Reality dating shows and FTC enforcement (really)

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A participant on a reality dating show who doesn’t tell the truth? So what’s new. A participant on a reality dating show who is a defendant in an FTC action and doesn’t tell the truth in a sworn financial statement? That’s a different story.

In 2014 the FTC sued Vito Glazers and his company, CPATank, for their role in a massive spam text message operation deceptively pitching websites offering “free” prizes and gift cards. Consumers got texts that said things like “Dear Walmart shopper, your purchase last month won a $1000 gift card, go to [website] within 24 hours to claim.” Most consumers ended up with zilch. One of the only “winners” was Vito Glazers, who served as an intermediary between the companies running those sites and networks of affiliate marketers who touted the bogus offers to unsuspecting consumers.

In addition to broad injunctive relief, the order in that case imposed a $200,000 judgment against Glazers. He filed a sworn financial statement that purported to show he couldn’t pay more than $20,000. Among other things, the financial statement required Glazers to disclose all of his assets and liabilities, as well as any transfer of assets in excess of $5,000 within the past five years. He revealed only one: $15,000 to “Sally Mae [sic]” for “Ex-girlfriend, Paid off Car.”

Of course, this wasn’t the FTC’s first date with defendants who plead poverty when it’s time to return money to defrauded consumers. So the FTC spelled out that its agreement to suspend the remaining portion of the judgment was “expressly premised upon the truthfulness, accuracy, and completeness” of Glazers’ financial statement. The FTC also insisted on an avalanche clause – a provision that allows the FTC to ask the Court to lift the suspension and enter the full judgment against a defendant who misstated or omitted material financial information.

What’s that rumbling you hear? It’s the thundering sound of an avalanche. Alleging that Glazers’ financial statement was untruthful, inaccurate, and incomplete, the FTC asked the Court to lift the partial suspension of judgment.

According to the FTC, Glazers failed to disclose a bank account maintained by a company he set up just to hold his assets, Solomon Assets LLC, that received a $524,388 wire transfer in 2012. After making several five-figure withdrawals in early 2013, Glazers withdrew another $400,000 in June of that year. (He even signed a notarized letter absolving the bank of any liability since he took the money out in cash.) The bank then informed Glazers it was closing his account. He authorized that remaining funds be paid via cashier’s check to – guess who? – Solomon Assets LLC. Connect the dots and it means that Glazers withdrew more than $447,000 while negotiating the FTC settlement and falsely pleading poverty.

That’s not all he was up to at the time. Glazers was preparing to appear on a reality dating show called “Mystery Millionaire.” Given his experience with financial deception, the premise of the program seems appropriate. The show portrayed Glazers as the millionaire owner of an advertising company who pretends to be penniless on a series of first dates and then ultimately reveals himself to be rolling in dough. Oh, the irony.

To settle the case, Glazers will turn over $180,000 to the FTC – meaning he will have to pay every dollar of the $200,000 judgment.

We won’t speculate on Section 5’s applicability to deceptive claims conveyed on first dates. But the settlement with Glazers serves as a reminder that it’s a really bad idea to make misleading representations to consumers – and it’s an equally lousy idea to make them in a sworn financial statement submitted to the FTC.

 

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