For Release: June 5, 1996
The Federal Trade Commission announced settlements with four more of the 34 cases it brought as part of "Project Telesweep," a nationwide federal-state crackdown on business opportunity fraud. The settling defendants -- Global Gumballs, Inc.; Summit Communications, Inc.; Kenneth Sterling, president of American Vending Group, Inc.; and Modern Management Systems, Inc. -- have agreed to injunctions barring future violations of the FTC's Franchise Rule. In addition, three of the settling defendants have collectively agreed to pay $67,000 in civil penalities: Modern Management has agreed to pay a $7,000 civil penalty, Global Gumballs has agreed to pay a $50,000 civil penalty, and Summit Communications has agreed to pay a $10,000 civil penalty, under their settlements with the FTC.
The FTC's Franchise Rule requires franchisors to give potential buyers detailed up-front disclosures about the financial and litigation history of their firms and their current and past franchisees, and also to provide documentation supporting any claims they make about earnings.
"Project Telesweep" snared nearly 100 marketers of vending machine business opportunities for failure to provide critical pre-purchase information to potential buyers. Many firms also were charged with making exaggerated earnings claims and false promises about the amount and type of assistance they would provide franchisees.
The settlements the FTC announced today, which require the court's approval to become binding, have been negotiated with:
The consent orders to settle these charges, would prohibit the defendants from violating the FTC's Franchise Rule, and prohibit them from making false statements or misrepresenting material aspects of any business venture they offer. The consent orders also contain various reporting provisions designed to assist the FTC in monitoring compliance.
The FTC votes to authorize filing of the consent orders settling these cases were 5-0. They were filed at the FTC’s request by the Department of Justice in federal district courts as noted below.
NOTE: These consent orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Consent orders have the force of law when signed by the judge.
Copies of the consent orders and other documents associated with Project Telesweep are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580: 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it happens, call the FTC’s NewsPhone at 202-326-2710. FTC news releases and other documents also are available on the Internet at the FTC’s World Wide Web Site at http://www.ftc.gov
(Global Gumballs -- (FTC Matter No. X950085) / filed in the U.S. District Court for the Southern District of Alabama, in Mobile, on June 4, 1996. Civil Action No. 95-0539-P-C)
(Summit Communications -- (FTC Matter No. X950099) / filed in the U.S. District Court for the Southern District of Florida, in Miami, on May 28, 1996. Civil Action No. 95-CIV-1485 Graham)
(American Vending -- (FTC File No. X950083) / filed in the U.S. District Court for the Southern District of Florida, in West Palm Beach, on May 21, 1996. Civil Action No. 95-6640-CIV-Hurley)
(Modern Management -- (FTC File No. X950088) / filed in the U.S. District Court for the Southern District of Florida, in Miami, on April 29, 1996. Civil Action No. 96-CV-6643-Ferguson)