Consumer Protection Mission
Consumer Redress Actions
Type of Matter
|American Business Supplies, Inc.||X960074||11/13/96||Telemarketing Sales Rule||Office Supplies|
|American Exchange Group, Inc.||X960080
|Telemarketing Sales Rule||Magazine Subscription Prize Promotion|
|American Fortune 900, Inc.||X960011||11/18/96||Investment Fraud||900-Number Telephone Lines|
|Amstar Finance Corporation||X960055||3/04/97||Advance-Fee Loan Fraud||Consumer Finance|
|Bell Connections, Inc.||X960030||12/10/96||Investment Fraud||Paging License Services|
|Best Marketing, Inc.||X960077||2/28/97||Prize-Promotion Fraud||Specialty Merchandise|
|Bureau 2000 International, Inc.||X960042||10/01/96||Franchise Rule||900-Number Business Venture|
|Career Assistance Planning, Inc.||X960089
|Scholarship Fraud||Scholarship Search Services and Finance|
|Career Information Services, Inc.||X960058||3/20/97||Job Placement Fraud;
|Careers, Inc.||X960072||10/25/96||Job Placement Fraud||Employment Services|
|Christopher Ebere Nwaigwe||X960091
|Scholarship Fraud||Scholarship Search Services and Finance|
|David L. Amkraut||X970033||1/21/97||Immigration Services Fraud||Green Card Lottery|
|Diversified Marketing Service Corporation||X960025||10/18/96||Telemarketing Sales Rule||Magazine Subscription Sales|
|Empress Corporation||X960008||2/15/97||Telemarketing Fraud||Magazine Subscription Prize Promotion|
|Falcon Crest Communications, Inc.||X960016
|Investment Fraud||Mobile Radio and Paging Licensing Services|
|Family Publishers Clearing Center||X960090||7/16/97||Telemarketing Sales Rule||Magazine Subscription Prize Promotion|
|Fortuna Alliance, LLC||X960059||2/24/97||Investment Fraud||Internet Pyramid Scheme|
|Genesis One Corporation, d/b/a Bureau One||X960038
|Franchise Rule||900-Number Business Venture|
|Glendale Associates (Patricia Esme Popp, d/b/a)||X960084||10/10/96||Telemarketing Sales Rule; Advance-Fee Loan Fraud||Consumer Finance|
|Global Assistance Network for Charities||X970006||2/04/97||Pyramid Scheme||Charity Contributions|
|Gold Leaf Publishing & Distributing Company, Inc. (William Szabo, d/b/a)||X960044||10/01/96||Franchise Rule||900-Number Business Venture|
|(Ideal Concepts, Inc.)||X960002||6/25/97||Telemarketing Fraud||Prize Promotion|
|Ideal Credit Referral Services Ltd.||X960063||4/24/97||Telemarketing Sales Rule; Advance-Fee Loan Fraud||Consumer Finance|
|Incentive International, 9013-0980 Quebec, Inc., d/b/a||X960099||2/11/97||Cross-Border Telemarketing Fraud||Prize Promotion|
|Infinity Multimedia, Inc.||X960073||1/15/97||Franchise Rule||Display Rack Business Opportunity|
|Insulate Industries, Inc.||X950038||10/18/96||Home Improvement Fraud||Windows|
|Intelinet Data Services||X960067||8/06/97||Job Placement Fraud||Employment Services|
|(Law Center, The)||
|Telemarketing Sales Rule||Credit Repair|
|(Linc II, Inc.)||X960083||3/12/97||Job Placement Fraud||Employment Services|
|Marquette, Inc. Monte Bolt||X950076
|Franchise Rule||Billing Software Business Opportunity|
|Medical Recovery Service, Inc.||X970012
|Business Opportunity Fraud||Medical Billing Consultant|
|Mentor Network, Inc., The||X970015||3/20/97||Pyramid Scheme||Charity Contributions|
|Mercantile Messaging, LLC (Daniel B. Lubell, d/b/a)||X970013||5/27/97||Telemarketing Sales Rule||Pay-Per-Call Travel Information|
|(Meridian Capital Management, Inc.)||
|Telemarketing Fraud||Investment Scheme "Recovery Room"|
|(Metropolitan Communications Corp.)||
|Investment Fraud||Specialized Mobile Radio Licenses|
|Michael P. McGowan||X960076||4/10/97||Telemarketing Sales Rule||Office Supplies|
|Micom Corporation||X960024||3/12/97||Investment Fraud||Mobile Radio and Paging License Services|
|(Multinet Marketing, LLC)||X960081||11/04/96||Telemarketing Sales Rule||Magazine Subscription Prize Promotion|
|National Art Publishers and Distributors, Inc.||X940042||6/26/97||Telemarketing Fraud||Movie Posters and Collectibles|
|National Business Distributors Company, Inc. Deborah L. Azari, Raphael Ralph Azari||X960087
|Telemarketing Sales Rule||Office Supplies|
|Oasis Southwest, Inc.||X960079||6/06/97||Telemarketing Sales Rule||Prize Promotion - "Say No to Drugs" Materials|
|Omega Promotions Inc.||X960118||4/04/97||Job Placement Fraud||Employment Services|
|(On Line Communications, Inc.)||X960022||11/02/96||Telemarketing and Investment Fraud||Paging License Services|
|Pantron I Corporation||X890012||2/13/97||Infomercials||Baldness Cure|
|Pase Corporation||X940059||2/06/97||Business Opportunity Fraud||Work-at-Home Opportunity|
|Precision Communications Administration, Inc.||X970004||2/25/97||Business Opportunity Fraud||Pay-Per-Call Business Ventures|
|Progressive Media, Inc.||X970011
|Telemarketing Fraud||Student Employment and Financial Aid|
|(Publishers Award Bureau)||X960098||3/12/97||Telemarketing Sales Rule||Magazine Subscription Prize Promotion|
|Retail Sales & Marketing (Joseph Hayes and Thelma Hayes, d/b/a)||X970003||8/18/97||Franchise Rule||Directory Board Advertising Business Opportunity|
|S.J.A. Society, Inc.||X970061||8/25/97||Telemarketing Sales Rule; Fair Debt Collection Practices Act||Magazine Subscriptions|
|Sage Seminars, Inc.||X950065||10/29/96||Franchise Rule||Motivational Seminars|
|Silver State Western Publishing, Inc., d/b/a Prime Time Marketing||X960053||12/04/96||Telemarketing Sales Rule||Prize Promotion - "Say No to Drugs" Materials|
|Sparta Chem, Inc.||X960071||11/05/96||Telemarketing Sales Rule||Office Supplies|
|Student Aid Incorporated||X960115||8/07/97||Scholarship Fraud||Scholarship Search Services and Finance|
|Student Assistance Services, Inc.||X960120||6/23/97||Scholarship Fraud||Scholarship Search Services and Finance|
|Thadow, Inc.||X950018||12/05/96||Telemarketing Fraud||Telefunding Scheme "Recovery Room"|
|Thornton Communications, Inc.||X970083||8/14/97||Telemarketing Fraud||Advance-Fee Credit Cards|
|Tower Cleaning Systems, Inc.||X960122||10/02/96||Franchise Rule||Commercial Janitorial Cleaning Franchises|
|Universal Credit Corporation (Gabrielle Ellis and Mark Thomas Ellis, d/b/a)||X960048||12/16/96||Telemarketing Sales Rule||Credit Repair|
|USA Channel Systems, Inc.||X960017
|Investment Fraud||Paging License Services|
|USA Credit Services||X960068||3/18/97||Telemarketing Sales Rule||Credit Repair|
|Windward Marketing, Ltd.||X960026
|Telemarketing Fraud||Magazine Subscription Prize Promotion|
|World Class Network, Inc.||X970031||5/06/97||Multi-Level Marketing Fraud||Travel Agent Credential Mill|
|Worldwide Marketing and Distribution Company, Inc.||X950056||10/23/96||Franchise Rule||Vending Machine Business Opportunity|
|Worldwide Wallcoverings and Blinds, Inc.||X960096
|Mail/ Telephone Order Merchandise Rule||Wallpaper and Window Coverings|
1A company name shown in parentheses is for identification of the case only. The company is not a defendant in the item shown in the table.
2Redress or disgorgement funds were also obtained from the following: 2943174 Canada, Inc. (see page 68)
Amerifit, Inc. (see page 71)
BodyWell, Inc. (see page 71)
Computer Business Services, Inc. (see page 73)
Guildwood Direct Limited (see page 76)
Interactive Medical Technologies, Ltd. (see page 77)
KCD Holdings, Inc. (see page 78)
Money Tree, Inc., The (see page 79)
Nationwide Syndications, Inc. (see page 80)
Pre-Paid Legal Services, Inc. (see page 70)
RustEvader Corporation (see page 87)
Tower Loan of Mississippi, Inc. (see page 109)
The consumer redress amounts included in the following case descriptions are those ordered by the court. They may be higher than the amounts actually collected and returned to consumers.
American Business Supplies, Inc.; Creative Business Consultants, Inc.; Interstate Office
Systems, Inc.; Nationwide Office Products, Inc.; Michael Chierico; Teri Chierico
A "boiler room" telemarketing operation selling office supplies under four company names will pay $1 million for consumer redress to settle allegations that its business practices violated federal laws. The Commission alleged that the operation used deceptive tactics to induce thousands of consumers to order merchandise, charged them inflated prices, and pressured them to collect bills. The order also requires Michael and Teri Chierico, who ran the operation, to post a $100,000 performance bond before engaging in telemarketing again and prohibits them from using misrepresentations in future telemarketing.
American Exchange Group, Inc.; Todd Bishop; William S. Kelly
American Exchange and William Kelly, one of its principals, are required to pay $52,000 for consumer redress to settle allegations that they violated the Telemarketing Sales Rule. A default judgment was also entered against Todd Bishop, which requires him to pay more than $173,000 into the consumer redress fund. The Commission alleged that the defendants ran a fraudulent prize-promotion telemarketing scheme in which they promised consumers large awards if they purchased magazine subscriptions and other items, but the awards were not received or were worth significantly less than represented. The orders prohibit all three defendants from future misrepresentations and violations of the Rule, and the order with Kelly and American Exchange also bans them from engaging in prize-promotion telemarketing and recovery services.
American Fortune 900, Inc.
American Fortune settled allegations that it falsely represented that investments in its 900-number venture were low risk and would produce substantial profits. In fact, the Commission alleged, the company depleted a substantial portion of investors' capital in paying sales commissions and other expenses and misrepresented the number of operational 900-number lines in which it had a financial interest. The order imposes a judgment of $2,544,000 against the firm, to be used for consumer redress, although it is unclear how much of this amount can be collected. The order also prohibits the firm from making false claims in marketing any investment or telephone information service in the future.
Amstar Finance Corporation; Amstar Investment Corporation; Bibekanand Satpathy
Two loan companies and their owner agreed to settle allegations that few, if any, of their customers received promised business loans and other financing for which they paid upfront fees averaging $3,000. The order includes a $300,000 judgment for consumer redress, but suspends that judgment based on the defendants' sworn financial statements. The consent order requires Bibekanand Satpathy to post a $500,000 performance bond before marketing loan or credit services in the future and bars all defendants from making false representations regarding such services.
Bell Connections, Inc.; Michael Berman (d/b/a Discount Filing Services); Donald Lee
Dayer; Jimmie Justus; Erwin Allen Strauss
A settlement with Bell Connections and four individual defendants resulted in a consumer redress fund totaling nearly $200,000. The Commission alleged that the defendants misrepresented the value and investment potential of paging licenses available through the Federal Communications Commission (FCC), to induce consumers to pay substantial fees for Bell Connections' services in preparing license applications. The order requires each of the individual defendants to post a $275,000 bond before selling similar or related services for FCC licenses or any investment and prohibits them from making false claims about any investments and telemarketed products or services. Judgments of approximately $1,378,000 had been entered against the defendants, but the total amount could not be collected.
Best Marketing, Inc.; Edward H. Hexter (a/k/a David D. Best)
Best Marketing and its president agreed to settle allegations that they misrepresented the value of prizes they awarded to induce small business owners to buy advertising specialty products through their telemarketing operation. The order requires Edward Hexter to pay $125,000 to the U.S. Treasury. In addition, the defendants are prohibited from making misrepresentations in prize promotions, and Hexter is required to post a $500,000 bond before engaging in future telemarketing activities.
Bureau 2000 International, Inc.; Malibu Media, Inc.; Krystee Carr; Dave Ryder
The Commission reached a settlement with two companies and their corporate officers, under which they are required to pay $25,000 into a consumer redress fund. The defendants, who sold business opportunities consisting of 900-number lines offering entertainment programs, were alleged to have violated the Franchise Rule by failing to give investors important information about the venture they offered. The order requires the defendants to give potential purchasers of any future franchise or business opportunity the information and documentation mandated by the Rule and prohibits them from making false earnings claims and other misrepresentations.
Career Assistance Planning, Inc. (d/b/a College Assistance Planning, College Assistance Program, and C.A.P.); David Chaim Levy; Donna M. Levy (a/k/a Donna Holleger); Becky Burch Settles
A federal district court judge upheld Commission allegations against David and Donna Levy, who allegedly ran a scholarship search service scam that defrauded consumers of over $6 million. The court found that the Levys orchestrated the fraudulent practices used by Career Assistance Planning, inducing tens of thousands of students and their parents to pay for services the company failed to provide. The court observed that the company had received over 2,500 consumer complaints, many from consumers who did not receive scholarships or the refunds of fees that the defendants promised. The judge ordered the Levys to pay over $6 million in consumer redress and to post a $6 million performance bond before engaging in any telemarketing activity in the future. In a separate settlement, Becky Settles agreed to pay just over $13,000 for consumer redress for her role in the fraudulent scholarship search service. The order requires Settles, for 10 years, to post a $75,000 bond before participating in any telemarketing activity and prohibits her from making false representations about any future scholarship search service she markets.
Career Information Services, Inc.; CIS Associates, Inc.; William Phillips; David Lee
Two related employment services and their senior officers agreed to settle allegations that they defrauded consumers seeking federal and postal jobs. According to the Commission, the defendants advertised what appeared to be specific and available jobs, but consumers who called the 800 number in the ads were directed to call a 900 number and were not told about the charge for placing that call. The Commission alleged that the pay-per-call service then instructed the caller to write for an information package, which turned out to have little or no information about particular job openings. The settlement requires monetary redress of nearly $2.6 million. In addition, each defendant is required to post a $1 million bond before marketing career advisory or pay-per-call services in the future. The order would also prohibit the defendants from violating the 900-Number Rule's cost disclosure requirements and from making deceptive statements about the availability and nature of federal and postal employment.
Careers, Inc.; Daniel T. Faulkner; Nicholas S. Mancino
An agreement with Careers and two of its officers requires them to pay $350,000 into a fund for consumer redress to settle allegations that they deceptively marketed employment services for airline jobs. According to the Commission, the defendants placed advertisements in newspapers nationwide and charged upfront fees for their services, but few, if any, consumers received the type of job placement assistance promised. The order prohibits the defendants from claiming that they are affiliated with airlines and from making other false statements. In addition, the two individuals are required to post a $250,000 performance bond before getting involved in an employment services business in the future.
Christopher Ebere Nwaigwe (a/k/a Christopher Maige, Michael Morge, and Michael
Norge); Udoka Maduka (a/k/a Michael Mann)
Two individuals agreed to settle allegations that they promoted a fraudulent college scholarship search service. The Commission alleged that the defendants solicited students nationwide, under such names as "National Science Program" and "National Law Scholarship Program," but that consumers got little or nothing for their "processing fee." In separate orders, each defendant agreed to forfeit consumer funds seized by the Commission, which will be used for consumer redress. In addition, the settlements impose a $10,000 judgment against Christopher Nwaigwe and a $9,000 judgment against Udoka Maduka. Nwaigwe is required to post a $300,000 bond and Maduka a $50,000 bond before engaging in a scholarship service business in the future.
David L. Amkraut (d/b/a Law Offices of David L. Amkraut)
David Amkraut, an immigration attorney, settled allegations that he misled tens of thousands of people worldwide who wanted to obtain visas through the State Department's "green card" lottery. Winners of the lottery, created to encourage ethnic diversity, can apply for immigrant visas, which are used to enter the United States. The immigrant visas are then exchanged for permanent residence visas, commonly referred to as "green cards." According to the Commission, Amkraut misrepresented the nature of the lottery and his ability to increase an individual's chances of winning. In addition, the Commission alleged, he jeopardized his customers' lottery entries by violating State Department rules and he withheld information packages from lottery winners to try to pressure them into paying him additional fees to process the green card application. The consent order prohibits Amkraut from misrepresenting his ability to increase an individual's chances of becoming a winner in the lottery or misrepresenting any other fact material to a consumer's decision to purchase his services and from failing to comply with State Department rules and procedures. The order also requires Amkraut to disclose the nature of the lottery, procedures, and fees and to return information packages to winners in a timely manner. In addition, Amkraut agreed to provide consumer redress "in kind" by assisting past customers to enter the lottery free of charge. The actual cost of redress depends on the number of customers who avail themselves of the offer, but is expected to total over $250,000.
Diversified Marketing Service Corporation; Magazine Club Billing Service, Inc.;
National Marketing Service, Inc.; Neighborhood Periodical Corporation (NPC) of the
Midwest, Inc.; C.H. Kuykendall; H.G. Kuykendall, Jr.; H.G. Kuykendall, Sr.
Diversified Marketing, its affiliated corporations, and its officials settled allegations that they made a variety of misrepresentations and debited consumers' bank accounts without authorization as part of a magazine telemarketing scheme. The Commission alleged that the defendants misrepresented the cost of magazine subscription packages and the reason for obtaining checking account numbers and refused to cancel subscriptions. The order requires the defendants to pay $1.5 million in consumer redress and prohibits them from making the alleged misrepresentations and from charging consumer's credit cards or debiting their checking accounts without approval.
Empress Corporation (d/b/a American Publishers Exchange, Inc.); Scott Cooke
Empress, a telemarketing company, and its president agreed to settle allegations that they induced consumers to purchase magazine subscriptions by misrepresenting that consumers would receive prizes worth as much as or more than the cost of the subscriptions. The Commission settlement, together with a companion settlement filed by the State of Nevada, requires the defendants to pay approximately $277,000, of which $93,000 will go toward consumer redress. Funds will also go to consumer protection enforcement in Nevada and to the National Tape Library in San Diego, a valuable law enforcement resource that is a repository for telemarketing pitches. In addition, the order prohibits the defendants from misrepresentations in connection with prize promotions like those in this case.
Falcon Crest Communications, Inc.; Republic Communications Corporation; Joseph
Caridi; Joel H. Cohen; Jordan S. Drew; Gary Paperman
In six separate settlements, two related companies and four individuals agreed to settle allegations in connection with the sale and management of wireless communications licenses issued by the Federal Communications Commission (FCC). Falcon Crest and Republic allegedly touted themselves as experienced brokers for FCC licenses but delivered few, if any, offers to buy or lease the licenses. The orders require consumer redress as follows: Falcon Crest, $3,100; Republic, $38,544; Joseph Caridi, $350,000; Joel Cohen, $30,000; Jordan Drew, $350,000; Gary Paperman, $30,000. The order with Republic bars it from misrepresenting facts about wireless communications licenses or investment offerings in the future. The orders with Falcon Crest and four of its principals prohibit them from misrepresenting investments or any telemarketed product or service. In addition, Caridi and Drew are barred from any telemarketing for five years, and Cohen and Paperman must obtain $500,000 bonds before engaging in the telemarketing of any investments in the future.
Family Publishers Clearing Center; Warner Lists (American Enterprise List, Inc., d/b/a);
Kenneth Caparoni; Philip Katz; Sheldon Katz; Michael Weiss
Two companies and their principals agreed to settle allegations that they misrepresented the nature and value of prizes they offered to induce consumers to purchase magazine subscriptions and failed to make other disclosures required by the Telemarketing Sales Rule. According to the Commission, Family Publishers solicited consumers for magazine subscriptions by offering purportedly valuable prizes, and Warner Lists provided customer lists and other services. As part of the settlement, the four individuals paid consumer redress totaling over $120,000. The defendants are prohibited from providing lists, prizes, prize certificates, or any other substantial assistance or support to any seller or telemarketer engaged in deceptive practices. The defendants are also required to post a performance bond of $500,000 before engaging in similar telemarketing activities or providing lists to telemarketing businesses, and they are prohibited from violating the Rule in the future.
Fortuna Alliance, LLC; Augustine Delgado; Donald R. Grant; Libby Gustine Welch
The Commission reached a settlement with Fortuna and its officers under which the defendants could pay more than $5 million for consumer redress. The Commission alleged that the defendants promoted an investment program on the Internet that was actually an illegal pyramid scheme. They allegedly induced thousands of consumers around the world to join the pyramid scheme, promising thousands of dollars in "profits" as other people "enrolled" in the program. Under the settlement, every Fortuna member is entitled to a full refund of membership fees. The money for the refunds comes from funds frozen in the United States and from $2.8 million transferred from Antigua, West Indies. The order also permanently bars the defendants from participating in any chain or pyramid program and from making deceptive earnings claims in connection with any marketing or investment program they offer. (Also see Fortuna Alliance, LLC, page 94.)
Genesis One Corporation (d/b/a Bureau One); Ali Mostashari (a/k/a Alex Bass)
The Commission reached a settlement with Genesis One and entered a default judgment against Ali Mostashari in connection with allegations that they made false earnings claims and other misrepresentations in marketing pay-per-call 900-number business ventures. The Commission also alleged that the defendants violated the Franchise Rule by failing to give investors required pre-purchase information. The settlement with Genesis One, which is under receivership, includes a $5 million judgment for consumer redress. It is uncertain how much of this amount will be collected, but the receiver now holds $400,000 in funds that will be distributed. The default judgment against Ali Mostashari includes $6.1 million for redress. Both orders bar the defendants from misrepresenting income and other information concerning any franchise or business opportunity and from violating the Rule. (Also see Genesis One Corporation, page 95.)
Glendale Associates; Crown Credit Services; Star Financial Services (Patricia Esme
Popp, d/b/a all three businesses)
Patricia Popp, doing business under three company names, agreed to pay $10,000 for consumer redress to settle allegations that she falsely promised "guaranteed" loans to consumers and that she charged an advance fee for her services, a violation of the Telemarketing Sales Rule. The order prohibits Popp from violating the Rule and from misrepresenting any credit offer or service in the future and requires her to post a $250,000 bond before engaging in any telemarketing effort or offering any credit services.
Global Assistance Network for Charities; Eileen Belcar; Cedrick Robles
Operators of a pyramid plan that advertised on the Internet and in newspapers agreed to settle allegations that they made false and misleading statements to sell membership in the scheme, claiming that consumers could contribute to a charity and earn thousands of dollars a month. The order bars Eileen Belcar and Cedrick Robles from selling or offering for sale membership in any multilevel marketing, investment, or charitable donation program or plan, and from making unsubstantiated income or profitability claims and misrepresentations. The defendants are also required to pay full consumer redress of $4,900, an amount that reflects the fact that the Commission stopped the scheme in its very early stages.
Gold Leaf Publishing & Distributing Company, Inc. (William Szabo, d/b/a)
William Szabo, doing business as Gold Leaf, is required to pay over $28,000 for consumer redress to settle allegations in connection with the sale of pay-per-call 900-number business ventures. The Commission alleged that Szabo made false earnings claims and failed to give investors required pre-purchase information, in violation of the Franchise Rule. Szabo is prohibited from violating the Rule in the future.
(Ideal Concepts, Inc.)
The former owner of Ideal Concepts agreed to settle allegations that the company's telemarketers promised consumers, primarily senior citizens, valuable prizes or awards that were never delivered or, if delivered, were worth a fraction of their claimed value. The prizes were offered as an inducement for consumers to purchase a variety of products costing from $400 to over $1,000. The settlement requires Michael Garganese to pay $15,000 in consumer redress and permanently bans him from any future telemarketing activities, including sales of any goods or services and charitable solicitations. (Also see Ideal Concepts, Inc., page 95.)
Ideal Credit Referral Services Ltd.; CAF Phone Systems; Direct Telemarketing Inc.;
Elite Credit Referral Services Ltd.; New Consolidated Consultants Inc.; Universal Client
Services Inc.; Cindy W. Forde (a/k/a Cindy Williams); Donald Patrick Hugh; Karl
Morris; Englhieberth (Bert) Smith; Maria Tilotta Smith
Ideal Credit, five related companies, and five individuals are required to pay over $1.8 million in consumer redress to settle allegations that they violated the Telemarketing Sales Rule by marketing advance-fee loans. According to the Commission, the defendants, operating out of Canada, ran a "boiler room" operation that offered loans to consumers for advance fees of $200 to $540. The defendants allegedly misrepresented that they could obtain or arrange loans for consumers, that consumers' loan applications had been approved, and that consumers would receive the requested loans regardless of their creditworthiness. In addition to paying redress, the defendants are prohibited from making false or misleading statements in the marketing of any good or service, from violating the Telemarketing Sales Rule, and from providing assistance or support to any seller or telemarketer engaged in practices that violate the Rule or federal law. (Also see Ideal Credit Referral Services Ltd., page 96.)
Incentive International (9013-0980 Quebec Inc., d/b/a Incentive International, Incentives
International, and Pegasus Industries); Joshua Baazov; Ofer Baazov
The Commission alleged that this Canadian firm and two principals engaged in cross-border telemarketing fraud, calling senior citizens in the United States and telling them they had won valuable prizes if they purchased certain merchandise. In fact, the Commission said, consumers received premiums worth a fraction of the money they spent on purchases. The order requires the defendants to pay almost $777,000 for consumer redress. It also prohibits them from misrepresenting facts about prize promotions in the future and from violating the Telemarketing Sales Rule.
Infinity Multimedia, Inc.; Quality Marketing Associates, Inc.; Joseph A. Wentz
The Commission negotiated a settlement with Infinity Multimedia, Quality Marketing, and Joseph Wentz, marketers of CD-ROM display rack businesses, that requires them to turn over $340,000 for a consumer redress fund. The settlement stems from allegations that the defendants made false earnings claims and used a variety of other deceptive practices in selling their pre-packaged businesses. The order also dissolves the two corporate defendants and bars Wentz from participating in any way in the marketing of any business venture in the future.
Insulate Industries, Inc.; Garry E. Wamsley
Insulate Industries and its vice-president/co-owner agreed to settle allegations that they misrepresented the thermal performance, or energy efficiency ratings, of windows the company manufactured and sold in the Pacific Northwest. The Commission alleged that sample windows submitted for testing were different from production windows and had been modified to improve the test results. The agreement does not provide for a monetary settlement, but requires the company to provide 1,000 code-compliant windows to government-funded projects and structures in Oregon and Washington. The order also requires the defendants to have competent and reliable scientific evidence for any claims about the thermal performance of production windows and requires test samples to be representative of production windows.
Intelinet Data Services (Stratified Advertising and Marketing, Inc., d/b/a)
A company that telemarketed job search services was ordered to pay over $2.3 million in redress to settle Commission allegations that its operation was fraudulent. Stratified, doing business as Intelinet, allegedly misrepresented the availability of government jobs in consumers' chosen fields and locations and misrepresented the ease of obtaining a refund of the advance fees it charged, if a consumer failed to find a job. In addition to requiring redress, the order bars the company from making false representations about positions or jobs available, bars it from misrepresenting the conditions for refunds, and requires it to clearly disclose to consumers all conditions of obtaining a refund. Three individual defendants settled under separate orders (see Intelinet Data Services, page 96).
(The Law Center; The Consumer Law Center)
Walter D. Channels; James Martin Coose
The Commission negotiated settlements with Walter Channels and James Coose, who did business together as The Law Center and The Consumer Law Center, to settle allegations that they ran a fraudulent credit repair telemarketing operation. The defendants allegedly violated the credit repair provision of the Telemarketing Sales Rule by charging upfront fees and claiming that they could force credit bureaus to remove negative or bad credit information. The two orders require each defendant to pay $2,500 for consumer redress and bar them from future violations of the Rule. The orders also require them to notify prospective clients of their rights under the Fair Credit Reporting Act.
(Linc II, Inc.)
The president-owner of Linc II agreed to turn over $8,000 in frozen funds as part of a settlement of allegations that she engaged in a fraudulent job search service. The Commission alleged that Betty Busler falsely claimed that she had access to a nationwide "hidden" job market and could obtain interviews for clients for an upfront fee, but did not provide clients with jobs or even job interviews in many cases. The settlement also requires her to post a $200,000 bond before engaging in future job placement services and prohibits her from misrepresenting such services. (Also see Linc II, Inc., page 97.)
Marquette, Inc.; Monte Bolt; Russell Brantmyer; Amy Felton; Lawrence Ken Swenson, Jr.
The Commission reached a settlement with Marquette and three of its officers, and a federal district court entered a default judgment against another officer, in connection with allegations that they made numerous misrepresentations in their sale of business opportunities involving medical billing software. The Commission alleged that the defendants misrepresented the amount of assistance they provided and the amount of earnings that could be expected and that they used false references. The defendants also allegedly violated the Franchise Rule by failing to give potential investors complete and accurate information about the business opportunity and documentation to support claimed earnings. The settlement with Marquette, Russell Brantmyer, Amy Felton, and Lawrence Swenson requires them to pay almost $147,000 in consumer redress. The default judgment against Monte Bolt includes $3,253,500 for redress. The orders also require the defendants to refrain from future misrepresentations about franchises or business ventures and prohibit them from violating the Rule.
Medical Recovery Service, Inc.; S&K Group, Inc.; Shapiro, Kossmeyer & Flom PC;
Marc Freeman; Nancy Freeman; Carl F. Kossmeyer; Richard C. Neiswonger
In two settlements, a group of firms and individuals agreed to pay a total of $1 million in consumer redress to settle allegations that they used false earnings claims and phony references in selling business consultant training programs. One order requires the defendant accounting firm, Shapiro, Kossmeyer & Flom, to pay $10,000; the second requires redress as follows: Richard Neiswonger, $425,000; S&K and Carl Kossmeyer, $265,000; Nancy Freeman and Marc Freeman, $300,000. All defendants are also subject to broad injunctive provisions.
The Mentor Network, Inc.; Parviz Firouzgar
The Mentor Network and Parviz Firouzgar are required to pay $75,000 for consumer redress as part of a settlement of allegations that they operated a fraudulent pyramid scheme promoted on the Internet, nominally involving the sponsorship of needy children in foreign countries, in which earnings depended on the recruitment of new participants. The order prohibits the defendants from engaging in any chain or pyramid program and from making misrepresentations about material facts in any marketing or investment program. It requires that payments to participants in any multi-level marketing program operated by the defendants come primarily from sales of goods or services and not from recruiting additional participants in the program.
Mercantile Messaging, LLC, and DB&L, Inc. (Daniel B. Lubell, d/b/a)
Daniel Lubell, doing business as Mercantile Messaging and DB&L, agreed to pay a total of $111,000 in consumer redress to settle allegations that he ran a fraudulent scheme to get consumers to place lengthy and expensive telephone calls - unknowingly - to Guyana or the Caribbean, for which the defendants received a per-minute payment from the foreign telephone company. The Commission alleged that Lubell's practices in soliciting consumers to call for information about free or discount travel and accommodations, or vacation sweepstakes, violated the Telemarketing Sales Rule. The settlement, in addition to requiring the redress payment, prohibits similar violations in the future.
(Meridian Capital Management, Inc.)
Jeffrey A. Jordan; Russell Mann; Markos Mendoza
Three individuals settled allegations stemming from their roles in an allegedly deceptive scheme in which telemarketers called victims of previous telemarketing fraud - often involving investments in wireless telecommunications licenses - and falsely represented that, for a fee, they could recover the money the consumers had previously lost. The order with Russell Mann requires him to pay $50,000 for consumer redress and prohibits him from misrepresenting any material aspect of any future telemarketing or recovery room service. In addition, he is required to post a $200,000 performance bond before participating in any future telemarketing activities. Jeffrey Jordan and Markos Mendoza are required to pay $1.6 million in consumer redress. (Also see Meridian Capital Management, Inc., pages 98 and 141.)
(Metropolitan Communications Corp.)
Sheldon Jackler; Joan Orth
Two defendants in a massive plan to sell Federal Communications Commission (FCC) specialized mobile radio licenses as "low-risk, high-return" investments agreed to settle allegations that the scheme was fraudulent. One settlement requires Sheldon Jackler to pay $1.6 million in redress to victims of the scam, permanently bars him from selling application preparation services for licenses or permits issued by any agency of the U.S. Government or any investment involving such licenses, prohibits misrepresentations about FCC licenses and investments generally, and requires a bond for any future telemarketing. A second settlement permanently bars Joan Orth from telemarketing investments and from misrepresenting FCC licenses and other investments generally and requires her to pay $20,000 for consumer redress. (Also see Metropolitan Communications Corp., page 142.)
Michael P. McGowan (d/b/a Amna Medical Products Corporation and Industrial
Michael McGowan, a telemarketer doing business under a number of aliases and corporate names, agreed to settle allegations that his practices violated federal laws. McGowan allegedly bilked businesses and not-for-profits by sending them unordered office supplies, billing them, and then harassing and threatening them for payment. The order bars McGowan from any telemarketing business in the future and from using any aliases in business dealings. In addition, $11,800 in frozen assets will be divided between the Commission and the U.S. Postal Inspection Service, which brought a parallel suit. A suspended judgment of $317,000, the amount of consumer losses, has also been ordered, which is collectable for consumer redress if the defendant has misrepresented his assets.
Micom Corporation; Joseph M. Viggiano
A federal district court order bars Micom and company principal Joseph Viggiano from offering any investment that involves a license or permit issued by the federal government and any application filing service in connection with a government-issued permit or license. The order also includes a $1.6 million judgment for consumer redress and a ban on misrepresentations regarding any investment or telemarketed offering. The order settles allegations that the defendants used false and misleading promises in their operation to sell consumers application preparation and filing services for paging licenses issued by the Federal Communications Commission. The order also requires Viggiano to post a $500,000 performance bond before engaging in telemarketing in the future.
(Multinet Marketing, LLC)
American Readers Service, Inc.
American Readers agreed to pay as much as $127,000 for consumer redress to settle allegations that it facilitated a deceptive prize-promotion scheme in which a group of telemarketers defrauded consumers of over $1 million. The Commission alleged that American Readers assisted the telemarketers by sponsoring the promotion, sending confirmation letters and prizes, taking customer service calls, and billing consumers' credit cards. The order prohibits American Readers from giving future assistance to deceptive telemarketers and from other violations of the Telemarketing Sales Rules.
National Art Publishers and Distributors, Inc.; Benjamin Valenty
Benjamin Valenty, a telemarketer who touted movie paraphernalia as an excellent investment, settled allegations that he violated federal law, including a 1994 order barring him from telemarketing investments. The earlier order followed allegations that Valenty and his firm, National Art, ran a deceptive scheme to sell vintage movie posters at inflated prices. Since the 1994 ban, Valenty has been part-owner of International Art Galleries, doing business as International Art Publishers. International Art has allegedly marketed movie collectibles, misrepresenting them as excellent investments. The current order permanently bans Valenty from telemarketing and requires him to pay $150,000 in consumer redress.
National Business Distributors Company, Inc.; Deborah L. Azari; Raphael Ralph Azari
National Business and its owners agreed to two orders to settle allegations that they used a variety of deceptive practices in their telemarketing operation to get orders for business supplies. They allegedly claimed that unordered merchandise had been ordered, charged inflated prices, added unauthorized fees, and charged "restocking" and shipping costs when consumers returned unordered goods. One order prohibits the defendants from making false statements or misrepresentations and from making unfounded threats about ruining consumer credit or taking legal action. The order also requires the Azaris to pay $200,000 for consumer redress and to relinquish rights to company assets, to secure a bond of $200,000 each before participating in any telemarketing business in the future, and to comply with the Telemarketing Sales Rule. Under the second order, the defendants are required to pay $10 million in refunds to consumers.
Oasis Southwest, Inc.; Michael A. Portalatin
A settlement with Oasis and one of its principals requires them to pay $30,000 in consumer redress to settle allegations that they ran a fraudulent telemarketing prize promotion, primarily targeting senior citizens. The defendants allegedly told consumers that if they purchased "Say No to Drugs" items, they would receive a prize worth more than the amount they paid. In fact, according to the Commission, the prizes consumers received, if any, were not worth more than they paid. In addition, the defendants allegedly failed to disclose that no purchase was necessary to win a prize, in violation of the Telemarketing Sales Rule. The order prohibits the defendants from involvement in any telephone prize promotion or recovery room service and from future violations of the Rule. A separate settlement was made with another officer of the company (see Oasis Southwest, Inc., page 100).
Omega Promotions, Inc.
An allegedly bogus employment service is banned from ever again engaging in another telemarketing operation or the activities of a job placement agency, under an agreement resolving allegations that it pitched openings for such positions as cruise ship tour guides, electronic specialists, and chemical engineers. The defendant allegedly promised to arrange interviews and induced consumers to divulge their checking account numbers, then debited the accounts without providing any services. The order calls for payment of $236,835 for consumer redress, although it is unclear how much of that amount can be collected. The three principals pled guilty to criminal charges brought by the Department of Justice and were sentenced to prison terms (see Omega Promotions, Inc., page 101).
(On Line Communications, Inc.)
Robert Corey (a/k/a Michael Allen)
The Commission reached a settlement with Robert Corey, a hidden principal in On Line Communications, a company that allegedly made false claims to investors about the nature and value of the Federal Communications Commission paging licenses it could obtain for them. Corey is required to disgorge a total of $362,500 from funds that he allegedly diverted to a Bahamian bank, of which $337,780 will be used for consumer redress. In addition, he is prohibited from making a variety of false claims about any investment offering and is required to obtain a $300,000 performance bond before engaging in any type of telemarketing in the future. This case marks the first time the U.S. Government obtained an asset freeze issued by a foreign court and returned the frozen funds to American telemarketing fraud victims.
Pantron I Corporation (a/k/a Pantron III Corporation; Pantron NV, and Second Pantron);
Hal Z. Lederman
The Commission agreed to a final settlement that brings to a close its pending lawsuit against Pantron I, a now-defunct company, and owner Hal Lederman. The order settles allegations first filed by the Commission in 1988, that advertising claims created and disseminated by the defendants in an infomercial for Helsinki Formula falsely represented that the product was effective in stopping hair loss and promoting hair regrowth. The injunction resulting from the 1988 suit was modified by an appeals court in 1994, and the court issued an order that the defendants pay monetary relief. The judgment against Lederman is for $27 million; however, the Commission will receive a pro rata share of the proceeds of Lederman's Chapter 7 bankruptcy. In addition to requiring the redress payment, the order prohibits the defendants from making claims about the effectiveness of any baldness product unless such claims would be permitted in labeling by the U.S. Food and Drug Administration. In addition, the defendants must have reliable scientific evidence for any claims about the performance, benefits, safety, or efficacy of any food, drug, device, or cosmetic, and they are prohibited from misleading endorsements and demonstrations in infomercials.
Pase Corporation; Robert J. Febre
A federal district court ordered Pase and its president to pay more than $16 million as redress to consumers who invested in allegedly fraudulent work-at-home business opportunities and programs that purported to offer grants, loans, and credit cards. The Commission alleged that, after consumers paid upfront fees, they found that the defendants were selling books that contained general information about jobs, money-making opportunities, entities that offered grants, or tax havens, and were soliciting consumers' assistance in selling products for Pase. The order prohibits the defendants from misrepresenting work opportunities and opportunities to obtain products and services and requires them to disclose any facts material to consumers' decisions to purchase products and services.
Precision Communications Administration, Inc.; Jeffrey Blayz (a/k/a John Blammy, John
Colburn, Jeff Gagliano, and John Jeff Sutton)
Precision Communications and its principal settled Commission allegations that they made false earnings and assistance claims in offering their pay-per-call business ventures to consumers. According to the Commission, few if any purchasers of the business ventures achieved the specific level of earnings promised by the defendants, and the defendants did not provide promised services, such as sending monthly checks and weekly call count reports. The settlement calls for the defendants to pay approximately $45,000 in consumer redress.
Progressive Media, Inc.; Collegiate Communications Group, Inc.; Mark Buchan;
Matthew G. Lucas; Kevin Lustgarten
Two companies and their principal officers agreed to pay an estimated $293,000 into a redress pool from which partial refunds may be made to students who paid fees to obtain either high-paying summer jobs or scholarships and other financial aid. The Commission alleged that the defendants misrepresented that the employment and financial aid directories they sold through telemarketing were actually "programs" that guaranteed students jobs or free financial aid. The Commission also alleged that the defendants' money-back guarantees turned out to be false. The two consent orders prohibit the defendants from making any false or misleading representations in connection with the future marketing of any employment or financial aid product or service and from misrepresenting any money-back guarantee.
(Publishers Award Bureau)
Marc DuBoise; Gerald E. LaFrance; Kenneth E. Nelson
Three individuals who operated through Publishers Award Bureau agreed to pay a total of $130,000 in consumer redress as part of a settlement of allegations that they ran a fraudulent prize-promotion program. The defendants allegedly sent solicitations to consumers telling them that they were "guaranteed to win" seemingly valuable prizes, but when consumers called to claim the prizes, they were told they had to pay several hundred dollars for magazine subscriptions to be eligible. The defendants agreed to an injunction against making future misrepresentations and against future violations of the Telemarketing Sales Rule. The order with Marc DuBoise and Gerald LaFrance requires them to post a $200,000 performance bond before becoming involved in prize promotions again and to pay $65,000 each in redress. The order with Kenneth Nelson requires him to pay $1,000 in redress. The company assets of Publishers Award Bureau have been given to a permanent receiver.
Retail Sales & Marketing (Joseph Hayes and Thelma Hayes, d/b/a); Automated Guest Directories, Inc.
A federal district court issued an order banning Joseph and Thelma Hayes, who did business under the name Retail Sales & Marketing, and Automated Guest Directories from marketing or helping others to market any business venture in the future. The default order was issued after the defendants failed to respond to Commission allegations that they used deceptive claims in marketing their business opportunity, which involved the sale of advertising on directory boards placed in hotel lobbies. The Hayeses, who offered their business opportunities for $30,000, allegedly made false earnings claims and false representations about the location assistance that would be provided to purchasers of the business opportunities. The judgment against the Hayeses and Automated Guest Directories includes a $465,000 judgment for consumer redress, but it is unclear how much can be collected. (Also see Retail Sales & Marketing, page 101).
S.J.A. Society, Inc. (d/b/a Apex Marketing Group, ASC, Atlantic Service Corp., and
Publishers Service); Thomas Alan Blair; Thomas P. Johnson
A telemarketing company and two principals are required to pay $88,000 in consumer redress to settle allegations that they used fraud and deception in their magazine marketing business, in violation of federal laws. The Commission alleged that the defendants told consumers they would receive "prepaid" magazines and sometimes promised prizes or cash during the sales pitch. In fact, the Commission said, S.J.A. billed consumers more than the full cost of the regular magazine subscriptions offered by the publishers and harassed and threatened consumers who tried to cancel orders. The consent order, among other things, bars future misrepresentations about the cost of magazines and the awarding of prizes, provides for accurate disclosures of charges and a 30-day cancellation period, and bars future violations of the Telemarketing Sales Rule and the Fair Debt Collection Practices Act.
Sage Seminars, Inc.; Peggy Ann Davenport; William R. Dempsey
Sage Seminars, a franchisor of opportunities to produce motivational seminars, agreed to settle allegations that it overstated potential earnings and failed to provide required documentation to prospective investors, in violation of the Franchise Rule, and misrepresented that it provided marketing support and assistance in recruiting seminar participants. Under the terms of the order, the two owners/officers of the company are banned from selling or marketing any franchise or similar business venture in the future and from offering employment opportunities for which they charge money. The defendants are also required to pay more than $950,000 for consumer redress to franchise purchasers.
Silver State Western Publishing, Inc. (d/b/a Prime Time Marketing and Prime Time
Publishing); John A. Pieri
Silver State, doing business as Prime Time, and its president agreed to pay $65,000 for consumer redress to settle allegations that they engaged in a deceptive telemarketing prize-promotion scheme. The Commission alleged that the defendants enticed consumers into purchasing "Say No to Drugs" materials or magazines through promises of valuable prizes, which turned out to be worth much less than what consumers paid Prime Time. Under the terms of the order, the defendants are banned from engaging in any telephone premium promotion, prize promotion, or recovery service, and are prohibited from future violations of the Telemarketing Sales Rule.
Sparta Chem, Inc.; Compu-Kleen, Inc.; Dennis J. Saccurato
Two companies and their owner agreed to settle allegations that they used a variety of deceptive practices in their telemarketing operation to get orders for business supplies. The Commission alleged that the defendants claimed that unordered merchandise had been ordered, charged inflated prices, added unauthorized fees, and charged "restocking" and shipping costs when consumers returned unordered goods. The order requires the defendants to pay $305,000 for consumer redress. It also requires Dennis Saccurato to secure a $100,000 performance bond before engaging in any future telemarketing and bars the defendants from the business practices cited, including violations of the Telemarketing Sales Rule.
Student Aid Incorporated; Adel Kovaleva; Raimma Tagiev
Two officers of Student Aid agreed to pay $7,500 to settle allegations in connection with the college scholarship search service they ran. According to the Commission, the respondents charged an upfront fee for "guaranteed" scholarship or grant money, but consumers almost never obtained the promised money and could not receive refunds of their fees without meeting onerous conditions. The consent order bars the respondents from misrepresenting any similar service they offer in the future, requires them to disclose all terms and conditions of any refund policy, and prohibits them from withdrawing money from consumers' accounts without authorization, among other prohibited conduct.
Student Assistance Services, Inc.; Fred Markowitz; Donald McGovern
The Commission negotiated an agreement with Student Assistance and two individuals, who ran an alleged scholarship search service scam. According to the Commission, the defendants solicited high school and college students and charged an upfront fee for their services, but provided nothing at all or a list of sources for financial aid that students had to apply to on their own. In addition, the defendants allegedly misrepresented their refund policy. The settlement requires the payment of approximately $340,000 into a refund pool for consumer redress, bans the defendants from ever selling scholarship-related services again, requires each individual defendant to post a $75,000 bond before engaging in any telemarketing activity, and prohibits them from violating the Telemarketing Sales Rule in the future.
Thadow, Inc.; Alex Norman
Thadow and its president agreed to pay $130,000 for consumer redress as part of a settlement of allegations arising from their roles in an allegedly fraudulent "telefunding" scheme. The Commission alleged that the defendants telephoned elderly consumers to whom previous telemarketers had promised valuable prizes, told them that the prizes would be delivered in return for a purportedly tax-deductible charitable donation, and falsely claimed that the value of the prize greatly exceeded the amount of the donation. The order prohibits the defendants from engaging in future misrepresentations in connection with soliciting charitable donations or payments in return for prizes or awards and any other misrepresentations regarding any material aspect of any future telemarketing or telefunding activity.
Thornton Communications, Inc.; Thomas E. Thornton
Thornton Communications and its owner are required to pay $8,000 in consumer redress to settle Commission allegations that they ran a fraudulent advance-fee credit card mill. According to the Commission, the defendants offered unsecured credit card accounts and charged a $100 processing fee, but few consumers, if any, received the promised card. In addition to requiring the redress payment, the settlement bars future misrepresentations and violations of the Telemarketing Sales Rule.
Tower Cleaning Systems, Inc.; David A. Gansky
Tower Cleaning, which has commercial janitorial franchisees in 11 states, agreed to pay $50,000 for consumer redress to settle allegations that it made inflated earnings claims to potential franchisees, did not provide critical information, and refused in numerous instances to refund fees or deposits. The order prohibits the company and its president from misrepresenting the sales volume or income of franchisees and from violating the Franchise Rule in connection with future efforts to market commercial janitorial services or any other franchises.
Universal Credit Corporation (Gabrielle Ellis and Mark Thomas Ellis, d/b/a)
Gabrielle and Mark Ellis are required to pay $50,000 for consumer redress as part of a settlement of allegations in connection with their credit repair business. The Commission alleged that the Ellises, doing business under the name Universal Credit, misrepresented their ability to remove negative information from credit reports and debited consumers' checking accounts without authorization. The order also requires the Ellises to post a $250,000 performance bond before engaging in any telemarketing activities in the future, permanently bans them from performing credit repair services or selling credit repair products, and prohibits them from violating the Telemarketing Sales Rule.
USA Channel Systems, Inc.; Two-Way Systems, Inc.; Charles Bernard Bayne; Rick Havil
The Commission negotiated settlements with two individuals and two firms that they ran as a single business enterprise, resolving allegations that the defendants understated the risks and overstated the potential profits to investors in paging licenses issued by the Federal Communications Commission (FCC). The settlement with Rick Havil requires him to pay $65,000 for consumer redress. The settlement with Charles Bayne and the two corporate defendants imposes a $50,000 judgment against Bayne and a $50,000 judgment against the two companies. Both orders prohibit the defendants from making a variety of false claims in connection with FCC licenses or any telemarketed product or service and require Havil and Bayne each to post a $250,000 performance bond before engaging in telemarketing again.
USA Credit Services; Steven Spence
USA Credit and its president agreed to settle Commission allegations that claims about their "credit repair" capability were false. According to the Commission, Steven Spence claimed he could remove negative information from consumers' credit reports, even if the information was accurate; in addition, he sought payment for services before they were rendered, a violation of the Telemarketing Sales Rule. The settlement requires Spence to pay $265,395 in consumer redress, bars him from deceptive practices, and requires him to provide customers with information on their rights and remedies under the Fair Credit Reporting Act.
Windward Marketing, Ltd.; Genesis Marketing and Administration, Inc.; Philip Edward
Dill; Ronald Jay Pepper
The Commission reached settlements with two companies and their owners in connection with allegations about their roles in a magazine subscription scheme involving a group of telemarketers. According to the Commission, Genesis telephoned consumers and used a variety of deceptive claims, including promising valuable prizes, to get information about consumers' bank accounts. Windward then allegedly made deceptive "verification" calls and used the information to process unauthorized debits of consumers' bank accounts. In both settlements, the corporate defendants are required to relinquish their rights to frozen assets that are to be used for consumer redress, the full amount of which is $13 million. The order with Genesis and Philip Dill requires them to relinquish approximately $60,000 for consumer redress, and the second order requires Windward and Ronald Pepper to relinquish $25,000. The orders prohibit the defendants from debiting consumers' checking accounts without advance written approval and permanently ban Dill, Pepper, and Windward from any future telemarketing activities.
World Class Network, Inc.; Howard K. Cooper; Daniel R. Dimacale; Denise L.
Dimacale; Robert C.K. Lee
World Class Network, a multilevel marketer of travel agency credentials and a work-at-home travel agency business opportunity, and four company officers agreed to pay more than $3 million into a consumer redress fund to provide refunds for the more than 51,000 consumers who purchased the defendants' travel tutorial kit. The Commission alleged that the defendants misrepresented the discounts and earnings available through the tutorial kit. The settlement bars the defendants from operating any type of pyramid or multilevel marketing scheme for travel-related business opportunities in the future, requires them to provide a full refund policy and "cooling off" period in connection with sales of any travel tutorials, and bars misrepresentations of earnings claims and travel benefits. The order requires redress as follows: World Class Network, $800,000; Howard Cooper, $50,000; Daniel and Denise Dimacale, $1,702,000; Robert Lee, $450,000.
Worldwide Marketing and Distribution Company, Inc. (d/b/a Hollywood Pop); Mammoth
Holding Corporation; Planet Ice Cream, Inc.; Popcorn Flavors International Inc.; Popcorn
Supply Company, Inc.; Remote Assembly Corporation; Royal Imperial Ltd., Inc.; Sutton
Group of Palm Beach, Inc.; Titan Management Corporation; Frank Friedland; Steven F.
Nine corporations and two individuals agreed to pay approximately $1.4 million for consumer redress to settle allegations of business opportunity fraud. The Commission alleged that Frank Friedland, Steven Gelb, and two other individual defendants, through a web of corporations, made numerous misrepresentations in marketing their business opportunities involving popcorn vending machines. They also allegedly failed to give potential investors pre-sale disclosures about their business opportunities and documentation to support claimed earnings, as required by the Franchise Rule. The order permanently removes Friedland and Gelb as officers of the defendant corporations; it requires Friedland to pay $45,500 for redress and Gelb to pay $64,000, which will be added to other assets in control of the court-appointed receiver. The order also prohibits the defendants from future violations of the Rule and from making false statements or misrepresentations in the sale of any telemarketed product, service, or investment opportunity.
Worldwide Wallcoverings and Blinds, Inc.; Martha Kazak; Bruce Sears
The Commission obtained a final judgment against Worldwide and a settlement with its principals in connection with allegations that the company, which advertised discount wallpaper and blinds in national magazines, defrauded thousands of consumers by, in many instances, simply pocketing their money and not shipping any merchandise at all. Both settlements prohibit the defendants from misrepresenting any fact material to a consumer's decision to purchase from them, and from violating the Mail or Telephone Order Merchandise Rule. The agreement with the two individuals permanently bans Bruce Sears from the mail order industry and requires him to pay the proceeds of the sale of his boat as consumer redress. It requires Martha Kazak to pay $3,000 for consumer redress. The judgment against Worldwide requires the company to pay more than $447,600 for consumer redress, although it is unlikely that there will be any funds available to pay the judgment