Mr. BERTOCH. I think the operation is being very shrewdly managed. Senator MONDALE. Can't we get a very simple and obvious answer? Clearly it would have helped, wouldn't it?

Mr. BERTOCH. No, sir, not necessarily, because these people, these marginal operators that still exist that are around, they will find loopholes and ways to escape any law that you enact, and some of them will violate any law that you enact.

Mr. MOYLE. Senator Mondale, may I respond to the question?
Senator MONDALE. Yes.

Mr. MOYLE. I think had Golden Palm Acres registered with the SEC, and this of course is only one example that we have been talking about for 2 days, if they had registered with the SEC under the law as it is presently written we would have ended up with a disclosure which would have followed a legalistic type prospectus. The purchasing public would probably have been afforded a little more protection to the one or two who might bother to read the prospectus, but probably not much more protection than they were afforded in this situation, because full disclosure by itself just will not do the job.

Senator WILLIAMS. Wait a minute. Disclosure runs not only to the prospective purchaser, it runs to the SEC. Maybe the prospective purchaser won't read the brochure, prospectus, whatever you call it, but the SEC would be charged with the responsibility of matching prospectus with fact.

Mr. MOYLE. Yes, sir, I understand from this bill, that if the land is 6 feet under water-and I wish we could talk about desertland a little bit instead of about swampland so much-and as long as this is disclosed in the prospectus, this man can operate under the Federal law. Mr. BERTOCH. The purchaser may have a false sense of security. Senator WILLIAMS. I tell you one thing that impresses me, though. Maybe people wouldn't read a long prospectus, I suppose they could make them so long that it would really discourage reading. But we might have an amendment that would require the advertising to conform to the disclosure of the filed prospectus.

Now, if you are going to read an ad that says this is 6 feet under

water

Mr. BERTOCH. You are getting closer to the answer to the problem. Mr. MOYLE. This is what we are talking about, but just like we don't let people sell LSD any more, in this proposed Federal law, we shouldn't allow them to sell one of these offerings that you have described, Senator Mondale, as unconscionable, I think. You reach a point where they shouldn't be allowed to market it.

Senator MONDALE. That is correct. Of course these prospecti can help some. I notice River Ranch Acres has a little point here at the end. I assume the consumer would read "This property is adjacent to Avon Park practice bombing range and some tracts may be as close as 3 miles to an active target area, making it subject to low flying aircraft and attendant noises." I think they could have added "and a careless bomber." That sort of information is useful, don't you think? Mr. MOYLE. Mr. Bertoch, we worked for 3 days to get that included in the prospectus.

Senator WILLIAMS. Where is this? This is in Florida?

Mr. MOYLE. While you are looking, Senator Mondale, may I point out, as a predicate to my answers a little while ago which were directed

to you, I assumed that we had reached a determination that State activity was not sufficient. I don't necessarily agree with that assumption, but I was assuming it in giving you the answers.

Senator MONDALE. I think the problem in our understanding here is that we probably agree that State regulation is not adequate, but your recommendations give us no other alternative, if we adopt what you recommend, except to go all the way over here, preempt States entirely, and adopt a sweeping measure of the kind that we know can't be passed. All States would object to it.

Your recommendations are such that you leave us no alternative but the present inadequate State situation, or an extreme measure in the alternative that is not acceptable.

Mr. MOYLE. I don't agree with the conclusion that the present State situation is inadequate. I was assuming an existence of a factual situation for the purposes of answering the question, but I think the States are very active and I think evidence of this is the uniform law, and I think what his happening

Senator WILLIAMS. That hasn't been enacted?

Mr. MOYLE. No, sir. It is being presented on August 1 in Montreal. It has been drafted for 2 years.

Senator WILLIAMS. After your experience in Tallahassee, you said you had 40 out of 60 legislative days and you never had a more frustrating experience?

Mr. MOYLE. I think I said 22, whatever it was, but that particular experience, when this bill was presented, and I will be glad to go into details of it, but there were a lot of political considerations involved and we just got beaten rather badly.

Senator WILLIAMS. That is the point.

Mr. MOYLE. We have a reapportioned legislature. I think that at the next session of the legislature, we are going to get our bill amended and plug this loophole. I think probably the strongest thing that we will have in getting it passed at the next session is the transcript of this testimony right here.

Senator WILLIAMS. Very good. We finally come to the point that it is sort of a utopian concept to expect uniform State laws in 50 States, and we have a long way to go to reach that utopia. We don't have extrastate authority to move in on the wrongdoer. You can't come up and sue that man in New Jersey, can you?

Mr. MOYLE. No, sir, not now. But under a uniform law you can, and may I make this point-you talk about uniform laws as being a utopian State. But there have been many, many uniform laws passed that are in effect in the States now, and I think Senator Mondale, when he was giving his testimony this morning, talked about the futility of a Uniform Land Sales Act, and then shortly thereafter commented favorably on what the Uniform Sales Act had accomplished so far as extraterritorial jurisdiction is concerned. It can be done. The Uniform Sales Act is an example, also the Uniform Securities Act.

Senator WILLIAMS. How many uniform acts do we have for the States, does anybody know?

Mr. PRICE. I just thought Uniform Commercial Code.

Mr. MOYLE. I think there are 80, Uniform Simultaneous Death Act, Uniform Commercial Code, Uniform Probate Code that has not been

adopted, Uniform Simultaneous Death Act which has been adopted I think in about every State. The Uniform Sales Act has been substantially adopted. I wish I had known. I have these facts and figures, and I will be glad to submit them to the committee.

Senator WILLIAMS. Uniform Divorce and Annulment Act?
Mr. MoYLE. There is one being drafted.

Senator WILLIAMS. It is being considered. Again, these things in consideration, we operate here on the basis of a jurisdiction that arises out of commerce, as we say, that means interstate commerce, and we have one legislative body that can consider this.

You are talking about 50 State legislatures. All you would have to do is have one State not come in and you would have a haven for all of the sharp interstate practices, practicers of land sales.

Mr. MOYLE. I agree there would be a problem. I don't know that it would be a haven.

Mr. BERTOCH. Senator, if the situs States

Senator WILLIAMS. They would gravitate to that one State bound on using misrepresented land as their basis of unearned income.

Mr. MOYLE. Senator, I don't know whether we made it clear. In the Florida situation we are endeavoring to protect every citizen in the United States when they buy Florida land, so if I had a

Senator WILLIAMS. You have to wait until someone goes bankrupt to do anything about

Mr. MOYLE. This is what we were trying to testify about.

Senator WILLIAMS. What have you done about the folks who bought underwater acres?

Mr. MOYLE. I think underwater acres in Florida have been strongly overemphasized in the last two days. There is not that much of it. May we quote you some statistics? Will you read what we have done to help purchasers, actions in which we have been involved, the number of complaints handled, the refunds, and the matters that have been straightened out?

Senator WILLIAMS. Have you gotten refunds out of the Golden Palms?

Mr. MOYLE. No, sir, Golden Palms is a very bad situation. We very readily agree with your conclusions, but Golden Palms is the only situation that we have talked about in connection with land in Florida. The committee records contain a list of three pages of indictments by the postal authorities, or whoever it is, and I note with interest, and I feel compelled to say it, because we have talked about Florida so much, there is not a single Florida person listed on it.

Senator WILLIAMS. Well, I will tell you

Mr. MOYLE. No Florida land.

Mr. BERTOCH. If I might make a further comment, Senator

Senator WILLIAMS. I will say, while I am not proud of the fact that probably the major owner of Palm Acres comes from the State I represent, it is proof indeed I am not a northerner trying to punish the South. Do you see what I mean?

Mr. BERTOCH. Mr. Pilnick has done a good job of doing that.

Senator WILLIAMS. I just want to say we are not taking any region and singling it out as a culprit area, you see.

Mr. MOYLE. But we have taken one situation here in Florida and overemphasized it. Florida is a wonderful State and has a lot of tremendous opportunity and a lot of tremendous land.

Senator MONDALE. Yes, it does. But do you think Golden Palms is helping?

Mr. MOYLE. We have talked about Golden Palms and nothing else. I don't think rapists and murderers and dope addicts help Florida either, but this just happens to be a bad person and I think the situation has been overemphasized. I can assure you, as members of this committee, that we are going to do everything under our power in Florida to go after this. I will go before the Board. I have already talked to Mr. Bertoch about it and asked for permission to bring contempt charges in the circuit court in Dade County against this fellow if we can do it. The same way we will on this statement that I showed to Mr. Oriole, involving the man in Rocket City, Mr. Mendelson. We are going to try to do something about it and we may not, but we are certainly going to try.

Senator MONDALE. You talk about a uniform law. Is this a law that has been approved by the uniform law commissioners?

Mr. MOYLE. This is a law that has been drafted by a committee of the Commissioners on Uniform State Laws.

Senator MONDALE. Is there a national association of uniform law commissioners which is a quasi-official sort of confederation of delegates selected officially by each of the States, which go through a highly formal and rigid procedure.

Mr. MOYLE. That is correct.

Senator MONDALE. And those are called uniform laws and uniformly recommended ones the commissioners recommend it to the State and has a very high level recommendation going with each of its proposals. Mr. MOYLE. Yes, sir.

Senator MONDALE. Now, when you refer to uniform laws you haven't gone through that procedure?

Mr. MOYLE. Yes, sir, and I am proud to say that I am a draftsman of this action that you just described.

The committee is composed of quasi-official members from eight States. These are appointed by the Governors of these States.

We presented our first tentative draft to the national conference in Miami, Hollywood, last August, and now we go up for the second time. We hope that we will get it passed this second time. It may not, but I think it will pass this second time. Then it goes through a procedure whereby the American bar endorses it, and then three commissioners from each State have the responsibility of taking this act back to the State and getting it enacted.

The members of this committee are Mr. Seligman from Albuquerque, N. Mex.; Mr. Harris from St. Petersburg, Fla.; Dean Charles Joiner from the University of Michigan Law School at Ann Arbor, Mich.; George Lindeman from Waterloo, Iowa; Tom L. Peterson, attorney general's office, Honolulu; William Rehnquist, attorney in Phoenix, Ariz.; and Bill Thomas, attorney, Alexandria, Va.

The reporters are John W. McWhirter, Jr., former director of Florida Installment Land Sales Board, and knowledgeable about this business. We have drafted this thing about 30 times, and we are proud of

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the product we have, and we hope it is going to be accepted. It is one of these formal documents that you are referring to and I think that is indicative of extreme interest and activity on the part of the States, and therein lies part of the reason that I disagree with your conclusion that the State situation is so bad that there has to be Federal legislation.

Senator MONDALE. Wait a minute. As I understand it, you are not against Federal legislation provided it preempts, it is broad enough and preempts the States.

Mr. MOYLE. If we determine State activity is so inadequate that there is a necessity for Federal legislation and I asume that to be true, arguendo, then, I would support Federal legislation only if it contained the provisions that I have been talking about, and if it preempted the field, because I am fearful if you don't do that you are going to create a very, very bad situation involving a false sense of security to the purchasing public.

Senator, in all of the subdivisions I am familiar with, most of the failures that take place occur sometime after the subdivision is started and they are involved with cash flow. Cash flow is a big problem in a subdivision operation, and it is not at the beginning that the failures take place. The failure takes place down the road when they are putting in improvements, and trying to pay off a fifth mortgage, which should have never been allowed in the first place, or when they factor their contracts somewhere at 40 percent. That is where the problem develops and that is where you have to have the regulatory control if you are going to protect the purchaser.

Now I am not saying that full disclosure is not a part of it; it is an essential part of it.

Senator WILLIAMS. Do you have that in your uniform State law? Mr. MOYLE. Yes, sir; and we have it in Florida.

Senator WILLIAMS. We will take care of the interstate aspects of disclosure and your uniform State law can be the followthrough to insure that what was disclosed as the fact becomes a fact. This is what I would call the best kind of creative federalism and partnership between National authority and State authority.

Mr. MOYLE. And my testimony is that I am fearful though that people will get the idea, that SEC registration

Senator WILLIAMS. Let me just warn you, don't use that argument. That was used when the Securities Act was passed, and the Securities Commission has always said it is not the arbiters of quality, it is a repository of disclosure of truth and figures. Am I right on that? The same argument has always been used and I heard the Commissioner say time and again, we are not the arbiters of the quality of this particular stock that is being issued.

Mr. MOYLE. I can only go back to the record when Mr. Van Horn said they would probably repeal the New Jersey law if the Federal law was enacted. (Additional discussion on this point, p. 54.)

Senator WILLIAMS. He is all for our Federal bill, by the way. He helped us immeasurably.

Mr. BERTOCH. He was at our January meeting for the first day. This concept of creative federalism, I think is touched upon on page 8 of our formal remarks. We suggest, Senator Mondale, another