FTC Licks Envelope-stuffing Pitchmen in Court

Illinois Defendants Permanently Barred From Promoting Work-at-Home Business Opportunities; Will Pay $420,000 for Consumer Redress

For Release

Under the terms of a court order announced by the Federal Trade Commission today, a set of defendants with mail drops in Willowbrook, Illinois are permanently barred from selling work-at-home business opportunities, and will pay $420,000 in consumer redress in connection with allegedly deceptive pitches made to consumers between 2001 and 2003. According to the Commission’s complaint, in promoting their program to consumers, the defendants violated the FTC Act through a variety of misrepresentations, including claims that consumers could earn between $500 and $5,000 per week stuffing envelopes at home, “guaranteed.” Consumers typically paid between $55 and $150 for the defendants’ business-opportunity information, with almost none receiving return of the registration fee, let alone earning the income promised in the defendants’ ads.

The stipulated final order announced today settles the FTC’s civil case against:
1) Financial Resources Unlimited, Inc.; 2) Supreme Mailing Services, Inc.; and 3) Mark E. Shelton, individually and as an officer of the corporate defendants. The defendants did business as L. Lewis & Associates and A. Joseph & Associates. The Commission filed its complaint as part of December 2003’s “Operation Pushing the Envelope” joint federal/state law enforcement sweep targeting envelope-stuffing home-based business opportunity fraud. The sweep consisted of five criminal and 22 civil cases filed by the FTC, 24 states, and four other government agencies, including the U.S. Postal Inspection Service.

The Commission’s Complaint

According to the FTC’s complaint, announced on December 16, 2003, since at least 2001, the defendants sold envelope-stuffing business opportunities throughout the United States, claiming that consumers could make “$500 WEEKLY” by mailing sales brochures from home. Calling their plan a “Genuine opportunity,” the defendants claimed that no experience was necessary and that they would provide consumers who called the toll-free number in their classified ads all the supplies they needed to earn “guaranteed paychecks.” Consumers who responded to the defendants’ ads were connected to a recorded message that instructed them to leave their name and address. According to the FTC, consumers then received a form letter stating that they could earn “$550.00 to $3,000 AND MORE WEEKLY!,” based on $10 for each circular they mailed.

The defendants’ program was organized into five different “groups,” each promising a higher level of income, ranging from $550 per week in Group #1 to $5,000 weekly in Group #5, with sign-up fees ranging from $55 for Group #1, to $150 (originally $300) for Group #4. Group #5 was “only for home workers who started under income Group #4" and “received their 5th $3,000 paycheck.” The defendants allegedly identified Group #4 as the “BEST DEAL!” and provided consumers with examples of how much money they could earn at each level. The FTC alleged that consumers did not make the money promised and that the defendants did not pay $10 per envelope for all or many of the envelopes stuffed and mailed by consumers. The FTC also alleged that the defendants did not pay the cost of postage as they promised consumers.

The agency filed for a temporary restraining order against the defendants on December 9, 2003. The court signed the order on December 15, 2003, and it has been in place since that time, barring the defendants’ allegedly illegal conduct and freezing their assets. The FTC received assistance and support from several other law enforcement agencies, including the U.S. Postal Inspection Service, the Illinois Attorney General’s Office, and the Cook County (Ill.) States Attorney’s Office, which is pursuing a separate civil case against the defendants.

The Final Judgment and Order

The final judgment and order bans the defendants from promoting work-at-home business opportunities, prohibits them from making misrepresentations in connection with the advertising and sale of any goods or services, and bars them from providing anyone else with the means of engaging in the deceptive conduct alleged in the complaint. In addition, the order requires the defendants to pay $420,000 for use as consumer redress, with an avalanche clause that requires the payment of $6.5 million – the estimate of total consumer harm – if the defendants are found to have misrepresented their financial condition. Finally, the order prohibits the defendants from distributing their mailing lists and contains terms related to monitoring and compliance to ensure that they meet the terms of the order.

The Commission vote authorizing the staff to file the stipulated final order was 5-0. It was filed in the U.S. District Court for the Northern District of Illinois on November 17, 2004, and requires the signature of the judge.

NOTE: This stipulated final judgment is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Stipulated judgments have the force of law when signed by the judge.

Copies of the Commission’s complaint and 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, DC 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, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.

 

(FTC File No. X040020; Civ. No. 03-C-8864)

Contact Information

Media Contact:
Mitchell J. Katz
Office of Public Affairs
202-326-2161
Staff Contact:
John C. Hallerud
FTC Midwest Region, Chicago
312-960-5615