Background on Contempt

By the close of the refund claims period, over 9,500 consumers had requested over $5 million in refunds. (This is in addition to the $2.3 million returned to consumers whose checks had never been deposited by Fortuna.) Unfortunately, there was only about $3.1 million in the redress fund. The Redress Contractor has had to hold up paying any refund claims because it does not have enough money to pay them all in full. (For information about how Fortuna's delays in providing information and its challenges to refund claims also delayed the refund program, see Refund delays.)

On October 30, 1997, the FTC asked the federal court to find Fortuna and its principals in contempt for violating the Final Order. The FTC charged that Fortuna had failed to pay a $2 million deficiency in the redress fund. The FTC asked the court to allow the Redress Contractor to make partial payments immediately.

The FTC contempt action also charged that Fortuna, its principals, and its attorney, Robert Sailer, have misrepresented the meaning and effect of the settlement. For example, and contrary to their claims, Fortuna was not "cleared" of any of the charges against it, nor were the charges dismissed. Finally, the FTC charged that Fortuna had violated the Final Order by withholding various documents it was obliged to provide.

The court held hearings on December 4 and 17, 1997. While it denied the FTC's request to hold defendants and Mr. Sailer in contempt, it did find that the FTC had submitted sufficient evidence to warrant entry of a order requiring compliance with the Final Order. That compliance order includes the most important relief sought by the FTC.