Empress Corporation, a Las Vegas-based company doing business as American Publishers Exchange ("APX"), and its president Scott Cooke, have agreed to settle Federal Trade Commission charges announced as part of the "Senior Sentinel" crackdown -- a nationwide, multi-agency telemarketing sweep. The FTC complaint alleged that APX induced consumers to pay $489 or more for magazine subscriptions on the promise that they would receive prizes worth as much or more than the consumers paid APX. The defendants then "reloaded" many of the victims for additional payments of $1,400 to $3,000 by promising even more valuable awards in exchange for purchasing products and publications that purportedly would be used in a program to help children "say no" to drugs and other vices. The complaint alleged that, contrary to the representations, the consumers did not receive the valuable prizes promised or awards worth more than they paid APX.
The FTC settlement, together with a companion settlement filed by the State of Nevada, requires defendants to pay approximately $277,000 out of funds frozen in the FTC's action. The funds will go toward consumer redress, to consumer protection enforcement in Nevada, and also provide over $92,000 to the State of Iowa's National Tape Library, located in San Diego. The Tape Library is a repository of telemarketing pitches, an invaluable aid to law enforcement agencies.
The FTC's charges against the defendants were filed in December 1995, as part of the "Senior Sentinel" sweep spearheaded by the Department of Justice and Federal Bureau of Investigation. This massive project, focusing mainly on Las Vegas telemarketers, has resulted in the arrest and prosecution of over 800 individuals charged, many of whom targeted their pitches to older Americans. The FTC participated in this sweep by bringing civil actions that immediately stopped the frauds and seized assets. The Commission also provided substantial evidence from the fraud database it maintains in cooperation with the National Association of Attorneys General, and provided other assistance.
In this case, the FTC obtained orders freezing almost all defendants' reachable assets. Out of these funds, the FTC will use approximately $93,000 to provide direct redress to "reloaded" victims or to fulfill promised magazine subscriptions. Also out of these funds, the State of Nevada will apply approximately $92,000 in civil penalties to help fund the National Tape Library in San Diego and will apply another $92,000 toward consumer protection in Nevada.
These settlements, taken together, not only provide redress for identifiable consumers who lost money to APX, but also will be a boon to the nationwide law enforcement effort against telemarketing fraud. For example, the National Tape Library collects taped pitches from all over the country and makes them available to all law enforcers. The Tape Library played a pivotal role in Senior Sentinel and continues to be an invaluable resource for targeting fraudulent actors and assembling evidence for criminal or civil enforcement actions.
In addition, the FTC consent order imposes an injunction against misrepresenting material facts or from engaging, or assisting others, in any misrepresentations in connection with the types of prize promotions that were the subject of this case. The settlement also includes various reporting and recordkeeping provisions designed to assist the FTC in monitoring the defendants' compliance.
The case is being handled by the FTC's San Francisco Regional Office and the FTC's Division of Service Industry Practices in Washington, D.C.
The Commission vote to authorize filing of the stipulated order for permanent injunction and final relief was 5-0. The settlement was filed in the U.S. District Court, District of Nevada in Las Vegas, on February 5, 1997.
NOTE: This stipulated order for permanent injunction is for settlement purposed only and does not constitute an admission by the defendants of a law violation. Stipulated orders have the force of law when signed by the judge.
The FTC has issued consumer brochures on "Telemarketing," "Prize Offers," and "Recovery Room Fraud," which are available for free. Copies of these brochures, the stipulated order for permanent injunction, 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 FTC news as it is announced, call the FTC's NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web Site at: http://www.ftc.gov
San Francisco Regional Office
901 Market Street, Suite 570
San Francisco, California 94103
(FTC Matter No. X960008)
(Civil Action No. CV-S-95-001174-LDG (RLH))