Three California-based telemarketing companies and their owner, Hari Jiwan Singh Khalsa, have agreed to settle charges filed by the Federal Trade Commission as part of "Project Field of Schemes" -- a sweep targeted at investment-related fraud -- alleging that they made numerous misrepresentations when soliciting consumers to buy gemstones as investments. The settlement requires Khalsa to post a $100,000 bond before engaging in, or assisting others engaged in, telemarketing activities. In addition, the defendants have agreed to a monetary judgment that requires the defendants to forfeit most of their assets.
In June 1997, the FTC filed charges against the following entities: Sweet Song Corporation, also doing business as Windsor & White Trading Co. and d/b/a Pacific Wellington Associates; Tsavorite Sword Corporation, d/b/a Pacific Wellington Associates; Ron Hudson, Inc., d/b/a Pacific Wellington Associates; Hari Jiwan Singh Khalsa, also known as Stephen Jon Oxenhandler, a/k/a Bob Thomas; and Siri Ram Singh Khalsa, a/k/a William Taylor, a/k/a Phillip Anderson, as part of "Project Field of Schemes." This enforcement effort was comprised of approximately 61 law-enforcement actions with a major consumer education component. In its complaint detailing the charges, the FTC alleged that the defendants routinely misrepresented the risk, value, appreciation and liquidity of the gemstones they sold and falsely claimed that consumers would realize tremendous profits. In addition, the defendants falsely pledged that they could and would easily liquidate consumers’ gemstone portfolios after an 18-month holding period. In fact, according to the FTC, the defendants typically ceased all contact with consumers and refused to liquidate their stones after the 18-month period. Shortly after the complaint was filed, the court issued a temporary restraining order, froze the defendants' assets and appointed a temporary receiver over the corporate defendants. On July 10, the court issued a preliminary injunction that continued the terms of the TRO and permanently installed the receiver. (The case against Siri Ram Singh Khalsa, a/k/a William Taylor, a/k/a Phillip Anderson is still pending.)
The FTC's proposed settlement, which requires the court's approval to become binding, would prohibit the defendants from falsely representing, among other things:
- the degree of risk of any investment opportunity;
- that any investment opportunity sold to consumers has appreciated in value since the time of the purchase;
- the past appreciation, the future appreciation, the income potential and the origin of any investment opportunity;
- that a consumer can easily re-broker or liquidate a gemstone or any other investment opportunity; and
- any other fact material to a consumer's decision to purchase gemstones, coins, bullion or any other investment opportunity.
The proposed settlement would also prohibit the defendants from violating, or assisting others in violating, any provision of the FTC's Telemarketing Sales Rule.
In addition, the settlement would require the settling defendants to forfeit most of their assets in order to satisfy the monetary judgment.
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. The stipulated final judgment was filed in the U.S. District Court for the Central District of California in Los Angeles, on August 17, 1998.
NOTE: This stipulated final judgment is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Final judgments have the force of law when signed by the judge.
Copies of FTC's news releases are available on the FTC’s web site at: http://www.ftc.gov and copies of the proposed settlement, as well as other documents associated with Project Field of Schemes, are also available from the FTC’s Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD 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 Matter No. X970051)
(Civil Action No. CV-97-4544 LGB (JGx))
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