Home Professions, Inc., Telesalescenter.Com., and their owner, Michael Petok, charged by the Federal Trade Commission as part of a nationwide crackdown on fraudulent business opportunities, have agreed to pay $27,647 to settle the charges against them. The FTC had filed a complaint in federal district court alleging that the defendants operated a fraudulent work-at-home medical billing business opportunity. The FTC alleged that the defendants misrepresented the earnings consumers could realize, the ease of signing up doctors as clients, the utility of their medical billing software, and the availability of a money back guarantee. Under the settlement, the defendants are banned from the medical billing and work-at-home industries.
The settlement announced today ends the litigation in this case, which was among 35 cases brought by the FTC and the Department of Justice as part of "Project Biz-illion$," a multi-prong state/federal attack on traditional business opportunity scams. This case, like most of "Project Biz-illion$" actions, was launched against defendants that advertised in the classified section of daily newspapers to peddle work-at-home scams. The FTC's complaint named Home Professions, Inc., Telesalescenter.Com, based in San Juan Capistrano, California, and Michael Petok, doing business as Nationwide Medical Billing, ProClaim Software, and OptiMed (collectively referred to as "Home Professions"). According to the FTC, the defendants made unsupported earnings claims, provided consumers with faulty software that was incapable of processing medical billing claims, falsely promised consumers that they had a list of doctors who were ready to hire the defendants' customers to process their medical claims, and misrepresented their refund policy. A minimum investment ranging from $299 to $599 was required and the defendants' ads typically stated that consumers would make "From $24K to $50K+ per year."
Under the settlement, which required the court's approval, the defendants are banned from any future involvement in the sale of medical billing or other work-at-home business opportunities, and are prohibited from misrepresenting any fact material to a consumer's decision in connection with the sale of any goods or services. The settlement requires the defendants to provide notice of the settlement to all customers who are currently making payments under existing contracts and to allow those customers to rescind their contracts. In addition, the settlement requires the defendants to pay $27,647, with an avalanche clause that would require them to pay $2.9 million in the event they are found to have made omissions or misrepresentations about their financial condition. Finally, the settlement contains various recordkeeping and reporting requirements designed to assist the FTC in monitoring the defendants' compliance.
The Commission vote authorizing staff to file the proposed settlement was 5-0. The stipulated judgment and order for permanent injunction was filed in the U.S. District Court for the Central District of California, Southern Division, on January 26, 2001, and the court approved it on January 29
NOTE: This stipulated judgment and order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.
Copies of the news release and the stipulated judgment are available from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. Copies of other documents associated with "Project Biz-illion$" are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. 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. 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.
Office of Public Affairs
Rolando Berrelez or Theresa McGrew
FTC Midwest Regional Office - Chicago
(FTC Matter Mo. X000049) (Civil Action No. SACV OO-111AHS (EEx)