The ringleader behind an operation accused of deceptively selling automated teller machine (ATM) business opportunities is banned from ever selling business ventures again. The entire operation will give up all of its frozen assets, worth over $700,000, including a BMW automobile, a Harley Davidson motorcycle, and Rolex watches, to settle the Federal Trade Commission’s charges. The FTC has set up an information hotline for consumers.
According to the FTC, the operation deceptively sold ATM business opportunities costing at least $30,000 to more than 100 consumers throughout the United States. To sell the business opportunities, the defendants misrepresented that purchasers were likely to earn a substantial income and promised substantial assistance with the venture. They specifically promised that all of the purchaser’s ATMs would be installed and operational within 45 days of purchase at retail locations that already had been secured. Instead, the operation frequently did not deliver any ATMs, and if they did, it took weeks or months to get the ATMs up and running. Purchasers ended up losing money even when the machines were operational – the cost of keeping the ATMs secure and stocked with cash far exceeded the income the machines generated. The FTC also alleged that the defendants failed to make disclosures required by the Franchise Rule and made unsubstantiated earnings claims.
The ringleader, Andrew Steinberg, and his companies, Fidelity ATM, Inc. and Steinberg Group, Inc., are banned from any involvement in the offer or sale of business ventures. The rest of the defendants – Andrew’s wife, Allison Steinberg, her brother, Stephen Duffie, and Andrew’s brother, Adam Steinberg – are prohibited from making misrepresentations when selling any goods or services and from violating the Franchise or Business Opportunity rules.
The orders against the defendants enter a monetary judgment in the total amount consumers paid: $4.25 million. The defendants will turn over to the FTC all of their frozen assets – approximately $713,000 – to be used for consumer redress. The defendants also will give up a BMW, a Harley Davidson, and Rolex watches. The rest of the defendants’ monetary judgment is suspended based on an inability to pay. If it is found that they misrepresented their financial status, then the rest of the judgment will be due.
Consumers who purchased ATM distributorships from Fidelity can call 1-202-326-3890 for more information.
The Commission vote to authorize staff to file the stipulated final orders was 5-0. The stipulated final orders for permanent injunction were filed in the U.S. District Court for the Southern District of Florida.
NOTE: These stipulated final orders are for settlement purposes only and do not constitute an admission by the defendant of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://www.ftc.gov/bcp/consumer.shtm.