Four individuals and four companies, named by the Federal Trade Commission in its "Project Field of Schemes" investment fraud cases, have agreed to settle FTC charges that they, and others, made numerous misrepresentations when soliciting consumers to invest in films produced by filmmaker, Lyman Dayton. The defendants allegedly claimed that Mr. Dayton's prior films had generated 5 to 1 returns for investors; and that Mr. Dayton and his films had won certain awards, including a Cannes Film Festival award. The FTC also alleged that the defendants sold substantially more units in their film investment partnerships than they claimed they would sell, thereby diluting each investor's interest in the film. The settlement announced today permanently bans the individual defendants -- John Iavarone, Glen Burke, Ignacio Jimenez, and Kevin Roy -- from engaging in, or assisting others, in telemarketing activities. The settlement also prohibits these individuals and the corporate defendants -- High Voltage Pictures, Inc., High Voltage Entertainment, Inc., J.J. Dayton Associates, Inc., and Aztec Escrow, Inc. -- from misrepresenting the risk and profitability of investments in films or other investments or products.
On June 20, 1997, the FTC filed charges against the defendants as part of "Project Field of Schemes" -- a sweep targeted at investment-related fraud. "Project Field of Schemes" comprised approximately 61 law-enforcement actions with a major consumer education component. In its complaint detailing the charges, the FTC named Dayton Family Productions, Inc.; J.J. Dayton Associates, Inc.; High Voltage Pictures, Inc., also known as High Voltage Entertainment; John Rubbico, individually and doing business as J J Family Film Productions; John Iavarone; Glen Burke; Ignacio Jimenez; Kevin Roy; and Fred Davidson. The Commission later amended its complaint to name American Family Productions, Inc.; American Family Consultants, Inc.; Reunion Management, Inc.; Icon Management Services, Inc.; Aztec Escrow, Inc.; Raymond Filosi; and Richard S. Hart as additional defendants. (The Court has already entered default judgments against defendants Rubbico, Hart, and Davidson, and defendant Raymond Filosi agreed to a settlement with the FTC in February of this year.)
The FTC alleged that the defendants misrepresented to consumers, among other things, that they would realize a 500 percent return if they invested in family films being produced by an award-winning producer and director, Lyman Dayton. According to the FTC, while Lyman Dayton had previously produced a number of movies, his films generally generated either no profits or substantially lower profits for investors than represented; neither he nor his films have won many of the awards claimed by the defendants; and the defendants allegedly oversold their partnerships, thereby reducing each investor's stake in the partnerships and raising the break-even point for the partnerships.
In addition to the ban on the individual defendants, the settlement prohibits all of the defendants from making the types of fraudulent representations alleged in the FTC's complaint. The order requires the defendants to pay $19,500 in disgorgement. Under the terms of the order, if the FTC were to prove to the court that any of the individual defendants had materially misrepresented his financial condition, the Commission would be entitled to an automatic $1 million judgment against that defendant.
The settlement also prohibits the defendants from selling their customer lists. Finally, the settlement contains other recordkeeping requirements to assist the FTC in monitoring the defendants' compliance.
The Commission vote to authorize staff to file the proposed settlement was 4-0. The settlement was filed on September 29, 1998 in the U.S. District Court, District of Nevada, in Las Vegas. It was entered and signed by the judge on October 1, 1998.
NOTE: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Final orders have the force of law when signed by the judge.
Copies of the settlement, as well as other news releases associated with Project Field of Schemes, are available from the FTC's web site at http://www.ftc.gov and also 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. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC Matter No. X970058)
(Civil Action No. CV-S-97-750-PMP (LRL))