FTC Obtains Summary Judgment Against Cross-border Scammer

At the request of the Federal Trade Commission, a federal district court in Seattle has entered an order for permanent injunction and other relief against a Canadian con-man whom the FTC charged with targeting elderly U.S. consumers with bogus bond pitches and unfulfilled promises of easy money. The order bars the fraudster from engaging in similar illegal conduct in the future, as well as from calling consumers whose numbers are on the National Do Not Call Registry, as he and his telemarketers did in the past. It also requires him to pay $4.75 million for use in providing refunds to the consumers who bought his bogus bonds.

Case Background

The court order announced today resolves the Commission’s charges that John Raymond Salvator Bezeredi falsely promised consumers that after buying the bonds, they would be entered into monthly drawings and that they were likely to receive substantial cash winnings or receive regular cash payments. Few, if any, consumers received such payments after buying the nonexistent bonds, leading the Commission to charge Bezeredi with violating the FTC Act and the Telemarketing Sales Rule (TSR). He also was charged with illegally calling consumers on the National Do Not Call Registry maintained by the FTC and the Federal Communications Commission.

According to the FTC’s complaint, Bezeredi, doing business as Dominion Investments (Dominion), Eurobond Fidelity Ltd. (Eurobond), and Imperial Investments (Imperial), violated both Section 5 of the FTC Act and the TSR by telemarketing fake foreign bonds to U.S. consumers. Specifically, he misrepresented that consumers who bought from, or paid fees to, Dominion, Eurobond, or Imperial would receive regular cash payments, would be entered into
monthly drawings to win cash prizes, or were highly likely to receive cash winnings. Further, the FTC charged that Bezeredi failed to disclose to consumers that importing and trafficking in foreign lotteries is a crime in the United States, and that the bond scheme he was pitching constitutes such a lottery. Finally, the complaint charged Bezeredi with violating the Do Not Call provisions of the TSR by calling, or causing other people to call, numbers on the National Do Not Call Registry, as well as by failing to pay the required fees for access to telephone numbers in the area codes he and his telemarketers called.

On October 17, 2005, a federal district court in Seattle issued a temporary restraining order barring Bezeredi’s allegedly illegal conduct, pending the resolution of the Commission’s complaint. Along with the FTC’s complaint, a simultaneous civil action against Bezeredi was filed in British Columbia, Canada. In addition, he was arrested on October 21, 2005, in Vancouver, B.C., pursuant to criminal charges filed by the U.S. Attorney’s Office for the Central District of California. He has since been released on bail in British Columbia.

The Summary Judgment and Order

The summary judgment and order announced today against Bezeredi permanently bars him from: 1) promoting, offering for sale, or selling any program or part of any program that purportedly includes a lottery, random drawing, game of chance, prize, or other prize promotion as defined by the TSR; 2) misrepresenting or omitting any fact material to a consumer’s decision to buy any product or service offered for sale or during the billing process; 3) violating the TSR, including making any calls to telephone numbers on the FTC’s Do Not Call Registry or causing anyone else to do so; and 4) assisting anyone else in violating the injunctive provisions included in the order. The order also contains monitoring provisions to ensure the defendant’s compliance, bars him from selling or transferring his customer lists to anyone else, and within 10 days of the order’s entry by the court requires him to pay $4.76 million to the FTC for consumer redress.

Project Emptor

The investigation leading to the complaint and order in this matter was conducted by the British Columbia Telemarketing Task Force, known as Project Emptor. In addition to the FTC, agencies participating in Project Emptor include the Royal Canadian Mounted Police, the British Columbia Business Practices and Consumer Protection Authority, the Canadian Competition Bureau, the FBI, the U.S. Attorney’s Office for the Central District of California, and the U.S. Postal Inspection Service.

The final judgment and order for permanent injunction and other equitable relief announced today was entered by the Court on April 3, 2007.

Copies of the final judgment and order for permanent injunction and other equitable relief 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 unfairbusiness 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 thousands of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. 042-3152; Civ. No. 05-CV-01739-ORD)