9723149
B258752

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION

In the Matter of

LS ENTERPRISES, LLC, a limited liability company, also doing business as FREEPROMO.COM, ENTERPRISE PUBLICATIONS, and LRS PUBLICATIONS, and INTERNET PROMOTIONS, LLC, a limited liability company, also doing business as CYBERPROMOTERS.COM, and LOUIS SALATTO, individually and as the principal member of the limited liability companies.

DOCKET NO. C-3884

COMPLAINT

The Federal Trade Commission, having reason to believe that LS Enterprises, LLC, a limited liability company, also doing business as Freepromo.com, Enterprise Publications, and LRS Publications; Internet Promotions, LLC, a limited liability company, also doing business as Cyberpromoters.com; and Louis Salatto, individually and as the principal member of the limited liability companies ("respondents"), have violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that this proceeding is in the public interest, alleges:

1. Respondent LS Enterprises, LLC is a Connecticut limited liability company with its principal office or place of business at 1204 Main Street, Suite 380, Branford, Connecticut 06405.

2. Respondent Internet Promotions, LLC is a Connecticut limited liability company with its principal office or place of business at 1204 Main Street, Suite 380, Branford, Connecticut 06405.

3. Respondent Louis Salatto is the principal member of LS Enterprises, LLC and Internet Promotions, LLC. Individually or in concert with others, he formulates, directs, or controls the policies, acts, or practices of the companies, including the acts or practices alleged in this complaint. His place of residence is 13 Branhaven Drive, East Haven, Connecticut 06513.

4. Respondents have advertised, offered for sale, sold, and distributed products and services to the public, including: a service whereby respondents will assist in disseminating unsolicited commercial electronic mail ("E-Mail") on behalf of other companies or individuals who are trying to sell their own products or services; software and mailing lists that would enable other companies or individuals to send their own unsolicited commercial E-Mail; and various business opportunities and work-at-home opportunities offered for sale by respondents via unsolicited commercial E-Mail or postings on Internet newsgroups. Newsgroups are a collection of topic groups and discussion fora on the Usenet portion of the Internet where users can post messages to be read by the general public, and where others can post responses to particular messages.

5. The acts and practices of respondents alleged in this complaint have been in or affecting commerce, as "commerce" is defined in Section 4 of the Federal Trade Commission Act.

UNSOLICITED COMMERCIAL E-MAIL PRODUCTS AND SERVICES

6. Respondents have disseminated or have caused to be disseminated advertisements for unsolicited commercial E-Mail products and services, including but not necessarily limited to the attached Exhibits A through D that were disseminated via unsolicited commercial E-Mail, postings on Internet newsgroups, or the World Wide Web. These advertisements contain the following statements:

A. "Bulk E-Mail I[nternet] S[ervice] P[rovider] http:www.freepromo.com/isp.htm

High Speed E-Mail Relay Network . . .

NOW AVAILABLE!

. . . .

LS Enterprises is now presenting THREE new technologies that will only work properly if used all together. The first technology can CHANGE THE MESSAGE-ID **BEFORE** your emails leave your computer! The second technology allows you to send OVER 150,000 EMAILS AN HOUR - with a single computer and modem - and the third technology will relay your email messages through LS Enterprises [sic] *OWN* PROPRIETARY HIGH-SPEED RELAY NETWORK, WITHOUT IDENTIFYING THE DOMAIN NAME OR IP ADDRESS OF THE ORIGIN!

. . . .

You can make the same fortunes that many other online marketers are making the hard way! . . .

Well, if this package sold for $8,000 . . . you would probably be smart enough to spend that money on 'Cyber-Bomber,' knowing that you will make it right back in the next couple of *days*. . . . The bottom line is that LS Enterprises is offering the full 'Cyber-Bomber' package for only $1,495. This will be the best investment you will make this year - guaranteed. It's hard to put a value on what you will receive, but it would be fair to say that this technology can help make you thousands or even millions - this year! This is what you will receive when you order 'Cyber-Bomber':

. . . .

* Unlimited exclusive-direct-access to LS Enterprises [sic] own dedicated high-speed relay network that will relay your email to its final destination, and cloak the originating domain name and IP address of your local dialup provider, leaving absolutely no trace to your origin." (Exhibit A).

B. "27,000,000 Email Addresses

Plus 12 Bonuses . . .

All For Only $295!

EARN INSANE PROFITS WITH THE RIGHT FORMULA

. . . .

You can literally make a fortune by just sending out email and the best part is that you will pay nothing to do so. All you need is an internet connection that you can find for as little as $19 per month. . . .

LS Enterprises has been in the online marketing business for over 7 years. We have helped many individuals succeed in marketing their product effectively. It's very simple to do. In fact, soon you will have the problem of what to do with all the cash you will make from sending out bulk email.

Here is just one of many true success stories we have seen . . .

We did a mailing of 1 million emails for one of our customers. He was selling a home workers manual for $29.95. His results are very typical and scary. He took in over 700 orders! 700 x $29.95 = $20,000. This gentleman was so amazed, that after being skeptical, it had really happened to him, he made it, he found a niche. That niche was email! He went on to buy our full list and will be set for life in less than a years time. All this from selling a manual via email.

That was just one of the many success stories we hear everyday. It may all sound to [sic] good to be true. Well, we can tell you this. It really does work. Why else are there so many individuals doing it? They are not just wasting their time. They are all making mega bucks." (Exhibit B).

C. "Bulk Email Services

. . . .

The Demographic Breakdown for our [mailing] list of 300,000 [bulk e-mail] recipients, include only business people and opportunity seekers. All recipients are located in the United States and are interested in receiving emails from other businesses. Recent research reveals that approximately 90% of our recipients are small business owners or opportunity seekers. The remaining 10% of our list is comprised of medium to large corporations. . . . These types of individuals have proven to be most receptive to internet marketing." (Exhibit C).

D. "The Truths about Bulk Email

. . . .

Our Recipient List

Our recipient list is over 27,000,000 and continuously growing. It is made up of mainly small business owners and individuals that would be categorized as opportunity seekers. Experience has shown that these types of recipients are the most responsive to this form of marketing." (Exhibit D).

7. Through the means described in Paragraph 6, respondents have represented, expressly or by implication, that:

A. Respondents act as an E-Mail Internet Service Provider, maintaining their own proprietary high speed E-Mail relay network through which unsolicited commercial E-mail can be transmitted.

B. Respondents sent out 1.5 million unsolicited commercial E-Mails on behalf of one customer who was selling a home worker's manual for $29.95 each, and this customer took in over 700 orders as a result of this one mailing, earning $20,000.

8. In truth and in fact:

A. Respondents do not act as an E-Mail Internet Service Provider, and do not maintain their own proprietary high speed E-Mail relay network through which unsolicited commercial E-mail can be transmitted. Rather, respondents can arrange for purchasers to have their unsolicited commercial E-mail transmitted through actual Internet Service Providers.

B. Respondents did not send out 1.5 million unsolicited commercial E-Mails on behalf of one customer who was selling a home worker's manual for $29.95 each, and who then took in over 700 orders as a result of this one mailing, earning $20,000. The representation set forth in Paragraph 7(B) does not reflect the actual experience of any customer of respondents.

Therefore, the representations set forth in Paragraph 7 were, and are, false or misleading.

9. Through the means described in Paragraph 6, respondents have represented, expressly or by implication, that:

A. Purchasers of respondents' unsolicited commercial E-Mail products and services can reasonably expect to achieve a specific level of earnings, income, or sales, such as: sales of 700 products and profits of $20,000 for each one-time sending of bulk unsolicited commercial E-Mail; earnings of millions of dollars per year; or recouping an investment of up to $8,000 within a matter of days.

B. Most or all of the recipients on respondents' E-Mail recipient lists have been identified as small business owners and individuals categorized as opportunity seekers who are interested in receiving unsolicited commercial E-Mail.

10. In truth and in fact:

A. Few if any purchasers attain the specific level of earnings, income, or sales represented by respondents.

B. Few if any of the recipients on respondents' E-Mail recipient lists have been identified as small business owners and individuals categorized as opportunity seekers who are interested in receiving unsolicited commercial E-Mail.

Therefore, the representations set forth in Paragraph 9 were, and are, false or misleading.

11. Through the means described in Paragraph 6, respondents have represented, expressly or by implication, that they possessed and relied upon a reasonable basis that substantiated the representations set forth in Paragraph 9, at the time the representations were made.

12. In truth and in fact, respondents did not possess and rely upon a reasonable basis that substantiated the representations set forth in Paragraph 9, at the time the representations were made. Therefore, the representation set forth in Paragraph 11 was, and is, false or misleading.

WORK-AT-HOME OPPORTUNITIES AND BUSINESS OPPORTUNITIES

Mystery Shopper Promotion

13. Respondents have disseminated or have caused to be disseminated advertisements for a work-at-home opportunity as a "mystery shopper," i.e., someone who is hired by companies to shop in their stores or places of business and then report back on the shopping experience, including but not necessarily limited to the attached Exhibit E that was disseminated via unsolicited commercial E-Mail and postings on Internet newsgroups. This advertisement contains the following statements:

"Subject: $ JOBS $

. . . .

GET PAID TO SHOP AND RECEIVE FREE MERCHANDISE!

. . . .

[Y]ou can easily make $300 - $600 part-time in your area.

. . . .

You are guaranteed to find a position in your local area and we will make sure this dream comes true for you. In fact, we are the #1 company in connecting people just like you with the right contacts. You can earn up to $24 per hour and bring home Free Merchandise every time you go shopping. Items such as Food, Clothing, Appliances, Electronics and much more. In addition, you will even receive coupons worth hundreds of dollars in free stuff.

Help solve your money problems! If you already have a job, you can still work part-time and earn a hefty pay check each week, or if you want a full-time job and want to earn $600 to $1000 or more per week, then this could be for you. You can take as many shopping assignments as you desire. You can also turn down assignments if you wish, without losing your job. Basically you work when you want and for whoever you want. We will make sure you have as many assignments as you need.

. . . .

[M]ajor corporations ask contractors such as ourselves, to hire people like you to do this simple work.

Where [sic] not the only contractor. There are hundreds of contractors and each one has thousands of assignments they need to give to somebody, why not let that somebody be you. In addition to our service, you will be given a 25 page manual that will include over one hundred contractors['] [n]ames, [p]hone [n]umbers, and addresses so you can get in touch with them for more assignments. You can work for as many contractors as you like and for as long as you like. You can even make a career out of Mystery Shopping!

. . . .

In addition, you will be entered into our Nationwide Database, so when there is [sic] extra "shops" in your area, you will be contacted in advance to see if you can fit them in your schedule.

. . . .

You never have to pay any money for the merchandise [that you purchase during a shopping assignment]. You will be given Vouchers or Free Coupons to make sure you don't spend one single penny of your own cash. In other words, you pick out the merchandise, totaling a certain amount, usually $25 to $75 worth of merchandise. The company pays for it . . . . and you get to keep it! This of course, is in addition to making upwards of $24 per hour.

There is a one time refundable fee of $29.00 to get started. This is a small fee indeed! This one-time refundable fee is to ensure us that you are serious about Mystery Shopping. We are looking for serious people and this is a good way to weed out the people who just are not serious.

60 Day No Risk Trial! We have helped thousands of people get started Mystery Shopping. Let us help you. Try Mystery Shopping for 60 days and if it's not for you, we will promptly refund your $29[.] Guaranteed!

In order to get started, just [p]rint out the form below and fill in the necessary information. [S]end it to us along with your check or money order and then wait 3 to 7 days to hear from us. Also, upon receiving your form, [W]e will [r]ush the Professional Mystery Shopping Guide to you the same day. This is the guide that contains the Mystery Shopping contractors in your area and will be waiting to hear from you.

This is a one time offer and will never be repeated. You must act right now and let us hear from you today. When we receive your profile form below[,] [y]ou can begin Mystery Shopping. You will then be able to take on as many assignments as you desire and work for as long as you wish, with no obligation to us." (Exhibit E).

14. Through the means described in Paragraph 13, respondents have represented, expressly or by implication, that:

A. Respondents act as contractors for major corporations to hire consumers to work as "mystery shoppers," and have hired thousands of consumers to work as "mystery shoppers."

B. Respondents have actual job openings for "mystery shoppers" all over the country, and consumers who respond to respondents' "mystery shopper" promotion will be given as many "mystery shopper" assignments from respondents as they want or need.

15. In truth and in fact:

A. Respondents do not act as contractors for major corporations to hire consumers to work as "mystery shoppers," and have not hired thousands of consumers to work as "mystery shoppers." Rather, respondents do nothing more than sell a manual known as the "Guide to Professional Mystery Shopping."

B. Respondents do not have actual job openings for "mystery shoppers" all over the country, and consumers who respond to respondents' "mystery shopper" promotion will not be given as many "mystery shopper" assignments from respondents as they want or need. Rather, respondents do nothing more than sell a manual known as the "Guide to Professional Mystery Shopping."

Therefore, the representations set forth in Paragraph 14 were, and are, false or misleading.

16. Through the means described in Paragraph 13, respondents have represented, expressly or by implication, that:

A. Consumers who respond to respondents' "mystery shopper" promotion can reasonably expect to achieve a specific level of earnings, such as $300 to $600 per week part time, $600 to $1000 or more per week full time, or up to $24 per hour.

B. Consumers who respond to respondents' "mystery shopper" promotion will always receive for free all merchandise purchased during "mystery shopper" assignments.

17. In truth and in fact:

A. Few if any consumers who respond to respondents' "mystery shopper" promotion attain the specific level of earnings represented by respondents.

B. Consumers who respond to respondents' "mystery shopper" promotion may not always receive for free all merchandise purchased during "mystery shopper" assignments. Whether consumers receive any free merchandise, and the types of merchandise they may receive, depend on the policies of companies who actually hire and use "mystery shoppers."

Therefore, the representations set forth in Paragraph 16 were, and are, false or misleading.

18. Through the means described in Paragraph 13, respondents have represented, expressly or by implication, that they possessed and relied upon a reasonable basis that substantiated the representations set forth in Paragraph 16, at the time the representations were made.

19. In truth and in fact, respondents did not possess and rely upon a reasonable basis that substantiated the representations set forth in Paragraph 16, at the time the representations were made. Therefore, the representation set forth in Paragraph 18 was, and is, false or misleading.

General Work-At-Home Opportunities

20. Respondents have disseminated or have caused to be disseminated advertisements for general work-at-home opportunities, including but not necessarily limited to the attached Exhibit F that was disseminated via unsolicited commercial E-Mail and postings on Internet newsgroups. This advertisement contains the following statements:

"Subject: MAKE EXTRA CASH AT HOME!

. . . .

****WORK IN THE COMFORT OF YOUR OWN HOME****

***WIDE SELECTION OF JOBS . . . TOP PAY***

**REAL JOBS WITH REAL COMPANIES**

Plus receive your very own 'Computer Cash Disk' . . FREE!

Every day thousands of people just like you are getting started working at home in fields of computer work, sewing, assembling products, crafts, processing coupons, typing, telephone work and much more!

WHO ARE HOME WORKERS?

They are regular ordinary people who earn an excellent living working at their own pace and make their own hours. They are fortunate people who have found an easier way to make a living. They had absolutely no prior experience in this field. They earn several hundred dollars weekly in the comfort of their own home and you can be next!

Companies all over the United States want to hire you as an independent home worker.

. . . .

$$$$ EASY EXTRA INCOME AT HOME $$$$

All business can be done by Mail or phone. You can START THE SAME DAY you receive the 'Guide to Genuine Home Employment.'

Start Receiving Money in about two [w]eeks and every week from then on for as long as you desire.

**ONLY REAL COMPANIES OFFERING REAL JOBS!

The companies in our guide are legitimate and really need home workers. There is [sic] over one hundred of the top companies included in our guide offering an opportunity for you to make extra income at home. Unlike other insulting booklets or lists you may see, our guide only includes up to date information of companies who pay top dollar for your services and will hire you. . [. . ] GUARANTEED!

. . . .

You are guaranteed to find home based work in our guide. . [. .] No Problem!

. . . .

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

This is an opportunity for you to become an independent HOME WORKER. remember, this is not a get-rich-quick-scheme. It is an easy way for you to [e]arn [m]oney while filling the needs of a company who needs you.

. . . .

We helped thousands of people like yourself get started working at home. You can be next!

THINK WHAT AN EXTRA $300, $700 OR MORE A WEEK COULD DO FOR YOU AND LET US HEAR FROM YOU TODAY!

THIS COULD EASILY CHANGE YOUR LIFE FOREVER!

DON'T LET THIS EXTRAORDINARY OPPORTUNITY PASS!! THESE OPPORTUNITIES ARE PROFITABLE AND EASY . . . ACT NOW!!!!!!

. . . .

Send Check or Money-Order for $29.95 [t]o:

LRS PUBLICATIONS." (Exhibit F).

21. Through the means described in Paragraph 20, respondents have represented, expressly or by implication, that respondents have helped thousands of consumers to find home-based work.

22. In truth and in fact, respondents have not helped thousands of consumers to find home-based work. Respondents sell a home workers' manual that contains tips for finding home-based work and a list of companies that may be hiring home workers. Respondents have sold fewer than 200 of these manuals. Therefore, the representation set forth in Paragraph 21 was, and is, false or misleading.

23. Through the means described in Paragraph 20, respondents have represented, expressly or by implication, that:

A. Consumers who purchase respondents' "Guide to Genuine Home Employment" can reasonably expect to achieve a specific level of earnings, such as $300 to $700 or more per week.

B. Consumers who purchase respondents' "Guide to Genuine Home Employment" can start working at home the same day they receive the guide, will start receiving earnings within two weeks of receiving the guide, and will continue to receive earnings every week thereafter for as long as they want to continue working at home.

24. In truth and in fact:

A. Few if any purchasers attain the specific level of earnings represented by respondents.

B. Few if any purchasers can start working at home the same day they receive the guide, will start receiving earnings within two weeks of receiving the guide, or will continue to receive earnings every week thereafter for as long as they want to continue working at home.

Therefore, the representations set forth in Paragraph 23 were, and are, false or misleading.

25. Through the means described in Paragraph 20, respondents have represented, expressly or by implication, that they possessed and relied upon a reasonable basis that substantiated the representations set forth in Paragraph 23, at the time the representations were made.

26. In truth and in fact, respondents did not possess and rely upon a reasonable basis that substantiated the representations set forth in Paragraph 23, at the time the representations were made. Therefore, the representation set forth in Paragraph 25 was, and is, false or misleading.

Sale of Distribution Rights to Consumer Manuals

27. Respondents have disseminated or have caused to be disseminated advertisements for a business opportunity or work-at-home opportunity involving making money through the reproduction and distribution of various consumer manuals, including but not necessarily limited to the attached Exhibit G that was disseminated via unsolicited commercial E-Mail and postings on Internet newsgroups. This advertisement contains the following statements:

"Subject: Open . . . . . NOW!!!

. . . .

FOR SALE!

My Multi-Million Dollar

Publishing Company - $199.

If you ever wanted 'the easy way out' to make a lot of money with a business of your own. . . Here is the easiest way to start!

. . . .

For the past five years or so. . . I've been running small, inexpensive ads in the back of many large National magazines and the Internet. These ads were always small and very cheap. . . On [sic] these ads I've been selling little manuals. These manuals sold from $14.95 - $49.95 each. I always ran a different ad for each manual I was selling.

I have collected the reprint rights to 15 different HOT SELLING manuals on topics that consumers really need. . . . [I]t is very cheap to produce HOW-TO manuals. It usually costs me about 40 cents to produce each manual that I get to sell for as much as $49.95. That s [sic] one hell of a mark-up.

Anyway, I've been selling these 15 manuals with little, cheap ads in the back of National Magazines and on the Internet for the past five years or so. . . Each manual brings me about $2000 - $4000 per week - PER AD. . . . This is big money stuff. . . A very lucrative business to be in.

Well this is where the unbelievable offer comes in. . . I hope your [sic] sitting down for this one. . . because it is a once in a lifetime offer to you. I do not know of any easier way for you to become financially independent. . . In fact THEIR [sic] IS NO EASIER WAY!!! . . . Since I m [sic] so busy selling my best-selling HOW-TO business books nowadays. . . I do not have the time to service these ads. . . It s [sic] just that I really can t [sic] find the time to have all the orders taken care of in a timely fashion.

. . . .

[L]ike I was saying $2000 to $4000 per week per advertisement. There are 15 different manuals. . . and there are several hundreds of magazines to run these little ads in.

. . . .

I m [sic] willing to sell you the entire set of reprint rights to all 15 of these manuals on a 3 1\2 [sic] floppy disk . . . I m [sic] also willing to give you the rough drafts of the actual ads that sold these manuals!!! (all you have to do is have them copied. You can do it yourself - or you can take them all to a local copy shop. . . this is why I say Push One Button And Start Your Own Million Dollar Publishing Company).

. . . .

Remember these are PROVEN winners.

. . . .

One of the manuals in this kit sold $4,000,000 worth by a Florida man named M. Zboch. Now, I got the reprint rights. . . and I ll [sic] sell them to you. . . If your [sic] wondering how much this will cost you. . . Think about it for a minute. There are 15 different manuals that can make you $3000 per week - each manual. . . That equals $45,000 per week if you placed an ad in one magazine. . . Now there are thousands of magazines and newspapers out there. . . You can place these ads in more magazines as you make more money. . . You can also sell them through direct mail. . .

. . . .

[Y]ou get to make a ton of money off these manuals, for as long as you wish. . . .

All I ask for is this. . . $199.00 and I'll include RUSH shipping for free! . . . But there is only one drawback. . . I will only allow 200 sets of my Publishing Company In A Box to be sold. It won t [sic] make much sense if I sold the kit to 1000 or 2000 people. . . the market would be saturated with the same manuals. . . and I don't want that. To make sure the same people who invest in this offer get the same results I got in the past 5 years. . . Only 200 people can have it for $199.00.

. . . .

And anyone who gets their check in to me late. . . I ll [sic] simply send it back un-cashed. . . . For only $199.00 I m [sic] going to let you in on the easiest money you ll [sic] ever make. YOU DO NOT HAVE TO DO ANYTHING!! The ads are done. The manuals are all written. The printer will print the manuals for about 40 cents. . . All you have to do is place the ads and your [sic] set. . . Push one button today! Rush me your payment of $199.00 right now. . . and get your very own MILLION-DOLLAR publishing company going!

. . . .

Sincerely,

Louis Salatto
Owner Enterprise Publications." (Exhibit G).

28. Through the means described in Paragraph 27, respondents have represented, expressly or by implication, that respondents have been selling the consumer manuals referred to in Paragraph 27 for five years preceding the dissemination of the advertisement(s) referred to in Paragraph 27, and that the experiences related in Paragraph 27 are those of respondents over that five year period.

29. In truth and in fact, respondents have not been selling the consumer manuals referred to in Paragraph 27 for five years preceding the dissemination of the advertisement(s) referred to in Paragraph 27, and the experiences related in Paragraph 27 are not the actual experiences of respondents over that five year period. Rather, respondents began selling the consumer manuals referred to in Paragraph 27 no earlier than March 1996, and began disseminating the advertisement(s) referred to in Paragraph 27 shortly thereafter. Therefore, the representations set forth in Paragraph 28 were, and are, false or misleading.

30. Through the means described in Paragraph 27, respondents have represented, expressly or by implication, that consumers who purchase from respondents the right to reproduce and distribute various consumer manuals can reasonably expect to achieve a specific level of earnings, such as $2,000 to $4,000 per week for each individual advertisement promoting a single manual, $45,000 per week for 15 individual advertisements promoting each of 15 different manuals, $4,000,000 overall for one particular manual, or millions of dollars each year.

31. In truth and in fact, few if any purchasers attain the specific level of earnings represented by respondents. Therefore, the representations set forth in Paragraph 30 were, and are, false or misleading.

32. Through the means described in Paragraph 27, respondents have represented, expressly or by implication, that they possessed and relied upon a reasonable basis that substantiated the representations set forth in Paragraph 30, at the time the representations were made.

33. In truth and in fact, respondents did not possess and rely upon a reasonable basis that substantiated the representations set forth in Paragraph 30, at the time the representations were made. Therefore, the representation set forth in Paragraph 32 was, and is, false or misleading.

34. The acts and practices of respondents as alleged in this complaint constitute unfair or deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act.

THEREFORE, the Federal Trade Commission this thirteenth day of July, 1999, has issued this complaint against respondents.

By the Commission.

Donald S. Clark
Secretary

SEAL: