FIELD OF SCHEMES

 

List of Defendants in FTC Cases*

 

1. DEFENDANTS:

Dayton Family Productions, Inc.
J.J. Dayton & Associates, Inc.
High Voltage Pictures, Inc.
Kevin Roy
Glen E. Burke
Ignacio Jimenez
John Iavarone
Fred Davidson
John Rubbico, doing business as J J Family Film Production

LOCATION:

Las Vegas, Nevada

ALLEGATIONS:

Telemarketed and otherwise offered consumers investments in two general partnerships -- Family Movie Partners, which would produce and market a film called "The Last Resort," and Wolf Creek Partners, for a film called "Wolf Creek." Both low-budget, family films were being produced by Lyman Dayton. Falsely represented that they would be raising $2.625 million for the first partnership and $3.5 million for the second; in fact they raised more than $4.1 million and $4.5 million respectively, thereby diluting substantially each investor's promised stake in the partnerships and reducing their likelihood of a positive return. To promote the investments, they falsely claimed that Dayton's films have generated on average a 5 to 1 return to investors when in fact they've returned much less, if anything; and that he has won several named awards, none of which he'd won and some of which don't exist.

CONTRIBUTORS TO THE INVESTIGATION:

The FTC received invaluable assistance from the Utah Division of Securities, Texas Securities Board, Nevada Attorney General's Office, and U.S. Attorney's Office in Las Vegas.

STATUTES/RULES ALLEGEDLY VIOLATED:

FTC Act, Telemarketing Sales Rule

MEDIA CONTACT:

Dean Graybill, FTC Bureau of Consumer Protection, 202-326-3284;
Jerome Steiner, FTC San Francisco Regional Office, 415-356-5270

(FTC File No. 972 3089; filed in U.S. District Court for the District of Nevada, in Las Vegas Civil, Action No. CV-S-97-750-PMP (LRL)).

2. DEFENDANTS:

Intellicom Services, Inc., doing business as Intellicom Group
Connectkom Services, Inc.
Enternet 2000, Inc.
World Net Development Group, Inc.
Riviera Consulting, Inc.
Granite Consulting, Inc.
Brookside Management, Inc.
Mediatech, Inc.
American Long Distance Corp.
Networld Consulting, Inc.
Perspective Consulting, Inc.
All Administrative Services, Inc.
Prostaff Administrators, Inc.
Support Staff Administrators, Inc.
Frontline Consulting, Inc.
Marc D. Levine
Ira Itskowitz
Mark Ericson
Paul Perelman, doing business as Connectkom Group
Mark V. Nachamkin, also known as Mark Nash, doing business as Enternet Communications
James C. Q. Slaton, doing business as Home Net Partners
Timothy D. Grayson
David Z. Diamand
Eugene Evangelist
Kent Bollenbach
Brent Morris
Erica Llanos

relief defendants:

Dixon Capital Corporation
Greg Harrington
Chad Harrington
T.L. Laidlaw
James Leonard

LOCATIONS:

Tarzana, Woodland Hills, Encino, Los Angeles, Irvine, and La Jolla, California; and Las Vegas, Nevada  

ALLEGATIONS:

Telemarketed investments in high-tech schemes, pitching at least eight different offerings using numerous telemarketing boilerrooms to bilk more than $30 million from consumers. They would often re-solicit or "reload" initial investors before the consumers discovered that their first investment had failed. Promised consumers returns as high as 600 percent. The defendants' initial offerings included investments in partnerships that either were operating ongoing businesses or about to begin operations and over which investors purportedly would receive control at a partnership meeting. The businesses involved 900-number services to consumers; a service bureau to maintain the telephone lines for 900-number service providers; and a "virtual shopping mall" on the Internet: investors in these four offerings lost substantially all of their money because the defendants depleted or kept all but about 15 percent. More recently, they pitched investments in firms that purportedly would operate a live, on-line shopping program on the Internet, similar to television shopping programs, or serve as an Internet service provider that would offer Internet access to consumers in Chicago, Detroit, and Indianapolis, Seattle or New York. But the defendants never held a partnership meeting, the businesses never materialized, and all but about 15 percent of investors funds have been depleted or delivered to shell corporations, such as Dixon Capital (which are represented to be making acquisitions of the partnerships), and investors have received essentially worthless stock certificates.

CONTRIBUTORS TO THE INVESTIGATION:

The FTC received invaluable assistance in its investigation from the California Department of Corporations; FBI offices in Los Angeles, San Diego, and Orange County; Securities and Exchange Commission offices in Los Angeles and Miami; National Tape Library; Arizona Boiler Room Task Force; Alabama Securities Commission; Maine Department of Professional and Financial Regulation; Nebraska Department of Banking and Finance; Pennsylvania Securities Commission; and Wisconsin Department of Financial Institutions.  

STATUTES/RULES ALLEGEDLY VIOLATED:

FTC Act, Telemarketing Sales Rule  

MEDIA CONTACT:

Ann Jones or Greg Staples, Los Angeles Regional Office, 310-235-4040

(FTC File No. 962 3237; filed in U.S. District Court for the Central District of California, in Los Angeles, Civil Action No. 97-4572 TJH (Mex)).

3. DEFENDANTS:

Equifin International
Financial Frontiers, Inc.
F. Jerald Hildreth

LOCATION:

Tustin and Newport Beach, California

ALLEGATIONS:

Telemarketed investments in stamps, specializing in purported "error" or misprint stamps that deviate in some way from the stamps' intended designs. Represented that the stamps are excellent and safe investments, likely to provide substantial return, and readily liquidated. In fact, the stamps, which were not valuable, were sold at 300 percent to 10,000 percent markups, so consumers had virtually no chance of even recouping their investment. Consumers paid $525 each for stamps valued at $5 to $7, and $1,960 for a block of four stamps valued at $40 to $50.

CONTRIBUTORS TO THE INVESTIGATION:

The FTC received invaluable assistance in this investigation from the San Diego Boiler Room Task Force.

STATUTES/RULES ALLEGEDLY VIOLATED:

FTC Act, Telemarketing Sales Rule

MEDIA CONTACT:

Ann Jones or Greg Staples, FTC Los Angeles Regional Office, 310-235-4040

(FTC File No. 972-3005; U.S. District Court of the Central District of California, in Los Angeles, Civil Action No. 97-4526 DT (CWX)).

4. DEFENDANTS:

Gulfstar Corporation
Nova Gaz Corporation
Nova Financial Corporation
Daniel W. Fisher
J. Todd Tidmore

LOCATION:  Dallas, Texas

 

ALLEGATIONS:

Mailed postcards inviting consumers to call regarding investments in oil drilling ventures, and also made unsolicited or "cold" calls to consumers. The first ventures involved wells in western Kansas -- the OZ Project and the Dorothy Project. Claimed that the investment was risk-free because consumers would receive back all of their principal investment plus 50 percent even if the Gulfstar wells did not produce oil, pursuant to an agreement with the British firm, Threadneedle Trust Company -- in fact, Threadneedle does not have sufficient assets to support such a cash-back guarantee. Also claimed that reports the defendants had received as drafts from a certified geologist and then edited without the geologist's approval were, in fact, approved by the certified geologist; that their maps accurately conveyed successful recent drilling activity in the area of one of the projects when, in fact, they did not disclose that two recent Gulfstar wells in the area were completely unproductive; and that oil wells recently drilled in Michigan have produced substantially more than actually was the case. Consumers invested $5,000 and more each in the projects.  

STATUTES/RULES ALLEGEDLY VIOLATED: FTC Act

CONTRIBUTORS TO THE INVESTIGATION:

The FTC received invaluable assistance in this investigation from the Ft. Worth, Texas Office of the Securities and Exchange Commission, the Texas Securities Board, the United Kingdom Department of Trade and Industry, the Michigan Department of Environmental Quality, and the Kansas Corporation Commission.  

MEDIA CONTACT:

Daniel Spiro, FTC Bureau of Consumer Protection, 202-326-3288, and Gary Kennedy, FTC Dallas Regional Office, 214-979-9379

(FTC File No. 972 3094; filed in U.S. District Court for the Northern District of Texas, in Dallas, Texas, Civil Action No. 3-97CV1508-G).

5. DEFENDANTS:

JewelWay International, Inc.
Bruce A. Caruth
Robert J. Charette, Jr.
Donilyn A. Walden
Greg G. Stewart   relief defendants (named for relief purposes only):   Angela D. Charette
Beverly Stewart

LOCATION: Tucson, Arizona

ALLEGATIONS:

Ran a pyramid scheme via an Internet home page and through group presentations, offering consumers the chance to earn up to $2,250 a week plus bonuses for the purchase of expensive homes, automobiles and vacations, by participating in a purported multi-level marketing scheme to sell fine jewelry. Consumers paid $250 to $2,750 or more and then had to recruit at least two new JewelWay representatives. As with any pyramid scheme, where compensation is based on recruiting new representatives rather than actual sales of products, this one ultimately will collapse and most investors will lose all their money.

HOT LINE AVAILABLE FOR CONSUMERS:

The FTC has set up an "information-only" hot line for consumers who want more information about the lawsuit. The hot line can be reached at 202-326-3656.

CONTRIBUTORS TO THE INVESTIGATION:

The FTC received invaluable assistance from the Arizona, Colorado, North Carolina and Kentucky Attorney General's Offices, and the Tucson (Arizona) Police Department.

STATUTES/RULES ALLEGEDLY VIOLATED: FTC Act

MEDIA CONTACT:

Jan Charter, FTC Denver Regional Office, 303-844-2272

(FTC File No. 972 3143; filed in U.S. District Court for the District of Arizona, in Tucson, Arizona, Civil Action No. CV97-383 TUC JMR).

6. DEFENDANTS:

Rocky Mountain International Silver and Gold, Inc., also known as RMI, Inc.
Steve Lucas
Jansey Lynne Lucas

LOCATION: Saguache, Colorado

ALLEGATIONS:

Ran a pyramid scheme via an Internet home page and by sending faxes and mail, promising consumers that they could earn thousands of dollars a month and receive free silver and other products, for an initial $12 to $15 investment and a continuing monthly obligation of $21 to $39. The scheme purportedly was to sell such products as the defendants' own network marketing course. However, the company did not pay commissions based on the sale of products, but instead provided commissions for recruiting new participants. Most participants will lose their investment and will not get a promised full refund.

CONTRIBUTORS TO THE INVESTIGATION:

The FTC received invaluable assistance from the Colorado Division of Securities.

STATUTES/RULES ALLEGEDLY VIOLATED: FTC Act

MEDIA CONTACT:

Phoebe Morse, FTC Boston Regional Office, 617-424-5960

(FTC File No. 972 3137; filed in U.S. District Court for the District of Colorado, in Denver, Civil Action No. 97WY-1296).

7. DEFENDANTS:

Tippecanoe Mining, Inc., doing business as Global Consulting
Hope Mining, Inc.
Stephen P. Noell
Mark Ford

LOCATION: Sherman Oaks, California

ALLEGATIONS:

Made telemarketing calls to raise funds purportedly to bring into commercial production two mines -- first the Tippecanoe silver mine and later the Hope gold mine -- in La Plata County, Colorado. Raised $750,000 for the Tippecanoe mine, and were attempting to raise $1.98 million for the Hope mine. Bolstered consumers' confidence by falsely representing that the U.S. government had verified the presence of valuable mineral deposits in the mines; that they had obtained the requisite permits to legally begin mining operations; that silver was being produced at Tippecanoe; and that both Exxon Corp. and Mitsubishi Corp. have expressed strong interest in acquiring the Hope mine. Falsely claimed that consumers could see a 10 to 1 return on their investments in units that sold for $15,000 each.

CONTRIBUTORS TO THE INVESTIGATION:

The FTC received invaluable assistance from the U.S. Postal Inspection Service, Burbank, California.

STATUTES/RULES ALLEGEDLY VIOLATED: FTC Act

MEDIA CONTACT:

Dean Graybill, FTC Bureau of Consumer Protection, 202-326-3284

(FTC File No. 972 3080; filed in U.S. District Court for the Central District of California, in Los Angeles, Civil Action No. 97-4543).

8. DEFENDANTS:

Sweet Song Corporation, itself, and doing business as Windsor & White Trading Co. and Pacific Wellington Associates

Tsavorite Sword Corporation, itself and doing business as Pacific Wellington Associates
Ron Hudson, Inc., itself and doing business as Pacific Wellington Associates
Hari Jiwan Singh Khalsa, also known as Stephen Jon Oxenhandler and Bob Thomas
Siri Ram Singh Khalsa, also known as William Taylor and Phillip Anderson

LOCATION: Los Angeles, California

ALLEGATIONS:

Telemarketed gemstones as excellent, low-risk, highly-liquid investments that were being offered to consumers at discounted prices. Used high-pressure tactics such as telling consumers they would sell the stones to another client if consumers did not commit immediately, and using overnight couriers to pick up payments. Represented that they routinely re-broker or liquidate the stones after an 18-month holiday period, and often resolicited or "reloaded" consumers to buy more stones or trade in previously-purchased stones during that 18-month period by representing that their stones had dramatically appreciated in value each month. In fact, the defendants' prices are several times the wholesale value of the stones, the previously-purchased stones either had not appreciated at all or had done so at a rate much lower than the defendants claimed; and, typically, the defendants ceased all contact with consumers and refused to liquidate their stones after the 18-month period.

CONTRIBUTORS TO THE INVESTIGATION:

The FTC received invaluable assistance from the U.S. Attorney's Office, Los Angeles, California; and the Consumer Law Section of the California Attorney General's Office.

STATUTES/RULES ALLEGEDLY VIOLATED: FTC Act, Telemarketing Sales Rule

MEDIA CONTACT:

Dean Graybill, FTC Bureau of Consumer Protection, 202-326-3284

(FTC File No. 952 3224; filed in U.S. District Court for the Central District of California, in Los Angeles, Civil Action No. 97-4544LGB(JGX)).

NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaints are not findings or rulings that the defendants actually have violated the law. The cases will be decided by the courts.

*  One other FTC case remains under seal at this time. The Commission's votes to authorize its staff to file the complaints in all but two cases in the appropriate federal district courts were 5-0. The votes in the Dayton Family Productions, Inc. and Intellicom Services, Inc. cases were 4-1, with Commissioner Mary L. Azcuenaga dissenting.