Defendants in two separate cases filed in federal district court as part of "Operation Misprint" have agreed to settle Federal Trade Commission charges. In both cases, the FTC alleged that the defendants shipped and billed consumers for unordered office supplies. In separate settlements, David Moreno, doing business as Continental Business Systems and United Products; and International Business Network, Inc., and its principals, Danny Yahalom and Oren Ben Elkanah, will be permanently banned from engaging in telemarketing and selling of office supplies. Each settlement also includes a monetary judgment for consumer redress.
In December 1999, the FTC announced "Operation Misprint"-- a multi-agency effort to crack down on bogus office and maintenance supply telemarketing schemes that targeted large and small businesses and non-profit organizations. In "Operation Misprint," the Commission alleged that the defendants duped their victims into accepting and paying for shipments of unordered merchandise. The complaints against defendants David Moreno and International Business Network alleged that they violated the FTC Act and the Telemarketing Sales Rule (TSR).
The proposed settlements announced today, which require each court's approval, would prohibit the defendants from engaging in violations of the FTC Act and TSR. Specifically, the defendants would be prohibited from:
- shipping unordered goods;
- billing for unordered goods, and
- misrepresenting the purpose of telemarketing calls, or that a person had ordered the supplies the defendant had shipped, or that consumers have an obligation to pay for merchandise they did not order.
David Moreno, doing business as Continental Business Systems, d/b/a United Products
According to the FTC, David Moreno and his companies, based in Huntington Park, California, used deceptive tactics in order to get businesses to pay for the supplies he sent to them. He falsely represented that he was the businesses' regular toner supplier and that they had ordered the toner he had shipped and/or billed them for. In addition, the complaint alleged that Moreno and his telemarketers failed to disclose the sales purpose of their calls and Moreno's identity when they initially contacted the companies. The settlement announced today resolves the case.
The proposed settlement with Moreno would permanently ban him from participating in or assisting others in the sale or distribution of nondurable office supplies in the absence of face-to-face contact with the consumer prior to consummation of the transaction, and further ban him from engaging in the telemarketing of any product or service. In addition, the receiver would be required to turn over to the FTC all remaining funds in the receivership estate (approximately $130,000) to be used as consumer redress or disgorgement. The settlement contains a suspended judgment of $2.5 million, to be paid immediately if the court, upon motion by the Commission, finds that Moreno made any misrepresentation or omission in his financial statement. The settlement also contains various recordkeeeping requirements to assist the FTC in monitoring the defendant's compliance.
International Business Network, Inc.
According to the FTC, International Business Network, Inc., based in Tarzana, California, and its principals, Danny Yahalom and Oren Ben Elkanah, used pretext calls to obtain information on their victims' photocopiers and the names of personnel responsible for ordering the photocopiers. They used this information to convey the impression that they were the victims' regular toner supplier. Once the victims paid one bill, additional shipments and bills were made at outrageous prices. The settlement announced today resolves the case.
The proposed settlement would permanently ban the defendants from participating in or assisting others in the sale or distribution of nondurable office supplies in the absence of face-to-face contact with the consumer prior to consummation of the transaction, and would further ban them from engaging in the telemarketing of any product or service. In addition, the defendants would be prohibited from selling their customer lists and from transferring business information. The settlement also requires the defendants to pay $85,000 in consumer redress. The settlement contains a $6 million suspended judgment to be paid immediately if the defendants failed to disclose any material asset of $1,000 or more. The settlement also contains various recordkeeping requirements to assist the FTC in monitoring the defendant's compliance.
The Commission vote to authorize staff to file the proposed stipulated final judgment and order in the David Moreno case was 5-0. It was filed in the U.S. District Court for the Central District of California, Western Division, on December 12, 2000.
The Commission vote to authorize staff to file the proposed stipulated final judgment and order in the International Business case was 5-0. It was filed in the U.S. District Court for the Central District of California, Western Division, on December 12, 2000.
NOTE: These stipulated final judgments and orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. The stipulated orders are subject to court approval and have the force of law when signed by the judge.
Copies of the Stipulated Orders are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at https://www.ftc.gov/ftc/complaint.htm. The FTC enters Internet, telemarketing and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.
(David Moreno: Civil Action No. CV-99-12837 R (AIJx); FTC Matter No. X000006)
(International Business: Civil Action No. CV-99-12831 R (RZx); FTC File No. X000005)
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