FRANCHISE RULE & BUSINESS OPPORTUNITY CASES

2001-2002

 

FTC and State of Maryland v. Accent Marketing, Inc., No. 02-0405-CB-M (S.D. Ala. 2002)
The Commission’s complaint alleges that Accent Marketing, Inc.; Monarch Vending, Inc.; Vend One 1, Inc.; John Nolan White; and John Byron White violated Section 5 of the FTC Act in selling vending machine opportunities by misrepresenting: (1) how much purchasers could earn; (2) that company-selected references have purchased the defendants’ business venture and will provide reliable descriptions of the references’ experiences with the defendants’ business venture; and (3) that defendants, or locating companies acting upon their behalf, have obtained the consent of store owners for the placement of vending machines. In addition, the complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide purchasers with a basic disclosure document; (2) failing to provide potential purchasers with an earnings claims document substantiating their earnings claims; and (3) making earnings claims in the general media without complying with the Franchise Rule’s general media claims requirements, including disclosing the number and percentage of prior purchasers known by the defendants to have achieved the same or better results.

FTC v. Affiliated Vendors Association Inc., No. 3-02CV-679-D (N.D. Tex. 2002)
The Commission’s complaint alleges that Affiliated Vendors Association, Inc.; Maurice Billion; and Joyce Billion violated Section 5 of the FTC Act in selling vending machine opportunities by misrepresenting that they would provide consumers with independent and reliable reports which accurately describe their members’ business practices.

FTC v. America’s Shopping Network, Inc., No. 02-80540-CIV-Hurley (S.D. Fla. 2002)
The Commission’s complaint alleges that America’s Shopping Network; Consumer Services Inc.; Karen A. Zagami; Carianne Sica; Louis S. Gangi; HME Inc.; and John M. Epstein violated Section 5 of the FTC Act in selling an envelope stuffing opportunity by misrepresenting that: (1) purchasers were likely to make substantial incomes; (2) defendants would pay purchasers a specified amount for each envelope stuffed and mailed and that defendants would pay purchasers a specified amount for every order defendants receive in response to purchasers’ mailings; (3) defendants would pay purchasers $635 per week for processing mail; and (4) defendants would provide full unconditional refunds if purchasers were not satisfied.

FTC v. Associated Record Distributors, Inc., No. 02-21754-CV-Graham/Garber (S.D. Fla. 2002)
The Commission’s complaint alleges that Associated Record Distributors, Inc.; Alfredo Susi; Russell MacArthur; David Siegel; and Brian Morgenstern violated Section 5 of the FTC Act in selling audio cassette and compact disc display opportunities by misrepresenting: (1) how much purchasers could earn; (2) that the company supplies purchasers with a specific quantity of the “hottest selling” audio cassettes and compact discs of the “most popular” artists; (3) that the company assists purchasers in the operation of the business, including conducting demographic studies to identify popular music in the opportunity purchasers’ locations; (4) that company-selected references have purchased the defendants’ business venture and will provide reliable descriptions of the references’ experiences with the defendants’ business venture; and (5) that defendants, or locating companies acting upon their behalf, have obtained the consent of store owners for the placement of the rack display. In addition, the complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide potential purchasers with a basic disclosure document; (2) failing to provide purchasers with an earnings claims document substantiating their earnings claims; (3) making earnings claims in the general media without complying with the Franchise Rule’s general media claims requirements, including disclosing the number and percentage of prior purchasers known by the defendants to have achieved the same or better results; and (4) making statements inconsistent with the information required to be disclosed by the Franchise Rule.

FTC v. Bigsmart.com, L.L.C., No. CIV 01-0466 PHX ROS (D. Ariz. 2001)
The Commission’s complaint alleges that Bigsmart.com, L.L.C.; Mark Tahiliani; and Harry Tahiliani violated Section 5 of the FTC Act in selling Internet mall and multilevel marketing opportunities by: (1) misrepresenting that consumers who become Bigsmart members will receive substantial financial gain; (2) misrepresenting that all consumers who become Bigsmart members will receive financial gain; (3) providing the means and instrumentalities for others to engage in deceptive acts and practices; (4) failing to disclose that participating consumers are not likely to receive substantial income; and (5) conducting a pyramid scheme in which participants must pay money for the right to sell products and compensation is paid primarily for recruiting new members rather than for the retail sale of products or services.

FTC v. Electronic Medical Bill Inc., No. CV SA02-368- AHS (AN) (C.D. Cal. 2002)
The Commission’s complaint alleges that Electronic Medical Billing, Inc.; Esoft Caducei, Inc.; John C. Moore; and David L. Miller violated Section 5 of the FTC Act in selling medical billing opportunities by misrepresenting that: (1) defendants will provide purchasers with the names and addresses of physicians likely to use purchasers’ medical billing services; and (2) purchasers will earn a specific level of earnings.

FTC v. Electronic Processing Services Inc., No. CV-S-02-0500-L.H.-R.S. (D. Nev. 2002)
The Commission’s complaint alleges that Electronic Processing Services, Inc.; and David Stewart violated Section 5 of the FTC Act in selling medical billing opportunities by misrepresenting that: (1) defendants will provide purchasers with the names and addresses of physicians likely to use purchasers’ medical billing services; and (2) purchasers will earn a specific level of earnings.

FTC v. Essex Marketing Group, Inc., No. 02-CV-3415 (E.D.N.Y. 2002)
The Commission’s complaint alleges that Essex Marketing Group, Inc.; Westbrook Marketing Group, Inc.; Westbrook Marketing Associates LLC; Manhattan Vending LLC; Richard J. Guadagno; Jack G. Schwartz; and Henry Sanchez violated Section 5 of the FTC Act in selling vending machine opportunities by misrepresenting: (1) how much purchasers could earn; and (2) that the company would deliver machines within the agreed upon time or the purchaser has the right to cancel. In addition, the complaint alleges that the defendants violated the Franchise Rule by: (1) failing to furnish potential purchasers with a basic disclosure document; and (2) failing to provide potential purchasers with an earnings claims document substantiating their earnings claims.

FTC v. Inspired Ventures, Inc., No. 02-21760-CIV-Jordan (S.D. Fla. 2002)
The Commission’s complaint alleges that Inspired Ventures, Inc.; I.V.I. Management Corp.; Source Systems, Inc.; Jesse Alper; and Victor Alper violated Section 5 of the FTC Act in selling vending machine opportunities by misrepresenting: (1) how much purchasers could earn; and (2) that company-selected references have purchased the defendants’ business venture and will provide reliable descriptions of the references’ experiences with the defendants’ business venture. In addition, the complaint alleges that the defendants violated the Franchise Rule by: (1) making statements inconsistent with the information required to be disclosed by the Franchise Rule; (2) failing to provide potential purchasers with an earnings claims document substantiating their earnings claims; and (3) making earnings claims in the general media without complying with the Franchise Rule’s general media claims requirements, including disclosing the number and percentage of prior purchasers known by the defendants to have achieved the same or better results.

FTC v. International Trader, No. 02-02701 (C.D. Cal. 2002)
The Commission’s complaint alleges that International Trader and Bruce Anugwom (doing business as Premier Business Solutions, American Data Systems and/or International Trader) violated Section 5 of the FTC Act in selling medical billing work-at-home opportunities by misrepresenting that: (1) defendants will provide purchasers with the names and addresses of physicians who are likely to use purchasers’ medical billing services; (2) purchasers will likely earn a specific level of earnings; and (3) purchasers will be able to obtain refunds upon request.

FTC v. Healthcare Claims Network, Inc., No. 2:02-CV-4569 MMM (AJWX) (C.D. Cal. 2002)
The Commission’s complaint alleges that Healthcare Claims Network, Inc.; Charles G. Lloyd; and Anne Miller (doing business as Med Data Solutions, Southern California Billing Services; Medical Claims Network, and/or Probillers) violated Section 5 of the FTC Act in selling medical billing opportunities by misrepresenting that: (1) defendants will provide purchasers with the names and addresses of physicians likely to use purchasers’ medical billing services; and (2) purchasers will likely earn substantial income.

FTC v. Komaco International, Inc., No. CV 02-04566 LGB (RNBX) (C.D. Cal. 2002)
The Commission’s complaint alleges that Komaco International, Inc.; Robert Lee Anderson; and Kenshin Hayashi (doing business as Success Masters International and/or Max Horizon Securities) violated Section 5 of the FTC Act in selling booklet stapling work-at-home opportunities by misrepresenting that: (1) purchasers will earn substantial income; and (2) defendants will pay purchasers specific amounts for each booklet stapled.

FTC v. Leading Edge Processing, Inc., No. 6:02-CV-681-ORL-19 DAB (M.D. Fla. 2002)
The Commission’s complaint alleges that Leading Edge Processing, Inc.; Quality Publishing, Inc.; Mega Processing Corp.; Creative Tech of America, Inc.; Digital Inputting Corp.; The Bair Group Inc.; Michael J. Gardner; and Rebecca A. Dahl violated Section 5 of the FTC Act in selling data entry work-at-home opportunities by misrepresenting that: (1) purchasers will earn a specific level of earnings; (2) defendants have actual job openings performing data entry; and (3) defendants will provide training in data entry.

FTC v. Medical-Billing.com, Inc., No. 022-3049 (N.D. Tex. 2002)
The Commission’s complaint alleges that Medical-Billing.com, Inc. and Michele Graham (doing business as Professional Management Consultants) violated Section 5 of the FTC Act in selling medical billing opportunities by misrepresenting that: (1) defendants will provide purchasers with medical professionals as clients; (2) purchasers will earn a specific level of earnings; and (3) defendants will provide full refunds upon request.

FTC v. Medicor LLC, No. CV01-1896 (CBM) (C.D. Cal. 2001)
The Commission’s complaint alleges that Medicor LLC; Maven Holdings, Inc.; The S&M Trust; Andrew Rubin; and Matthew Rubin violated Section 5 of the FTC Act in selling medical billing work-at-home opportunities by misrepresenting that: (1) purchasers will earn specific levels of income; (2) defendants will provide purchasers with medical professionals as clients; and (3) defendants will provide full refunds upon request.

FTC v. Morrone’s Water Ice, Inc., No. 02-3720 (E.D. Pa. 2002)
The Commission's complaint alleges that Morrone’s Water Ice, Inc.; Franchise Consultants Corp.; Ice America Corp.; Water Ice Systems, Inc.; JMS Sales, Inc.; Stephen D. Aleardi; and John J. Morrone III violated Section 5 of the FTC Act in selling Italian ices and home-made ice cream franchises by misrepresenting that purchasers are likely to earn substantial income. In addition, the complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide potential purchasers with a complete and accurate basic disclosure document; (2) failing to provide potential purchasers with an earnings claim document substantiating their earnings claims; and (3) making statements inconsistent with the information required to be disclosed by the Franchise Rule.

FTC v. National Crafters, Corp., No. 01-4825-CIV-Graham-Turnoff (S.D. Fla. 2001)
The Commission’s complaint alleges that National Crafters Corp. and Thomas Felix Diaz, Jr., violated Section 5 of the FTC Act in selling bracelet assembly work-at-home opportunities by misrepresenting that: (1) purchasers can expect to achieve substantial earnings; and (2) defendants would provide adequate tools and other materials to enable purchasers to make commercially-saleable bracelets.

FTC v. Pathway Merchandising, Inc., No. 01-CIV-8987 (S.D.N.Y. 2001)
The Commission’s complaint alleges that Evan Blumstein; Kenneth Finney; Pathway Merchandising, Inc.; and Four Vend, Inc., violated Section 5 of the FTC Act in selling vending machine opportunities by misrepresenting that purchasers are likely to earn substantial income. In addition, the complaint alleges that the defendants violated the Franchise Rule by: (1) failing to furnish potential purchasers with a basic disclosure document; (2) failing to provide potential purchasers with an earnings claims document substantiating their earnings claims; and (3) making earnings claims in the general media without complying with the Franchise Rule’s general media claims requirements, including disclosing the number and percentage of prior purchasers known by the defendants to have achieved the same or better results.

FTC v. Physicians Healthcare Development, Inc., No. CV-02-2936RMT (C.D. Cal. 2002)
The Commission’s complaint alleges that Physicians Healthcare Development, Inc.; NetBiz, Inc.; and Antonio Echavez violated Section 5 of the FTC Act in selling medical billing opportunities by misrepresenting that: (1) defendants will provide the names and addresses of physicians likely to use the purchasers’ billing services; (2) purchasers would earn specific levels of income; and (3) defendants will provide training needed to start a medical billing business.

FTC v. Darrell Richmond., No. 3:02-3972-22 (D.S.C. 2002)
The Commission’s complaint alleges that Darrell Richmond (doing business as Bargain Shopper Network Direct!/BSN Direct!, Specialty Merchandise Whole Direct!/SMW Direct!, and Apex Direct Marketing Group/Apex Enterprises) violated Section 5 of the FTC Act in selling envelope stuffing opportunities by misrepresenting that: (1) defendant would provide purchasers with pre-addressed and pre-stamped envelopes for stuffing; (2) defendant would pay purchasers a specified amount for each envelope stuffed; and (3) consumers would make a substantial income.

FTC v. SkyBiz.com, No. 01 CV 0396KE (N.D. Okla. 2001)
The Commission’s complaint alleges that SkyBiz.com; World Service Corp.; Nanci Corporation International; Worldwide Service Corporation; James S. Brown; Stephen D. McCullough; Elias F. Masso; Nanci H. Masso; Kier E. Masso; and Ronald E. Blanton violated Section 5 of the FTC Act in selling a work-at-home pyramid program by: (1) misrepresenting that purchasers are likely to receive substantial income; (2) providing the means and instrumentalities for others to engage in deceptive acts or practices; (3) failing to disclose that the defendants’ business structure is likely to ensure that most participants are not likely to earn substantial income; and (4) conducting a pyramid scheme in which compensation is paid primarily for recruiting new members rather than for the retail sale of products or services.

FTC v. Streamline Int’l, Inc., No. 01-6885-CIV-Ferguson (S.D. Fla. 2001)
The Commission’s complaint alleges that Streamline International, Inc.; J. R. Jackson; and Robert Waitkus violated Section 5 of the FTC Act in selling a multilevel marketing program by: (1) misrepresenting that purchasers are likely to receive substantial income; (2) conducting a pyramid scheme in which compensation is paid primarily for recruiting new members rather than for the retail sale of products or services; (3) failing to disclose that the defendants’ business structure is likely to ensure that most participants are not likely to earn substantial income; (4) providing the means and instrumentalities for others to engage in deceptive or unfair conduct; and (5) misrepresenting that their dietary supplements contain only ingredients recognized by the FDA as safe.

FTC v. Stuffingforcash.com, Corp., No. 02 C 5022 (N.D. Ill 2002)
The Commission’s complaint alleges that Stuffingforcash.com Corp.; American Publishing, Inc.; Sound Publications, Inc.; Nelson Barrero; Eduardo Gomez; and Ileana M. Morales violated Section 5 of the FTC Act in selling envelope stuffing opportunities by misrepresenting that: (1) defendants would provide purchasers with circulars for mailing and with pre-addressed and pre-stamped envelopes for stuffing; (2) defendants would pay purchasers a specified amount for each envelope stuffed.

FTC v. Terrance Maurice Howard, No. SA02CA0344 (W.D. Tex. 2002)
The Commission’s complaint alleges that Terrance Maurice Howard (doing business as True Techniques and Absolute Mailers) violated Section 5 of the FTC Act in selling an envelope stuffing opportunity by misrepresenting that: (1) purchasers would earn a substantial income; and (2) defendant would pay purchasers a specified amount for each envelope stuffed.

FTC v. Trek Alliance, Inc., No. 02-9270 SJL (AJWX) (C.D. Cal. 2002)
The Commission’s complaint alleges that Trek Alliance, Inc.; Trek Education Corp.; Vonflagg Corp.; Jeffrey Kale Flagg; Richard Von Alvensleben; Tiffany Alvensleben; and Harry M. Flagg violated Section 5 of the FTC Act in selling a multilevel marketing program by: (1) misrepresenting that purchasers would earn substantial income; (2) misrepresenting that employment opportunities are available to those responding to defendants’ advertisements; (3) failing to disclose that most program participants are not likely to earn substantial income; and (4) conducting a pyramid scheme in which compensation is paid primarily for recruiting new members rather than for the retail sale of products or services.

FTC v. Universal Greeting Card Corp., No. 02-21753-CIV-JORDAN (S. D. Fla. 2002)
The Commission’s complaint alleges that Universal Greeting Card Corporation; Robert Ruffeino; Edward Jacobs; and Wayne Hammond violated Section 5 of the FTC Act in selling greeting card rack display opportunities by misrepresenting that: (1) purchasers are likely to earn substantial income; (2) defendants would provide purchasers with significant assistance in the operation of their businesses, including but not limited to, securing profitable locations for the display racks; (3) company-selected references have purchased the defendants’ business venture and will provide reliable descriptions of the references’ experiences with the defendants’ business venture; and (4) that defendant Wayne Hammond had purchased the defendants’ business venture or would provide a reliable description of his experience with the defendants’ business venture. In addition, the complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide potential purchasers with a basic disclosure document; (2) failing to provide potential purchasers with an earnings claim document substantiating their earnings claims; and (3) making earnings claims in the general media without complying with the Franchise Rule’s general media claims requirements, including disclosing the number and percentage of prior purchasers known by the defendants to have achieved the same or better results.

FTC v. Vendco, LLC, No. CV-S-0200816-PAL (D. Nev. 2002)
The Commission’s complaint alleges that Vendco, LLC; Curt Briguglio; and Johan Briguglio violated Section 5 of the FTC Act in selling vending machine opportunities by misrepresenting that: (1) purchasers were likely to earn substantial income; and (2) defendants would provide purchasers with significant assistance in the operation of their businesses, including but not limited to, finding profitable, high volume locations for the vending machines. In addition, the complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide potential purchasers with a basic disclosure document; and (2) failing to provide purchasers with an earnings claims document substantiating their earnings claims.

United States of America v. American Vending Ventures Group, Inc., No. 02-CV-21766 (S.D. Fla. 2002)
The complaint alleges that American Vending Ventures Group, Inc.; Jamie Hagen; Leland Balber; and Peter Abrams violated the Franchise Rule in selling vending machine opportunities by: (1) failing to provide potential purchasers with a basic disclosure document; (2) failing to provide purchasers with an earnings claims document substantiating their earnings claims; (3) making earnings claims in the general media without complying with the Franchise Rule’s general media claims requirements, including disclosing the number and percentage of prior purchasers known by the defendants to have achieved the same or better results.

United States of America v. Century Placements, Inc., No. 6:02-CV-680-ORL-28KRS (M.D. Fla. 2002)
The complaint alleges that Century Placements, Inc.; Martel, Inc.; and Mark Miller violated the Franchise Rule in selling vending machine opportunities by: (1) failing to provide potential purchasers with a basic disclosure document; and (2) failing to provide purchasers with an earnings claims document substantiating their earnings claims.

United States of America v. Espresso Italia Marketing, Inc., No. 02-80545-CIV-Marra/Selter (S.D. Fla. 2002)
The complaint alleges that Espresso Italia Marketing, Inc.; Shadd Vickory; and Patrick Albright violated the Franchise Rule in selling espresso-cappuccino vending machines by: (1) failing to provide potential purchasers with a basic disclosure document; and (2) failing to provide purchasers with an earnings claims document substantiating their earnings claims.

United States of America v. Global Vending Services, Inc., No. CV-S-0817-PMP-(PAL) (D. Nev. 2002)
The complaint alleges that Global Vending Services, Inc.; Nicholas G. Chomakos; and Matthew A. Capicchioni violated the Franchise Rule in selling vending machine opportunities by: (1) failing to provide potential purchasers with a basic disclosure document; (2) failing to provide purchasers with an earnings claims document substantiating their earnings claims; and (3) making earnings claims in the general media without complying with the Franchise Rule’s general media claims requirements, including disclosing the number and percentage of prior purchasers known by the defendants to have achieved the same or better results.

United States of America v. Merchant Payment Solutions, Inc., 4:02-CV-93-3 (CDL) (M.D. Ga. 2002)
The complaint alleges that Merchant Payment Solutions, Inc., and Steven Todd Knight violated the Franchise Rule by: (1) failing to provide potential purchasers with a basic disclosure document; (2) failing to provide potential purchasers with an earnings claims document substantiating their earnings claims; and (3) making earnings claims in the general media without complying with the Franchise Rule’s general media claims requirements, including disclosing the number and percentage of prior purchasers known by the defendants to have achieved the same or better results.

United States of America v. Nationwide Premium Cigar Distributors, Inc., No. 02-60811-CIV-Marra/Seltzer (S.D.Fla. 2002)
The complaint alleges that Nationwide Premium Cigar Distributors, Inc., and Alvin Blish violated the Franchise Rule in selling cigar distributor business opportunities by: (1) failing to provide potential purchasers with a basic disclosure document; (2) failing to provide potential purchasers with an earnings claims document substantiating their earnings claims; and (3) making earnings claims in the general media without complying with the Franchise Rule’s general media claims requirements, including disclosing the number and percentage of prior purchasers known by the defendants to have achieved the same or better results.

United States of America v. North American Vending, Inc., No. 2:2002CV00572 (D. Utah 2002)
The complaint alleges that North American Vending, Inc., and Terry D. Bird violated the Franchise Rule in selling vending machine opportunities by: (1) failing to provide potential purchasers with a basic disclosure document; (2) failing to provide potential purchasers with an earnings claims document substantiating their earnings claims; and (3) making earnings claims in the general media without complying with the Franchise Rule’s general media claims requirements, including disclosing the number and percentage of prior purchasers known by the defendants to have achieved the same or better results.

United States of America v. Perfumes Unlimited, Inc., No. 02-21767-CIV-Martinez (S.D. Fla. 2002)
The complaint alleges that Perfumes Unlimited, Inc., and Ignacious Goldenberger violated the Franchise Rule in selling perfume and cologne display rack opportunities by: (1) failing to provide potential purchasers with a basic disclosure document; (2) failing to provide potential purchasers with an earnings claims document substantiating their earnings claims; and (3) making earnings claims in the general media without complying with the Franchise Rule’s general media claims requirements, including disclosing the number and percentage of prior purchasers known by the defendants to have achieved the same or better results.

United States of America v. Superior Hospitality, No. 2:2002CV02856-DRD (D. N.J. 2002)
The complaint alleges that Superior Hospitality and Robert Baxter violated the Franchise Rule in selling vending machine opportunities by: (1) failing to provide potential purchasers with a basic disclosure document; and (2) failing to provide purchasers with an earnings claims document substantiating their earnings claims.

United States of America v. Turnkey Vending, Inc., No. 1:02-CV-75-ST (D. Utah 2002)
The complaint alleges that Turnkey Vending, Inc., and Michael S. Burnett violated the Franchise Rule in selling vending machine opportunities by: (1) failing to provide potential purchasers with a basic disclosure document; and (2) failing to provide purchasers with an earnings claims document substantiating their earnings claims.

United States of America v. Univend, LLC, No. 02-0433-P-L (S.D. Ala. 2002)
The complaint alleges that Univend, LLC, and Paul Hall violated the Franchise Rule in selling vending machine opportunities by: (1) failing to provide potential purchasers with a basic disclosure document; (2) failing to provide purchasers with an earnings claims document substantiating their earnings claims; and (3) making earnings claims in the general media without complying with the Franchise Rule’s general media claims requirements, including disclosing the number and percentage of prior purchasers known by the defendants to have achieved the same or better results.