Individual Defendants Must Post a Million Dollar Bond
Four defendants operating a college financial aid scam have agreed to a multimillion dollar judgment with the Federal Trade Commission. The Commission filed its action as part of the Southwest Netforce Sweep announced in May 2003, alleging that the defendants misrepre-sented several claims made to consumers regarding their ability to obtain 100 percent of all funds necessary for college. Under the terms of separate settlements, the defendants must pay consumer redress totaling $1,433,000. Further, the individual defendants must post a $1 million bond before engaging in the advertising, promotion, or sale of college financial aid assistance programs.
Today’s settlements are with: The College Advantage. Inc., doing business as College Funding Center; Alan E. Baron and relief defendant Donna S. Baron (the Baron defendants); C Funding Group, LLC, d/b/a College Funding Group; and Edward F. Jacob and relief defendant Claudia L. Jacobs (the Jacobs defendants).
The FTC alleged that, using seminars and sophisticated Web sites, the defendants promoted and marketed a college financial aid assistance program promising that, for $1,000-$2,000, they would get 100 percent of the funding necessary for students to attend college. The complaint alleged that the defendants violated the FTC Act by misrepresenting that they would: (1) secure 100 percent of the funding necessary to attend college; (2) reduce the out-of-pocket expenses to attend college; and (3) fully refund consumers’ money if they failed to secure 100 percent of the funding necessary to attend college.
The settlement with the Jacobs defendants announced today requires them to pay $1,400,000 in consumer redress. The settlement with the Baron defendants requires them to pay $33,000 in redress. In addition, the defendants to post a $1 million performance bond prior to any future involvement in the promotion and marketing of college financial aid assistance programs. Both final judgments contain a suspended judgment of $15,509,564 and an avalanche clause that would reinstate the entire judgment if it is found that the defendants made material misrepresentations in their financial statements.
Finally, the settlements contain various recordkeeping requirements to assist the FTC in monitoring the defendants’ compliance.
The Commission vote authorizing staff to file the two stipulated final judgments and orders was 5-0. They were filed in the U.S. District Court, Eastern District of Texas, Sherman Division, on January 7, 2005, and require the court’s approval.
Consumers who were customers of College Funding Center can leave their name, address and phone number at Collegefunding@ftc.gov .
NOTE: These stipulated final judgments and orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Stipulated final judgments and orders have the force of law when signed by the judge.
Copies of the two stipulated final judgments and orders 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 in English or Spanish (bilingual counselors are available to take complaints), 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. X030052)
(Civil Action No. 4:03CV179)
- Media Contact:
- Brenda Mack
Office of Public Affairs
- Staff Contact:
- Gary Kennedy
FTC Southwest Region - Dallas