Republic Communications Corp. has agreed to settle Federal Trade Commission charges that it misrepresented its management of federal wireless communications licenses, and that its subsidiary sold bogus brokerage services to consumers holding such licenses. The terms of the settlement will bar Republic from misrepresenting facts about wireless communications licenses or investment offerings, require that it notify all consumers who may have been misled about its intention to acquire and develop their wireless communications licenses and require Republic to pay $38,544 in consumer redress.
Republic, a publicly-traded Delaware corporation, is based in New York.
The settlement follows a Federal Trade Commission complaint alleging that seven defendants, including Republic and its subsidiary Falcon Crest Communications, Inc., touted themselves as experienced license brokers with an excellent track record of selling or leasing licenses issued by the Federal Communications Commission. The defendants delivered “few, if any” offers to buy or lease the licenses, according to the FTC complaint. Arthur D. Spatt, Judge in the U.S. District Court for the Eastern District of New York, enjoined the defendants from the “promotion, advertising, marketing, sale, or offering for sale of, brokerage or listing services for licenses issued by the FCC,” pending trial.
According to the FTC complaint detailing the charges in the case, many consumers purchased FCC licenses as investments, but lack experience in the telecommunications field. According to the complaint, the defendants contacted license-holders through a nationwide marketing campaign, claiming to be experienced, professional and successful brokers and offered to locate buyers or lessees for the licenses.
Falcon Crest charged consumers an up-front, non-refundable fee of $495 which it claimed to use for engineering studies and other work necessary to market the licenses. The FTC alleged Falcon Crest had little or no success at obtaining lucrative offers for its clients’ licenses, but that it provided its database of clients to Republic. Republic, in turn, sent management and option agreements to hundreds of Falcon Crest’s customers -- making it appear to consumers that Republic had the capability and intention to develop wireless communications systems -- even though it had no such intent, the FTC alleged. In addition, Republic’s World Wide Web page declared, falsely, that it had over 500 wireless communications licenses under management.
The agreement to settle the FTC charges will prohibit Republic and its agents from misrepresenting its ability or intent to sell, lease, construct, utilize, control or manage any wireless communications licenses and from misrepresenting the number of wireless communications licenses it controls or manages. The settlement also bars any false representation of any fact material to any investment offering. In addition, Republic will pay all of its known liquid assets ($38,544) in consumer redress. Finally, Republic will notify the Falcon Crest customers who recieved their management and option agreements that it does not intend to develop their licenses or reimbursee them for their use.
This case is the latest in a series of FTC cases involving scams related to FCC licenses.
The FTC and the FCC have issued an "Alert for SMR and Paging Licensees" which was sent to holders of paging and SMR licenses. In addition, the FCC now sends the alert to all new licensees when licenses are granted.
The Commission vote to accept the consent agreement was 5 -0. The judge signed the consent order Feb. 7, 1997.
NOTE: This consent judgement is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.
Copies of the complaint, consent and consumer education brochures "Alert for SMR and Paging Licensees" and "Telecommunication Scams Using FCC Licenses" are available on the FTC’s World Wide Web site at http://www.ftc.gov and also 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. Consent agreements subject to public comment also can be obtained by calling 202-326- 3627. To find out the latest news as it is announced, call the FTC 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
(FTC File No. X96 0016)
(Civil Action No. 95-4881(ADS) )