Konrad King, and his company, Konrad King, Inc. of Las Vegas, Nevada, have settled Federal Trade Commission charges stemming from their role in the FTC's case against Woofter Investment Corporation. The defendants played supporting roles in a telemarketing fraud perpetrated by Canadian-based telemarketers of foreign lottery tickets against U.S. consumers. The FTC alleged that King assisted and facilitated the deceptive telemarketing practices and engaged in credit card laundering, in violation of the FTC's Telemarketing Sales Rule (TSR). The settlement prohibits King and his computer-consulting company from providing services to any company involved in the unlawful sale of lottery tickets, chances or interests.
In April 1997, the FTC filed charges in federal court against Woofter Investment Corporation, doing business as A.T.M.S., and Patsy Barbour, its principal. In the course of their business, the FTC charged, the defendants assisted and facilitated numerous Canadian telemarketers who deceptively and illegally sold shares in foreign lotteries by laundering their credit card transactions, acting as a lottery agent and providing "customer service" for them. The sale and trafficking in foreign lotteries is a crime in both the U.S. and Canada. The court approved a temporary restraining order, froze the defendants' assets, appointed a receiver over the corporate defendant, and granted the FTC immediate access to Woofter's premises.
The FTC amended its complaint in May 1997 to include William Woofter and Konrad King and his company, and the court extended the TRO to cover them. The amended complaint alleged that King provided computer services to Woofter Investment, Inc., in furtherance of the deceptive telemarketing practices and credit card laundering in violation of the Telemarketing Sales Rule. Credit card laundering, which is prohibited by the TSR, involves depositing into the credit card system a sales draft that is not the result of a credit transaction between the cardholder and the merchant. King also oversaw the daily operation of Woofter during its final year of operation.
The consent decree settling these charges, approved by the court on May 22, 1998, permanently prohibits the defendants from engaging, participating or assisting in any manner or in any capacity whatsoever in any foreign or domestic lottery promotion (except as expressly provided for by relevant state or federal law), directly or through any intermediary. The consent decree also prohibits the defendants from selling or assisting in any lottery promotions, chances or interests. In addition, the settlement prohibits the defendants from providing credit card processing services in any manner that violates the TSR.
Finally, the settlement requires King, for three years, to maintain records for every telemarketing client to whom he provides any service, and all records relating to any merchant credit account he acquires. The settlement also contains extensive recordkeeping requirements to help the FTC monitor King's compliance with the terms of the settlement. The settlement with King does not affect the FTC's case against Woofter Investment or other defendants.
The Commission vote to file the settlement was 5-0. The case was handled by the FTC's Seattle Regional Office. The settlement was filed in the U.S. District Court for the District of Nevada.
NOTE: This consent decree is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent decrees have the force of law when signed by the judge.
Copies of the news release and the settlement in this case, as well as the news release associated with the Woofter case, are available from the FTC’s Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. Copies of FTC news releases are also available from the FTC’s web site at http://www.ftc.gov To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC Matter No. X970041)
(Civil Action No. CV-S-97-00515-HDM (RLH))