Russell Mann, one of the remaining defendants sued by the Federal Trade Commission over his role in an allegedly deceptive telemarketing scheme that purported to recover money consumers lost to investment fraud, has agreed to post a $200,000 performance bond to protect consumers before engaging in, or assisting others in, any telemarketing activities in the future. The FTC alleged that the defendants called consumers who were victims of previous investment telemarketing scams -- often involving Federal Communication Commission wireless telecommunications licenses -- and told them that, for a fee, they could recover most or all of the money the consumers had previously lost. In addition to the bond requirement, the settlement would permanently prohibit Mann from misrepresenting any material aspect of any future telemarketing or recovery room services.
The settlement stems from an FTC complaint filed in federal district court in August 1995, leveling charges against Meridian Capital Management, Inc.; Advisory Consultants, Inc., successor to and doing business as Meridian Capital Management; Jeffrey A. Jordan; Richard Randall and Angelo Delon. In December 1995, the complaint was amended to include Markos Mendoza and Russell Mann as defendants, and Suzan Randall as a relief defendant not alleged to have participated in the purported misconduct, but who supposedly received and benefited from funds that the defendants fraudulently raised. (In April 1996, the court entered a final order for permanent injunction against defendant Angelo DeLon. The charges against the other defendants are still pending.)
The FTC alleged that Meridian Capital Management, a Las Vegas-based telemarketing firm ("Meridian"), made unsolicited calls to consumers throughout the United States, telling them that Meridian was located in Washington, D.C. and specialized in recovering money lost by consumers to fraudulent investment-promotion telemarketing firms. The defendants said that for an advance fee of 10 percent -- from $1,000 to as much as $5,000 -- of the original "bad" investment, plus another 10 percent fee upon recovery, they would recover all money that the consumer had lost, plus interest and punitive damages. To support these claims, the FTC said, the defendants allegedly told consumers that they would recover the money from the individuals who were behind the original fraudulent telemarketing scheme, and that they would recover money from bonds or insurance policies required to be posted by states in which the firms had done business. The complaint further alleged that the defendants often claimed that they were on the verge of filing a class action lawsuit on behalf of their clients.
Under the proposed settlement of the charges against him, which requires the court's approval to become binding, Mann would be prohibited from misrepresenting:
- that money previously lost by a consumer to a telemarketer has been, or is likely to be, recovered;
- that a prize that a consumer never received from a telemarketer has been, or is likely to be recovered;
- the success in recovering money previously lost by consumers to a telemarketer or the success in recovering prizes that consumers never received from a telemarketer;
- that a consumer must pay an advance fee to be able to participate as a member of a class action lawsuit;
- that lawsuits will be filed against telemarketers to obtain or assist in obtaining whole or partial refunds for victims of fraudulent telemarketers;
- that a consumer's money likely can be recovered from bonds posted by other telemarketers; and
- any other fact material to a consumer's decision to purchase recovery services.
In addition, in connection with telemarketing, Mann would be prohibited from falsely representing any fact material to a consumer's decision to purchase any good or service, or to donate to a charity. Also, the order would prohibit Mann from violating, or assisting others in violating, any provisions of the newly-enacted Telemarketing Sales Rule, which includes requesting or receiving an advance payment for recovery services.
The settlement includes a $50,000 judgment against Mann to be paid in five installments. The funds will be set aside for consumer redress, if distribution is practicable. In addition to the monetary judgment, the settlement would require Mann to post a $200,000 performance bond before engaging in, or assisting others in, telemarketing activities, and would require him to disclose the existence of any bond he posts in all written sales materials sent to consumers. The bond provision would not be required if Mann is employed as a securities broker/dealer registered with the National Association of Securities Dealers and regulated by the Securities and Exchange Commission or other state securities administrators.
Finally, the settlement includes various reporting requirements necessary to assist the FTC in monitoring Mann's compliance.
The Commission vote to file the final order for permanent injunction was 5-0. The proposed final order was filed in U.S. District Court for the District of Nevada, in Las Vegas, on October 9, 1996.
NOTE: This final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Final orders have the force of law when signed by the judge.
The FTC has developed a free Facts for Consumers that offers tips for consumers on protecting themselves from reloading and double-scamming frauds. Copies of the "Telemarketing Recovery Room Scams" brochure, the final order 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
(Civil Action No.: CV-S-96-63-PMP (RLH))
(FTC File No. X950060)
Office of Public Affairs
Bureau of Consumer Protection
James Reilly Dolan