Sheldon C. Wagner, who held financial management positions in several corporate entities sued by the Federal Trade Commission over an allegedly deceptive scheme to sell vending machine business opportunities, has agreed to settle the FTC charges against him. In part, the settlement would require him to turn over assets valued at approximately $45,000 to be used for consumer redress. In addition, he would be required to post a $1 million bond for the protection of future investors before he offers any franchise or business opportunity. The settlement also contains a broad prohibition against false or misleading claims in connection with the sale of any franchise or business venture or with any telemarketing activity in which Wagner engages. And it would require him to provide potential franchisees with key pre-purchase information and to otherwise comply with the FTC's Franchise Rule.
Wagner resides in Coconut Creek, Florida.
The settlement stems from FTC charges filed in March 1994 against Wagner, 31 corporate entities and 15 other individuals. The FTC alleged that the defendants, led by Florida resident Marvin Wolf, used a variety of illegal tactics -- including providing phony references and making false promises about investors' earnings potential and success, sales territories, and other key information -- to induce consumers across the United States to invest thousands of dollars or more each in vending machine distributorships. The vending machines dispensed pizza and other food items, among other products. Ten other individual defendants agreed to settle the FTC charges under consent orders announced last September. FTC charges remain pending against four other individual and 30 corporate defendants, which include Pizza King, Inc., Pizza Royale, Inc., Action Games Technologies, Inc., Entertainment Enterprises, Inc., Magnum Vending, Inc., and Indoor Amusement Games, Inc. The corporate defendants were based in Boca Raton, Florida; Phoenix, Arizona; Vienna, Virginia; and New York City.
Under the proposed consent judgment Wagner has signed with the FTC to settle the charges against him, he would be prohibited from:
- participating or assisting others in the making of false or misleading statements to any potential investor in a franchise or business venture;
- violating the FTC's Franchise Rule which, among other things, requires franchise sellers to provide potential buyers with a disclosure document containing 20 categories of information about the franchise, its officers and its franchisees, and requires franchise sellers making earnings claims to provide an earnings disclosure document containing substantiation for those claims;
- participating or assisting in the making of false or misleading statements in connection with any telemarketing activity; and
- transferring to non-law enforcement entities any consumer lists gleaned from the previous marketing of any franchise and business opportunity by any of the defendants in this case.
transferring to non-law enforcement entities any consumer lists gleaned from the previous marketing of any franchise and business opportunity by any of the defendants in this case.
Wagner would have to post the $1 million bond required by the settlement before he holds an ownership interest in, or serves as an officer or director of, any entity that offers franchises or business opportunities. He also would be required to turn over all stock or ownership interests he holds in any of the corporate defendants. If practical, the funds will be used for consumer redress.
Finally, the settlement contains various reporting provisions that would assist the FTC in monitoring his compliance.
The Commission vote to accept the consent judgment for filing in court was 5-0. It was filed this morning in U.S. District Court for the Southern District of Florida and requires the court's approval to become binding.
NOTE: This consent judgment is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.
The FTC has published two free brochures offering advice for consumers interested in purchasing a franchise or business opportunity. Copies of "Franchises and Business Opportunities," and "Business Opportunity Scams: Vending Machines and Display Racks," as well as the consent judgment and other documents associated with this case are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web site at: http://www.ftc.gov
(FTC File No. X940029)
(Civil Action No. 94-8119-CIV-Ferguson)