FRANCHISE & BUSINESS OPPORTUNITY CASES

2003-2006

 

FTC v. American Entertainment Distributors, Inc., No. 04-22431 CIV-Huck (S.D. Fla. 2004)
The Commission’s complaint alleges that American Entertainment Distributors, Inc.; Automated Entertainment Dispensers, Inc.; Automated Entertainment Machines, Inc.; Universal Technical Support, Inc.; Universal Cybercom Corp., Russell G. MacArthur, Jr.; Anthony Rocco Andreoni; James R. MacArthur; Mauricio A. Paz; and Miriam Smolyanksy violated Section 5 of the FTC Act in selling opportunities involving DVD and VHS movie rental machines by misrepresenting that: (1) that purchasers are likely to earn substantial income; (2) 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) defendants will find high-traffic locations for the rental machines and will negotiate a location agreement with the store owner. 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 statement inconsistent with the information required to be disclosed by the Franchise Rule.

FTC v. Bikini Vending Corp., No. CV-S-05-0439 LDG-RJJ (D. Nev. 2005)
The Commission’s complaint alleges that Bikini Vending Corp.; Mymart, Inc.; 360 Wireless Corp.; and Edward Bevilacqua, II, violated Section 5 of the FTC Act in selling Internet kiosk opportunities by making various misrepresentations, including: (1) that consumers will acquire ownership of an Internet Kiosk business venture at the time of purchase; (2) that purchasers are likely to earn substantial income; (3) that purchasers will receive monthly payments that represent revenue generated by the business venture; (4) that defendants have found or will find profitable locations for the kiosks; and (5) providing the means and instrumentalities for others to engage in deceptive acts and practices. The complaint further alleges that defendants provided sales agents with the means and instrumentalities to make the misrepresentations noted above in recruiting new purchasers. In addition, the complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide potential purchasers with a complete 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. Gregory Bryant, Jr., No. 3:04-CV-897-J-32-MMH (M.D. Fla. 2004)
The Commission’s complaint alleges that Gregory Bryant, Jr., and Nadira Bryant (doing business as Gregory Bryant & Associates, Dove Marketing Corporation, GBA Publishing Inc., GBA Financing, Network Marketing, Miracle Moms and/or DM Marketing Services) violated Section 5 of the FTC Act in selling an envelope stuffing opportunity by: (1) misrepresenting that purchasers are likely to earn substantial incomes; (2) misrepresenting that defendants would provide purchasers with pre-addressed, pre-stamped envelopes to stuff and that defendants would pay purchasers a specified amount for each envelope stuffed and mailed; (3) misrepresenting that defendants would provide full refunds upon request; and (4) providing the means and instrumentalities for others to commit deceptive acts or practices. The Commission’s complaint also alleges violations of the CAN-SPAM Act and the Telemarketing Sales Rule.

FTC v. Castle Publishing., No. A03CA 905SS (W.D. Tex. 2003)
The Commission’s complaint alleges that Castle Publishing and Treigh Dustin Hubbard violated Section 5 of the FTC Act in selling an envelope stuffing opportunity by: (1) misrepresenting that purchasers will earn substantial incomes; (2) misrepresenting that defendants would pay purchasers a specified amount for each envelope stuffed; (3) misrepresenting that defendants would pay for postage needed to mail defendants’ special letters; and (4) providing the means and instrumentalities for others to commit deceptive acts or practices.

FTC v. Patrick Cella, No. CV-03-3202 GAF (SHSX) (W.D. Cal. 2003)
The Commission’s complaint alleges that Patrick Cella; David Herrera; Irene Herrera; James Zezula; and Vincent Zezula (doing business as Quik Cash, U-Mail, Innovative Services, Central Solutions, Parallax Business Services, Ace Distributing Center, Executive Worldwide, Easy Money, Coast Distributing and/or Credit Solutions) violated Section 5 of the FTC Act in selling an envelope stuffing opportunity by: (1) misrepresenting that purchasers are likely to earn a substantial income; (2) misrepresenting that defendants would provide purchasers with pamphlets for mailing, pre-addressed and pre-stamped envelopes for stuffing, and a specified payment for each envelope stuffed; (3) misrepresenting that defendants will provide full refunds for processing fees; (4) providing the means and instrumentalities for others to commit deceptive acts or practices; and (5) misrepresenting that sender of the spam messages to consumers is a specific Internet-related business.

FTC v. End70 Corp., 3 03CV-0950N (N.D. Tex. 2003)
The Commission’s complaint alleges that End70 Corp. and Damien Zamora violated Section 5 of the FTC Act in selling a home-based Internet business opportunity by: (1) misrepresenting that that purchasers would receive a complete and fully functional Internet home business; (2) failing to disclose that purchasers must pay substantial additional charges to make Internet home business fully functional; and (3) misrepresenting that purchasers would earn substantial income. The Commission’s complaint also alleges violations of the Telemarketing Sales Rule.

FTC v. Financial Resources Unlimited, No. 03-C-8864 (N.D. Ill. 2003)
The Commission’s complaint alleges that Financial Resources Unlimited; Supreme Mailing Services, Inc.; and Mark E. Shelton (doing business as L. Lewis & Associates, A. Joseph & Associates) violated Section 5 of the FTC Act in selling an envelope stuffing opportunity by: (1) misrepresenting that purchasers are likely to earn substantial incomes; (2) misrepresenting that defendants would pay purchasers a specified amount for each envelope stuffed and mailed; (3) misrepresenting that defendants would pay for postage needed to mail defendants’ advertising circulars; and (4) providing the means and instrumentalities for third parties to engage in deceptive acts or practices.

FTC v. Greeting Cards of America, Inc. No. 03-60746-CIV-Gold (S. D. Fla. 2003)
The Commission’s complaint alleges that Greeting Cards of America, Inc.; Gerald Towbin; Susan Towbin; American Eagle Placements, Inc.; and Forrest Adams 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 assist purchasers by, among other things, securing profitable locations for the display racks; and (3) 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) failing to disclose information required by the Franchise Rule, including the business experience for the last five years of current directors and executives, as well as names and contact information for current purchasers; and (2) failing to provide potential purchasers with an earnings claim document substantiating their earnings claims, including disclosing the number and percentage of prior purchasers known by the defendants to have achieved the same or better results.

FTC v. Amada Guerra., No. 6:04-CV-1395-ORL-22KRS (M.D. Fla. 2004)
The Commission’s complaint alleges that Amada Guerra (doing business as AG Intercraft) violated Section 5 of the FTC Act in selling craft-assembly work-at-home opportunities to Hispanic consumers by misrepresenting that: (1) purchasers are likely to earn substantial earnings; and (2) purchasers will be able to obtain refunds of their initial deposits. The complaint also charges the defendant with violations of the Telemarketing Sales Rule.

FTC and State of Maryland v. Sandra L. Jacobson, No. 04-CV-1176 (D. Md. 2004)
The Commission’s complaint alleges that Sandra L. Jacobson (doing business as SLJ, LLC) violated Section 5 of the FTC Act in selling pyramid opportunities by: (1) misrepresenting that consumers who become defendant’s sales representatives were likely to make substantial income; (2) misrepresenting that employment opportunities are available to those responding to defendant’s advertisements; (3) conducting a pyramid scheme in which compensation is paid primarily for recruiting new members rather than for the retail sale of products or services; and (4) providing the means and instrumentalities for third parties to engage in deceptive acts or practices.

FTC v. K4 Global Publishing, Inc., No. 5:03-CV-0140-3-CAR (M.D. Ga. 2003)
The Commission’s complaint alleges that K4 Global Publishing, Inc., (doing business as Instant Internet Empires); Kern Family Enterprises, LLC; and Irwin F. Kern, IV, violated Section 5 of the FTC Act in selling an Web-hosting opportunity by: (1) misrepresenting that purchasers are likely to earn substantial income; (2) failing to disclose that the structure of the defendants’ business ensures that most purchasers will not earn substantial income; (3) promoting a chain marketing scheme in which compensation is paid for recruiting new members into the scheme; and (4) providing the means and instrumentalities for third-parties to engage in deceptive acts or practices.

FTC v. Mall Ventures, Inc., No. CV 04-0463 FMA (PLAX) (C.D. Cal. 2004)
The Commission’s complaint alleges that Mall Ventures, Inc., (doing business as 2by2.net); Jeffrey P. Morgan; and Dennis Wong violated Section 5 of the FTC Act in selling a multilevel marketing program by: (1) misrepresenting that purchasers would earn substantial income: (2) providing the means and instrumentalities for others to engage in deceptive acts or practices; (3) failing to disclose that most purchasers will not realize 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. Medical Billers Network, Inc., No. 05 CV 2014 (S.D.N.Y. 2005)
The Commission’s complaint alleges that Medical Billers Network, Inc.; Chris Taylor; Caceres Quality Distribution, Inc.; and Wilson Jose Caceres violated Section 5 of the FTC Act in selling medical billing opportunities by misrepresenting that: (1) purchasers were likely to earn a substantial income; and (2) defendants will provide the names and addresses of physicians who are likely to use the purchaser’s billing services. The complaint also charges the defendants with violations of the Telemarketing Sales Rule.

FTC v. National Vending Consultants, Inc., No. CV-S-05-0160-RCJ-PAL (D. Nev. 2005)
The complaint alleges that National Vending Consultants, Inc.; Success Vending Group, Inc.; USA Candy Express, Inc.; Patrick Abeyta, Jr.; Debra Abeyta; Larry Welli; and Richard Savard 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) 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) failing to provide potential purchasers with an earnings claims document substantiating their earnings claims; and (3) making statements inconsistent with the information required to be disclosed by the Franchise Rule.

FTC v. Netfran Development Corp., No. 05-CV-22223 (S.D. Fla. 2005)
The Commission's complaint alleges that Netfran Development Corp.; Netvertise, Inc.; and Elliot Krasnow violated Section 5 of the FTC Act in selling website promotion software and services franchises by misrepresenting: (1) how much purchasers could earn; and (2) the capabilities of the defendants’ software. In addition, the complaint alleges that the defendants violated the Franchise Rule by: (1) failing to furnish potential purchasers with a complete basic disclosure document disclosing that defendant Krasnow is subject to a currently effective court injunctive order involving fraud and/or unfair or deceptive practices; (2) failing to provide potential purchasers with an earnings claim document substantiating their earnings claims, and (2) by making statements inconsistent with the information required to be disclosed by the Franchise Rule.

FTC v. Network Services Depot, Inc., No. CV-S-05-0440-LDG-LRL (D. Nev. 2005)
The Commission’s complaint alleges that Network Services Depot, Inc.; Network Marketing, LLC; Net Depot, Inc.; Network Services Distribution, Inc.; Sunbelt Marketing, Inc.; Charles V. Castro; Elizabeth L. Castro; and Gregory High violated Section 5 of the FTC Act in selling Internet kiosk opportunities by misrepresenting: (1) how much purchasers could earn; and (2) that defendants have found or will find profitable locations for the kiosks . The complaint further alleges that defendants provided sales agents with the means and instrumentalities to make the misrepresentations noted above in recruiting new purchasers. In addition, the complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide potential purchasers with a complete basic disclosure document; and (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. NexGen3000.com, No. 03-120 TUC WDB (D. Ariz. 2003)
The Commission’s complaint alleges that NexGen3000.com, Inc.; Globion, Inc.; Infinity2, Inc.; David A. Charette; Jeffier K. Charette; Robert J. Charette, Jr.; Marta N. Charette; Stephen M. Diamond; Christine A. Wasser; and Edward G. Hoyt violated Section 5 of the FTC Act in selling Internet mall and nutritional supplement multilevel marketing opportunities by: (1) misrepresenting that purchasers were 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 structure of the defendants’ program ensured that a substantial number of purchasers would lose money; 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. Misty Stafford, No. CV 05-0215 (M.D. Pa. 2005)
The Commission’s complaint alleges that Misty Stafford and William R. Stafford (doing business as National Home Assemblers) violated Section 5 of the FTC Act in selling Internet refrigerator magnet assembly work-at-home opportunities by misrepresenting that: (1) purchasers were likely to earn substantial income; and (2) the assembly work is simple and requires no special skills.

FTC v. Sun Ray Trading, Inc., No. 05-20402-CIV-Seitz/Bandstra (S.D. Fla. 2005)
The Commission’s complaint alleges that Sun Ray Trading, Inc.; SR & Associates, Inc.; Rolando Galvez-Garcia; Annefelises Flores Adino; and Kostadin Osvaldo Marte Tavarez violated Section 5 of the FTC Act in selling an envelope stuffing opportunity by: (1) misrepresenting that purchasers were likely to earn substantial income; (2) misrepresenting that defendants would pay purchasers a specified amount for each envelope stuffed and mailed; (3) misrepresenting that defendants would pay for postage needed to mail defendants’ advertising circulars; and (4) providing the means and instrumentalities for others to engage in deceptive acts or practices. In addition the complaint alleges various violations of the CAN-SPAM Act.

FTC v. Transnet Wireless Corporation., No. 05-61559-CIV-Marra/Seltzer (S.D Fla. 2005)
The Commission’s complaint alleges that Transnet Wireless Corporation; Nationwide Cyber Systems, Inc.; Bradley Cartwright; Paul Pemberton; Farris Pemberton; and Margaret Pemberton violated Section 5 of the FTC Act in selling Internet kiosk opportunities by misrepresenting that: (1) purchasers are likely to earn substantial income; and (2) defendants have found or will find profitable locations for the kiosks. In addition, the complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide potential purchasers with complete disclosure documents, including the identity, business experience, and litigation history of the executive officers, the names, addresses and telephone numbers of previous purchasers of Defendants franchises and/or a statement disclosing the range of time that has elapsed between the signing of the franchise agreement and site selection; and (2) making earnings claims in violation of the Rule by, for example, failing to disclose the number and percentage of prior purchasers known by the defendants to have achieved the same or better results, failing to have a reasonable basis for such claims at the times they were made, failing to provide material which constitutes a reasonable basis for any earnings claim made to prospective purchasers and/or failing to provide prospective franchisees with earnings claims disclosures at the times required by the Rule.

FTC v. USA Beverages, Inc., No. 05-61682-CIV-Lenard/Klein (S.D. Fla. 2005)
The Commission’s complaint alleges that USA Beverages, Inc.; Dilraj Mathauda; Sirtaj Mathauda; Jeff Pearson; David Mead; and Silvio Carrano violated Section 5 of the FTC Act in selling coffee display rack opportunities by misrepresenting that: (1) purchasers are likely to earn substantial income; (2) defendant had already secured retail locations for the placement of the display racks; and (3) 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) 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.

FTC v. USS Elder Enterprises, Inc., No. SA CV-04-1039 HS (ANX) (C.D. Cal. 2004)
The Commission’s complaint alleges that USS Elder Enterprises, Inc.; America Vespucia Corp.; Ricardo Elder Partners, Inc.; and Ricardo E. Gonzalez violated Section 5 of the FTC Act in selling product assembly work-at-home opportunities to Hispanic consumers by misrepresenting that: (1) defendants would provide purchasers with assembly project work; (2) purchasers are likely to earn a substantial amount of income; and (3) defendant would provide refunds to consumers. In addition, the complaint alleges various violations of the Telemarketing Sales Rule.

FTC v. Esteban Barrios Vega, No. H-04-1478 (S.D. Tex. 2004)
The Commission’s complaint alleges that Esteban Barrios Bega (doing business as EBV Promotions, Paymentech Promotions, and Promotions of Service) violated Section 5 of the FTC Act in selling product assembly work-at-home opportunities to Hispanic consumers by misrepresenting that: (1) defendants would provide purchasers with assembly project work; and (2) purchasers are likely to earn substantial earnings. In addition, the complaint alleges violations of the Telemarketing Sales Rule.

FTC v. Vinyard Enterprises, Inc., No. 03-23291-CIV-Altonga/Bandstra (S.D. Fla. 2003)
The Commission’s complaint alleges that Vinyard Enterprises, Inc.; Sunshine Advertising & Marketing, Inc.; Ray A. Thompson; Judith Livingston; and Jason Lunan (doing business as Comfort Castle Enterprises, Dynamic Data Services, Direct Business Services, Dynamic Data, Dynamic Data Express, and/or Comfort Castle Associates) violated Section 5 of the FTC Act in selling catalog and book report mailing work-at-home opportunities by: (1) misrepresenting that purchasers are likely to earn a substantial income; (2) misrepresenting that the defendant will pay purchasers for each piece of mail they send out; and (3) providing the means and instrumentalities for others to commit deceptive acts or practices.

FTC v. Wealth Systems, Inc., CV 05-0394 PHX-JAT (D. Ariz. 2005)
The Commission’s complaint alleges that Wealth Systems, Inc.; Ecommerce Newtork.com, LLC; Martin Q. Wilson; and Shane Roach violated Section 5 of the FTC Act in selling a home-based Internet business opportunity by misrepresenting that purchasers will 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 basic disclosure document; and (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. World Traders Association Inc., No. CV 05-591 AHM (CTX) (C.D. Cal. 2005)
The Commission’s complaint alleges that World Traders Association, Inc.; United Traders Association; International Merchandise Group, Inc.; Trans-Global Connection, Inc.; Musketeer Partners, Inc.; Fulfillment Options, Inc.; International Associates Worldwide, Inc.; Magna Delta, LLC; Office Options, LLC; Judith Takala Fidler; Sheldon Fidler; Shannon Holden; Jamie Klotthor; and Scott Rinaldo violated Section 5 of the FTC Act in selling a surplus distribution business opportunity by misrepresenting that: (1) purchasers are likely to earn substantial income; (2) purchasers will receive accounts or lists of businesses that are pre-qualified to purchase the defendants’ surplus merchandise; (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) defendants will provide purchasers with goods and services for the operation of their businesses. 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 potential purchasers with an earnings claims document substantiating their earnings claims.

United States of America v. American Merchant Technologies, Inc., No. CV 05-2043 CIV-Huck (S.D. Fla. 2005)
The complaint alleges that American Merchant Technologies, Inc., and Lawrence B. Albano violated the Franchise Rule in selling Internet kiosk and ATM terminal business ventures 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. Elite Designs, Inc., No. CA 05 058 (D. R.I. 2005)
The complaint alleges that Elite Designs, Inc.; The Designer Collection, Inc.; and Anthony Antonelli violated the Franchise Rule in selling fashion jewelry rack display 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. Gold Leaf Distribution, Co., No. 05-2044-CIV-Moreno (S.D. Fla. 2005)
The complaint alleges that Gold Leaf Distribution, Co.; Luz Amporo Ugarte; and Jose V. Ugate violated the Franchise Rule in cigar distributorship 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. Robert Lasseter, No. 3:03-1177 (M.D. Tenn. 2003)
The complaint alleges that Robert Lasseter violated the Franchise Rule in the offer for sale and sale of computer education franchises by: (1) failing to provide potential purchasers with a complete basic disclosure document; and (2) failing to provide potential purchasers with an earnings claim document substantiating their earnings claims.

United States of America v. Money Movers, Inc., No. 05-80101-CIV-Ryskamp (S.D. Fla. 2005)
The complaint alleges that Money Movers, Inc., and Erastus Corning Davis violated the Franchise Rule in selling automated self-service coin machine opportunities by: (1) failing to provide potential purchasers with a complete basic disclosure document; and (2) failing to provide potential purchasers with an earnings claims document substantiating their earnings claims.

United States of America v. We The People Forms and Service Centers, USA, Inc., No. 04 10075 GHK FMOX (C.D. Cal. 2004)
The complaint alleges that We The People Forms and Service Centers, USA, Inc., violated the Franchise Rule in selling legal document preparation franchises by failing to disclose completely and accurately all information required by the Rule, or in the alternative, Uniform Franchise Offering Circular Guidelines, including: (1) regulations specific to the industry in which the franchise business operates; and (2) all current injunctive orders in which it was named a party and all pending actions in which such orders are sought.