A husband and wife team doing business through six corporations and five unincorporated entities are permanently banned from selling work-at-home business opportunities and from selling chain marketing schemes, including pyramid and Ponzi schemes, as part of a settlement with the Federal Trade Commission. The FTC charged the Florida couple in June 2002 with allegedly operating an online work-at-home scam. The FTC alleged that the defendants preyed on the fears of the jobless by falsely representing earnings, job openings, and the technical assistance they would provide prospective purchasers. In addition, the State of Florida recently charged the couple with 21 counts of racketeering, conspiracy to commit racketeering, and communications fraud. If convicted, they could each be sentenced to 30 years or more in prison.
The FTC's case was filed in June 2002 as part of "Operation Busted Opportunity," a coordinated attack on business opportunity and work-at-home fraud by the FTC, the Department of Justice, and 17 state law enforcement agencies. The law enforcement sting targeted individuals who used deceptive earnings claims and paid shills to promote their scams or otherwise violated consumer protection laws. The FTC's complaint named Michael J. Gardner and Rebecca Dahl Gardner, doing business as Home Typist International, Datapros, Professional Data Services, New Age Information Specialists, and Work At Home Direct, and their group of related corporations: Leading Edge Processing, Inc.; Quality Publishing, Inc.; Mega Processing Corp.; Creative Tech of America, Inc.; Digital Inputting Corp.; and The Bair Group. The defendants operated out of Kissimmee and Orlando, Florida.
The FTC alleged that the defendants used false earnings claims in e-mails and online advertisements to deceptively market and sell work-at-home data entry job opportunities.
According to the FTC, the defendants e-mailed job seekers who posted their resumes on job Web sites, and advertised their work-at-home data entry positions on such Web sites and in local newspapers. The defendants allegedly lured prospective purchasers with e-mail solicitations and ads falsely claiming actual jobs with potential incomes such as $187.50 per day or $937.50 per week, and guaranteeing a steady stream of work.
The FTC's complaint alleged that the defendants falsely claimed they would provide actual jobs to consumers who purchased their work-at-home opportunities for fees ranging from $59 to $150. In addition, the defendants allegedly misrepresented that they would provide potential purchasers with specialized software, manuals, and training that would enable them to earn a substantial income by processing orders or medical bills using a software program that allegedly permitted access to some health care provider or bill processor sites on the Internet. In fact, the FTC noted, many consumers who spent $59 to $150 received nothing, and those who did receive the software complained that they could not open the program; that the program was incompatible with the consumers' computer systems; that it failed to function properly; or that it destroyed existing data. The FTC also alleged that there were no jobs available for purchasers, and that the defendants provided purchasers with no orders or medical bills for data entry. Consumers reported that after the defendants received their payments, consumers earned no money and received no response to their complaints or inquiries.
To settle the FTC charges, the defendants are permanently banned from engaging in the sale of work-at-home business opportunities and from operating any chain marketing program. The settlement also prohibits the defendants from selling or disclosing their customer lists, and from using aliases, including in the text of any commercial e-mail. The settlement contains a $200,000 suspended judgment, but the defendants would be liable for the entire amount if it is found that they made material misrepresentations or omissions in their financial disclosure forms or deposition testimony. In addition, the settlement contains various recordkeeping requirements to assist the FTC in monitoring the defendants' compliance.
The FTC received valuable assistance on this matter from the State of Florida Office of the Attorney General, the Central Florida Better Business Bureau, and the Orange County Sheriff's Office.
The Commission vote to authorize staff to file the stipulated final judgment and order for permanent injunction was 5-0. It was entered by the District Court for the Middle District of Florida in Orlando, Florida on March 6, 2003.
Copies of the stipulated final judgment and order are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1 877-382-4357), or use the complaint form at http://www.ftc.gov The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
(FTC Matter No. X020078)
(Civil Action No. 6:02-CV-681-ORL-19DAB)
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