Tippecanoe Mining Inc., a Sherman Oaks, California-based telemarketing company, and its principals, have agreed to pay monetary judgments totalling $2,409,759 to settle Federal Trade Commission charges over their allegedly deceptive scheme to sell interests in a gold and a silver mine located in Colorado. The defendants allegedly told consumers that they projected as much as a 10 to one return on investments in the unregistered common stock of a company raising $1.98 million to reopen a gold mine in LaPlata County, Colorado. In addition to the monetary judgments, the settlement would prohibit the defendants from, among other things, misrepresenting the risk and profitability of mining investments.
The FTC charged Tippecanoe Mining, operating under its own name and doing business as Global Mining Consulting; Hope Mining, Inc.; Stephen P. Noell and Mark Ford, with soliciting consumers to invest in the Tippecanoe and/or Hope mines by promising lucrative returns from the investments. To bolster consumers' confidence they falsely represented that the U.S. government had verified the presence of valuable mineral deposits in the mines. Investment units sold for $15,000 each. In truth, the FTC alleged, the government had never conducted any mineral examination or confirmed the presence of valuable minerals in the mines.
On June 20, 1997, the FTC filed charges against Tippecanoe, Hope Mining, Noell and Ford, as part of “Project Field of Schemes” -- a sweep targeted at investment-related fraud. "Project Field of Schemes" comprised approximately 61 law-enforcement actions with a major consumer education component. In its complaint, the FTC alleged that the defendants misrepresented the risk and the likely return of an investment in the Tippecanoe and Hope mining ventures; that the federal government had verified the presence of valuable mineral deposits on the mineral claims; that the Tippecanoe mining venture had obtained requisite state permits to commence mining operations; and that Exxon and Mitsubishi had expressed strong interest in acquiring the Hope Mine. According to the FTC, however, all of the representations to consumers were false.
A judge issued a temporary restraining order on June 23, 1997, freezing the defendants’ assets and placing the companies into temporary receivership. On August 5, the court issued a stipulated preliminary injunction continuing the asset freeze and appointing a permanent receiver.
The FTC’s settlement has been submitted to the court and requires the court’s approval to becoming binding. The proposed judgment requires the corporate defendants to pay a monetary judgment of $2,374,259 and Noell to pay $8,500 and Ford to pay $27,000. The proposed settlement would prohibit the defendants from falsely representing the investment potential in any gold or silver mining venture, or any other investment offering. In addition, the settlement would prohibit the defendants from falsely representing:
- that the value of any ore deposit has been proved or that the U.S. Government has confirmed the value of any ore deposit;
- that they have obtained requisite permits to operate mines;
- that any individual or entity has expressed interest in acquiring a mine;
- that an investment in any mining venture or other investment offering is a low or safe investment; and
- any fact material to any investment or investment offering, including facts pertaining to the risk, liquidity, market value, or expected income to be realized from any investment offering.
Finally, the settlement contains various reporting provisions that would assist the FTC in monitoring the defendants' compliance.
The Commission vote to authorize staff to file the proposed settlement was 4-0, with Commissioner Mary L. Azcuenaga not participating. The stipulated final judgment and permanent injunction was filed in the U.S. District Court, Central District of California, in Los Angeles, on Jan. 22, 1998.
NOTE: This stipulated final judgment is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Final judgments have the force of law when signed by the judge.
Copies of proposed settlement, as well as other news releases associated with Project Field of Schemes, are available on the Internet at the FTC's World Wide Web Site at: http://www.ftc.gov or from the FTC's Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-3128; TTY for the hearing impaired 1-866-653-4261. To find out the latest FTC news as it is announced, call the FTC's NewsPhone recording at 202-326-2710.
Bureau of Consumer Protection
Connie Wagner or Dean Graybill
202-326-3309 or 202-326-3284
(FTC Matter No. X970052)
(Civil Action No. CV 97-4543-R
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