. ILA claimed to have identified 1,520 Perkins Braillers diverted in this way, resulting in an illegal profit to Maxi-Aids and the Zaretskys of $402,800, of which $152,000 was charitable money donated by the Hilton Foundation.
The Perkins lawsuit adds a completely new dimension, not only to the story involving the Braillers but also to the impact and consequences of Elliot Zaretsky's continual misconduct in the blindness field. For years, dating back as far as 1994, the National Federation of the Blind has unequivocally stated our opposition to the way Maxi-Aids and the Zaretskys have done business, and we have reported the well documented lawsuits filed by ILA against these business tactics. We stated our position clearly and told the world that we did not approve of their ethics and that under no circumstances would we do business with Maxi-Aids unless and until they cleaned up their act. Many readers of the Braille Monitor shared our sentiments on ethical grounds and stopped doing business with the company. Unfortunately, many other people, agencies, and even vendors apparently read our articles with bemused and disengaged interest, writing off the issue as nothing more than a fight between two commercial entities vying for market share. That has all changed, as the Perkins lawsuit and other developments in our field and within Maxi-Aids itself make clear.
As mentioned above, the Perkins lawsuit, at least at this point, is based largely on information and facts uncovered by ILA during its motion that Maxi-Aids and the Zaretskys be held in contempt of court. That motion was denied on a legal technicality, but the judge said in open court and on the record that "ILA has presented a thorough and persuasive presentation that strongly suggests that the defendants are indeed improperly obtaining subsidized Braillers intended for use in developing countries and selling them at retail prices in the United States." The ILA motion was largely a matter dealing with unfair competition and alleged violation of a court injunction. The Perkins lawsuit goes further and not only involves claims of deceptive practices and misrepresentations made to a manufacturer but begins to touch on the impact on purchasers of the Braillers, as well as the human cost to blind people in developing countries. It is almost certain that these issues will be developed in greater detail as the case winds its way through court.
The lawsuit filed by Perkins is nineteen pages long and contains eleven counts, which Perkins alleges have caused harm and for which it is claiming monetary damages. It is also asking for punitive damages to punish Maxi-Aids and the Zaretskys for what they have done, as well as injunctions to prohibit them from engaging in behavior of this type in the future.
Over and above the damage done to Perkins, both financially and through harm to its reputation, some of the counts make claims that indicate potential problems for purchasers of the Braillers that should give pause to anyone contemplating purchasing products from Maxi-Aids. The ILA motion for contempt of court included evidence demonstrating that someone at Maxi-Aids had opened the factory-sealed boxes of Braillers and torn off the covers from the instruction manuals, substituting a Maxi-Aids cover instead. This removed the address and phone number of the Howe Press division of Perkins. The boxes were then resealed and a sticker placed on each advising that for repairs the purchaser should contact Maxi-Aids, whose phone number was listed on the sticker. This effectively altered the warranty, since the machine was now to be repaired by someone at Maxi-Aids (or a person or company acting on Maxi-Aids's behalf) and was not going to be repaired by a Perkins-trained and authorized service person.
As reported in the December 2001 Braille Monitor, Perkins has announced that it would no longer do business with Maxi-Aids. This means that, not only would the repairs not be done by factory-trained service people, but that there was no longer assurance that repairs would be done with genuine Perkins parts. Although the matter of altered warranties is part of the lawsuit and will be litigated by Perkins on the issue of damage to their reputation, every purchaser of those Braillers must now consider his or her own self-interest with respect to the reliability of repairs and service. This inevitably leads to the question: how many other products is Maxi-Aids selling that have been obtained sub rosa and therefore do not have genuine manufacturers' warranties? Remember the NFB's experience years ago with Maxi-Aids watches that were purported to be Swiss-made when they were not. If ever there were an example of let the buyer beware, dealing with Maxi-Aids would certainly appear to be it.
If the issue of self-interest were not enough to give a buyer second thoughts about doing business with Maxi-Aids, the devastating human cost of what the Zaretskys have done should be cause enough for condemnation. It is axiomatic in our field that more than 70 percent of the employable blind population is unemployed, and 85 percent of those who are employed are Braille-literate. These figures are so universally accepted that many states and federal law now include a Braille literacy requirement in order to give blind kids a fair chance at a decent economic future. While this country has sufficient resources to ensure that blind children have access to Perkins Braillers, this is not the case in developing countries. In those areas Braillers are bought by schools and organizations helping blind people and are shared by numbers of students. The 1,520 Braillers diverted by Maxi-Aids would have been used by many thousands of kids--kids who have now been condemned to an uncertain educational and economic future by the greed of the Zaretskys.
When we interviewed Kevin Lessard, the director of the Perkins School, for our December 2001 story, he characterized the diversion of Braillers intended to reach children in the developing world to buyers in the United States as "outrageous." Reflecting on the implications of this situation, the words "immoral" and even "evil" come to mind. Surely it is not too strong a statement to say that an evil act has been perpetrated against innocent children in developing countries, and we condemn this act and any who have been party to it.
On the other hand, we do applaud a recent action taken by the American Council of the Blind. In April we learned that the ACB board of directors decided at its mid-winter meeting to prohibit Maxi-Aids from exhibiting or advertising at its annual convention. While we believe that this action is overdue, we certainly welcome the ACB's recognition that Maxi-Aids has acted unethically and perhaps illegally and that the ACB should take some action. It is never too late to take a stand against an immoral act.
We have learned of a further development that is both an astonishing revelation and an illuminating insight into the workings of Maxi-Aids and the Zaretsky family. Elliot Zaretsky and his son Harold have summarily removed Mitchel Zaretsky as president of Maxi-Aids and have fired him from the company. Although this occurred in November of 2000, we only recently found out about it because Mitchel has filed a lawsuit in the Supreme Court of the State of New York, demanding dissolution of Maxi-Aids and an accounting of the assets of the corporation. Mitchel filed a sworn affidavit alleging that Elliot and Harold had been wasting and looting the corporation's assets, and it also mentions "further loss and destruction of the good will and business of the corporation."
As part of his sworn affidavit, Mitchel detailed the ILA lawsuit, the judgment against Maxi-Aids of $2,779,806.98, and the subsequent bankruptcy filing by Maxi-Aids and the Zaretskys. He then discussed at length the proposed debarment by the Department of Veterans Affairs, as well as its consequences, and concluded with the sentence: "Ultimately, Maxi-Aids was able to avoid debarment by entering into an administrative agreement which restricted the manner in which Maxi-Aids could conduct its business affairs." The affidavit then went on to describe some of the terms and conditions which Maxi-Aids was required to meet in order to avoid debarment.
The affidavit then contained this revealing accusation: "Notwithstanding the clear and unambiguous terms of the administrative agreement and the manifest injury that would occur to the corporation and its shareholders were Maxi-Aids to default under the terms of said agreement, Elliot Zaretsky and Harold Zaretsky have, over the objection of petitioner [Mitchel] ignored the terms of the administrative agreement and repeatedly caused Maxi-Aids to default thereunder." There's no question that this is powerful stuff. Readers should know that Mitchel was the person who signed the administrative agreement with the Department of Veterans Affairs (VA) on behalf of Maxi-Aids, and now he is the one accusing his father and brother of repeatedly causing Maxi-Aids to violate the agreement. Mitchel's statements echo the claims made by ILA when it laid out the diversion of Perkins Braillers and the establishment of Able-Vision as a sham company to circumvent the debarment, as reported in the December 2001 and January/February 2002 editions of the Braille Monitor.
Whatever Mitchel's motives, the fact remains that he was unceremoniously dumped as a result of his efforts. His affidavit describes how "on November 3, 2000, Elliot Zaretsky and Harold Zaretsky called a special meeting of the shareholders and directors of the corporation for the express purpose of voting your deponent [Mitchel] out of the corporation as both an officer and employee." We don't know the outcome of Mitchel's lawsuit, or even if there has yet been an outcome.
When we began gathering the material to write this story, we contacted Kevin Lessard at Perkins. He confirmed that Perkins had indeed filed its lawsuit against Maxi-Aids, but he would not comment further about the case. Marvin Sandler, President of ILA, was also unwilling to comment on these matters. We then contacted Michael Solomon, the attorney for Maxi-Aids and the Zaretskys. He said that he could not and would not comment on the case since it is only beginning. He professed to be unable to comprehend why we were interested in covering a story that has not yet been tried. He said that he now understood that we are prepared to publish any papers at all that Marvin Sandler and his attorney Jack Dweck pass along to us with a request for publication. He went on to say that, if we were trying to sell daily newspapers, he could understand why we would publicize a story like this as it unfolded. But, he went on, we are a magazine in a small and narrow field, in which blind people are dependent on the products which Maxi-Aids sells. Why, he asked, would we want to stir up these people and make them suspect the motives of Maxi-Aids when there had never been any question about the company's products before this trouble with the Braillers?
Those who have read our coverage of this unfolding saga since 1994 and who understand just how important it is for people to know what they are buying in this field will recognize that we feel responsible to let blind people know what is happening and what problems are unfolding in this small market. We believe that we have seen compelling evidence and had painful experience of Elliot Zaretsky's business practices, and we have concluded that we must allow would-be buyers to understand the accusations being made and the evidence upon which they are based.
When we printed the article in December of 1994, it concluded with a statement from Dr. Jernigan saying that we had stopped buying anything at all from Maxi-Aids, even if its price was the lowest to be had, because we did not like its behavior or dealings. Even before Perkins filed its lawsuit, President Maurer wrote an article in the January/February 2002 edition, which declared, "We have determined that we will do no business with Maxi-Aids under any circumstances. In fact, we believe that Maxi-Aids's conduct has been sufficiently questionable that others should follow our lead." He concluded the article by saying, "Our policy about Maxi-Aids has not changed."
Now everyone who reads this article must decide where he or she stands, morally and philosophically, not to mention with respect to simple self-interest. We caution buyers--individuals and state or federal agencies--to think about the warranty problem with respect to Perkins Braillers and whether you have bought or are considering buying products that do not actually have warranties. In view of the deceptive way the Braillers seem to have been obtained by Maxi-Aids, it would be well to remember some of the issues in the original ILA lawsuit--including customs fraud, counterfeiting, and sale of refurbished products passed off as new merchandise. Every would-be buyer now has cause to wonder about the pedigree of merchandise being offered by Maxi-Aids.
Even vendors have something to think about. Perkins probably assumed that it would never have to become involved in the minutiae of business. Yet it now finds itself in the midst of litigation to recover a very substantial amount of money. Even ordinary vendors have to use caution. They should remember that, when the court awarded a judgment of $2,779,806.98 against Maxi-Aids and the Zaretskys, they almost immediately declared bankruptcy in an effort to avoid payment. This left several hundred vendors out on a limb, worrying that they might collect no more than pennies on the dollar for merchandise they had sold to Maxi-Aids. They were bailed out only when ILA agreed to a settlement of $1,600,000, which enabled the vendors to collect in full. If Perkins prevails in its lawsuit and is awarded punitive damages, who can doubt that Maxi-Aids and the Zaretskys will file for bankruptcy again to avoid paying a judgment?
Although the NFB's stated policy of refusing to do business with Maxi-Aids for the past eight years has left us financially protected and confident of the quality and pedigree of the products we sell, we believe that conscience obligates us to continue to take a firm stand against immorality in the marketplace of the blindness field. We also believe that those who choose not to take a stand are acting immorally. The old dictum, "Those who do not condemn, condone" is as true today as it ever was. As we said earlier in this article, it is never too late to take a moral stand. We call upon the Department of Veterans Affairs to review its administrative agreement with Maxi-Aids in view of the affidavit of Mitchel Zaretsky. We also call on VA officials to discontinue purchasing Perkins Braillers from Maxi-Aids immediately.
Not a court judgment resulting in the payment of $1,600,000 to ILA, nor the attempts of Mitchel Zaretsky to get Maxi-Aids to clean up its act, nor ILA's motion for contempt of court, nor the ACB's prohibition on exhibiting, nor the threat of debarment by the VA have had a constructive effect on the conduct of Elliot Zaretsky. Perhaps denying him a market for his allegedly illegally obtained Braillers and a strong stand by customers and suppliers alike will get him back on the moral high road. Until that day we can only restate our position loud and clear. Our policy about Maxi-Aids has not changed. We will not do business with the company under any circumstances.
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