The defendants in a Federal Trade Commission lawsuit which alleged that they deceptively sold business opportunities for vending machines that dispensed single-use disposable cameras, have agreed to settle the FTC charges under orders that would bar them permanently from selling franchises and business opportunities. The FTC had filed its case against the Atlanta and Tucker, Georgia-based defendants -- Georgia International Export Co., Inc., doing business as Creative Technologies International; L&S Manufacturing, Inc.; Andrew Gilmore; Steven Axelrod; Arnold Filner; and Wayne Gregory -- in November 1996.
The FTC filed charges in this case as part of Operation Missed Fortune, the broadest federal-state coordinated law-enforcement and consumer-education effort ever initiated. Missed Fortune targeted get-rich-quick, self-employment schemes, and resulted in more than 75 law-enforcement actions by the FTC and 25 states. The FTC alleged in this particular case that the defendants misrepresented the earnings potential of the vending machines, used phony references who further misrepresented the earnings potential of the machines, misrepresented the ability of locating firms to find profitable sites for the machines, and falsely stated that Creative was in partnership with Eastman Kodak Company.
In announcing Operation Missed Fortune, the FTC stated that the best advice for consumers considering the purchase of a vending machine or display rack business opportunity is to get a list of all persons who have invested in the opportunity in their area and to physically visit the sites of their machines.
The FTC also advised consumers to insist on getting, in writing, evidence that backs up any earnings claims. Education materials about franchises and business opportunities are available at the FTC=s web site, www.ftc.gov, and also from its Public Reference Branch (see address below).
Upon filing of the FTC complaint in the camera vending machine case, the federal district court immediately issued a temporary restraining order halting the challenged scheme, freezing the defendants= assets, and appointing a receiver over the corporate defendants.
The settlements announced today, if approved by the court, would end the litigation. Although the settlements ban the defendants from franchise or business opportunity sales for life, they do not require the defendants to pay consumer redress. Information obtained by the FTC in the litigation showed that the defendants have virtually no assets. The settlements do include provisions that would allow the Commission to reopen the orders to recover money for victims should the defendants be found to have misrepresented their financial condition. The orders with Gilmore and Axelrod would permit them to sell or lease equipment, and the Axelrod order would permit him to act as a realtor or real estate broker, but additional provisions in these orders would bar these two defendants, in so doing, from engaging in deceptive practices.
The orders also contain various record keeping and reporting requirements that would assist the FTC in monitoring compliance. The Commission vote to approve these settlements for filing in court was 5-0. They were filed July 22 in U.S. District Court for the Northern District of Georgia, Atlanta Division.
NOTE: These consent judgments are for settlement purposes only and do not constitute admissions by the defendants of law violations. Consent judgments have the force of law when signed by the judge.
Copies of the consent judgments and other documents associated with Missed Fortune and this case are available from the FTC's web site at http://www.ftc.gov and from its Public Reference Branch, Room 130, 6th St. and Pennsylvania Ave., 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 NewsPhone recording at 202-326-2710.
(FTC File No. X970008)
(Civil Action No. 1-97-CV-2906-ODE)