In response to a Federal Trade Commission suit alleging that Automated Systems & Concepts International, Inc. and its president, John R. ("J.R.") Munoz, engaged in deceptive practices to induce investments in three partnerships formed to produce television infomercials to market various products, U.S. District Judge Stephen V. Wilson of the Central District of California has permanently enjoined the defendants from misrepresentations in connection with telemarketing or the sale of any investment and has ordered them to pay more than $11.8 million in consumer redress. The court also ordered Munoz to post a $1 million performance bond before engaging in any investment sales or telemarketing in the future.
The FTC sued Automated Systems & Concepts, based in Los Angeles, California, Munoz, and four others in August 1998 as part of "Project Risky Business," a multi-agency sweep that targeted deceptive sales of entertainment-related investments. Four defendants in the case, Creative Marketing Concepts, Inc., Premier Entertainment, Inc., Timothy Munoz and Frank Gale, settled the Commission's charges in settlements that permanently bar them from engaging in misrepresentations in connection with telemarketing or the sale of any investment. Munoz and Gale also are required to post $300,000 performance bonds before engaging in future investment sales or telemarketing.
In his final ruling, Judge Wilson found that Automated Systems and Munoz violated the FTC Act and the FTC's Telemarketing Sales Rule. The court ruled that the defendants misrepresented the nature of an Elvis Presley product to be featured in one of the infomercials; falsely claimed that the product, a coffee table book titled "Elvis Immortal," would contain a compact disc featuring a previously unreleased Elvis Presley song; that the book would contain photographs from Elvis Presley's personal photographer; that the infomercial to market the book would air on the twentieth anniversary of Elvis Presley's death; and that Graceland, Elvis Presley's estate, was seriously considering making "Elvis Immortal" the "Official Book of Graceland." The court also ruled that the defendants falsely represented that various large and well-known retailers, such as QVC, Inc. and Target Stores, had sold or agreed to sell thousands of their products. Finally, the court ruled that they falsely represented that past investors in their infomercial partnerships had already received substantial returns on their investments.
The Court ordered Munoz and Automated Systems to pay $11,822,611 in investor redress. The court also barred Munoz from selling investments without posting a $1 million performance bond.
Copies of the legal documents associated with this case 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; toll free at 877-FTC-HELP (877-382-4357); 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.
Civil Action No. 98-6364 SVW (ANX) (C.D.Cal.)