A federal district court judge has upheld Federal Trade Commission charges against an Atlanta, Georgia, company and two individuals who operated a deceptive "recovery room" telemarketing scam. The FTC had alleged that the defendants targeted victims who lost money in a previous scheme when they invested in Specialized Mobile Radio (SMR) licenses. The defendants allegedly made a host of deceptive representations in promising to recover the victims' losses for an upfront fee. The judgement against United Consumer Services, Inc. (formerly known as United Recovery Services, Inc.), Wendy Heitkamp, United's president and Wayne Axelrod, requires that they pay more than $161,000 in consumer redress and permanently refrain from offering recovery services.
This latest move caps a string of actions by the FTC against United dating back to November 1994 when the Commission filed its complaint. At that time, the FTC charged another Atlanta firm, Falcon Financial Services, with falsely claiming that it was an established, experienced operator of SMR systems and a potential buyer of licenses which belonged to United's customers. A few days after the charges were filed, a federal district court ordered a temporary halt to the operation.
The Commission alleged in its complaint that United contacted consumers who had invested in a scheme operated by Metropolitan Communications Corp. and Columbia Communications Services Corp. of New York. Both were previously sued by the FTC for defrauding thousands of consumers by charging them $7,000 each to obtain SMR license application services and making false promises about the high earnings and low-risk nature of the investments. The FTC said that the investors could have paid just $200 had they applied directly to the government for the type of license the Metropolitan/Columbia defendants offered.
United falsely promised these consumers that they could help them: get refunds, obtain waivers of Federal Communications Commission deadlines, and help locate potential buyers for SMR licenses the consumers had purchased, the FTC charged.
Under a December 1995 order that granted partial summary judgement, United, Heitkamp and Axelrod are prohibited from misrepresenting any assistance they provide to consumers in finding SMR operators who will lease or purchase their SMR licenses, or that their assistance will prevent or reduce the likelihood that customers will lose their investments. Further, they are prohibited from misrepresenting that their services will increase their customers' chances of obtaining refunds of lost investments and from misrepresenting the risks, past or future earnings, or the nature or quality of the investments they offer. Finally, Axelrod is required to post a $100,000 bond if he offers these services.
Under a previous settlement filed against them, Falcon and Stuart Jedlicki, the company president, are permanently barred from offering recovery services. They are also required to pay $37,500 as consumer redress.
The judgement, signed by Judge Charles A. Moye, Jr., was entered on May 21, 1996.
Copies of the court order, as well as other documents associated with this case, 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 is announced, call the FTC's NewsPhone recording at 202-326-2710. FTC news releases and other materials are available on the Internet at the FTC's World Wide Web Site at: http://www.ftc.gov
(FTC File No. 942 3183)
(Civil Action No. 1:04-CV-3164-CAM)