Three individual defendants named in a 1998 Federal Trade Commission action filed in federal district court in Tampa against Hart Marketing Enterprises Ltd., Inc., have agreed to settle charges that they operated a fraudulent Internet kiosk business opportunity scheme. The court had previously ordered default judgments against a fourth individual defendant and the three corporate defendants. The FTC had alleged that the defendants misrepresented the earnings potential of their business opportunity and that locators recommended by the defendants had already found or would find profitable locations for the Internet kiosks. The FTC also had alleged that the defendants used "singers" or phony references to falsely tout the earnings potential of the business opportunity. In addition, the FTC had alleged that the defendants violated the FTC’s Franchise Rule. Under the terms of the individual settlements announced today, James Weems -- who along with defendant Robert Lemcke was the principal organizer is permanently banned from selling business opportunities and from telemarketing. Edward Patrick Evans is required to post a $1 million performance bond before engaging in telemarketing or business opportunity sales. Bruce Blair is required to post a $500,000 performance bond before selling business opportunities.
On December 8, 1998, the court ordered a default judgement against defendant Robert Lemcke in the amount of $872,882 and banned him from selling business opportunities and engaging in the business of telemarketing. Previously, the court placed the corporate defendants in permanent receivership and ordered a judgment in the amount of $872,882.
In February 1998, the FTC filed a complaint against Hart Marketing Enterprises Ltd., Inc., Internet Space Station, Inc., Four Seasons Distributing, Inc., James Weems, Robert Lemcke, also known as Mark Walker, Edward Patrick Evans, a/k/a Patrick Evans a/k/a Edward Adams, and Bruce Blair. The FTC alleged that the defendants, in promoting and selling free-standing computer kiosks with cash acceptors designed to allow customers to access the Internet from public locations, made numerous misrepresentations when soliciting consumers to purchase the business opportunity. The complaint also alleged that the defendants violated the Franchise Rule by failing to provide the basic disclosure document, by making earnings claims without a reasonable basis and failing to provide the required earnings claims document to potential buyers.
Under the terms of the settlement with Edward Evans, in addition to the performance bond requirement, Evans is prohibited from using any fictitious or false names in any future business dealings. He also is prohibited from making the types of misrepresentations cited in the complaint and from future violations of the Franchise Rule. The settlement with Bruce Blair, in addition to the performance bond requirement, prohibits him from making any material misrepresentations in the sale of any product or service.
The individual settlements with Weems, Evans, and Blair also contain record keeping provisions to assist the FTC’s monitoring the defendants’ compliance.
The Commission vote to authorize staff to file the individual settlements were 4-0. The stipulated final judgments were filed in U.S. District Court, Middle District of Florida, Tampa Division, on January 7, 1999. The settlements were approved by the court on January 17, 1999.
NOTE: These judgments are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Judgments have the force of law when signed by the judge.
Copies of the stipulated final judgments are available from the FTC’s web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 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. X980038)
(Civil Action No: 98-222-Civ-T-23E)