The Federal Trade Commission has won a $19.7 million judgment against Canadian telemarketers the FTC charged with operating an illegal international lottery scam. The agency alleged that in calls from a Toronto-based boilerroom, the telemarketers used high pressure tactics to persuade consumers to send anywhere from $29 to thousands of dollars to invest in the lotteries, telling consumers they were "practically guaranteed to win." Buying and selling foreign lottery tickets is illegal in the United States. In addition to the monetary judgment, the defendants will be barred from selling lottery tickets or telemarketing any product or service in the United States.
In December 1998 the agency filed a seven count complaint in federal court alleging violations of the FTC Act and the Telemarketing Sales Rule. In its ruling, the court found that the defendants told consumers - most of whom were elderly - that they had been "specially selected" to participate in a system for playing the Canadian lottery and that the consumer was likely to win a large prize or jackpot by playing with the defendants. The court also found that telemarketers told the consumers that they were "registered" or "sponsored" by the Canadian Government to sell the lottery tickets, but failed to disclose that it was illegal to sell them to U. S. consumers. In fact, only a small percent of the money the telemarketers took in actually went toward the purchase of lottery tickets.
Judge James B. Zagel of the United States District Court for the Northern District of Illinois in Chicago entered an order that will permanently bar the defendants from telemarketing or assisting in the telemarketing of any product or service to consumers in the United States and bars them from promoting or selling lottery tickets or interests in lottery tickets to U.S. residents. The court also ordered $19,797,982.48 in consumer redress. Ongoing litigation in Canada to recover the court ordered funds has not yet been resolved, and it is unclear how much of the total will be available for redress.
The defendants named in the FTC suit are Windermere Big Win International, Inc., Marathon Award Center, Inc., Sunshine Fortuity, Inc., Ernest Levy, a/k/a/Ernie Levy, Alan Silverstein, Selvanayagam Pararajasingam, Michael Levy, and George Ola. Consumers who believe they invested in foreign lotteries through one of the named defendants may apply for redress by contacting the FTC at 1-877-FTC-HELP.
The Commission received significant assistance from the Department of Justice, Office of Foreign Litigation, the United States Customs Service, and the Ontario Ministry of Consumer and Commercial Relations.
Copies of the complaint and the judgement 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. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at www.ftc.gov. The FTC enters Internet, telemarketing and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.
Claudia Bourne Farrell
Office of Public Affairs
C. Steven Baker or Karen Dodge
Midwest Regional Office
(Civil Acton No. 98C 8066)