The Federal Trade Commission has negotiated settlements in a business opportunity fraud case that, if approved by a federal district court in Florida, would net more than $600,000 for a consumer redress fund. The settlements, reached with the remaining 18 corporate and five individual defendants who were charged by the FTC in 1993 in connection with the nationwide scheme to sell display-rack distributorships, also contain provisions that would permanently ban each of the defendants from marketing franchises or business opportunities, require them to post bonds in varying amounts before engaging in any future telemarketing activities, and prohibit them from making false or misleading statements in connection with some or all of their future marketing activities.
The settlements are with William Robert O'Rourke (who allegedly has gone by at least a half-dozen other names including Bill Roberts and Sonny Genova), Carmella Jean Andrisani, brothers Christopher William Andrisani and David Lawrence Andrisani, and Laura O'Rourke (who also goes by Laura Hilty), and the corpora- tions they ran (see attached list). All of the defendant cor- porations were based in or near Boca Raton and Pompano Beach, Florida. Their assets have been frozen since the initiation of this lawsuit, and they have been under the operation of a receiver appointed by the court at the FTC's request. The court has entered default judgments against the other defendants originally named in the complaint except one individual who died, and the charges against him were dismissed.
The defendants marketed business ventures that involved display racks featuring a variety of products, including gourmet coffee, cosmetics, gourmet popcorn, cookies, lingerie, weight- loss products, car-care products, and cayenne pepper criminal repellant spray.
The FTC alleged in its complaint that the defendants used phony references and misrepresented the earnings potential of the display rack businesses, the success of current owners, and the amount of assistance the defendants would provide to buyers. Most buyers never even made back the cost of their initial investment, the FTC charged. Other FTC allegations involved multiple failures to provide certain pre-purchase information required by the agency's Franchise Rule.
The FTC has negotiated three separate consent judgments to settle these allegations. All three would permanently ban the defendants from participating in any way in the marketing of any franchise or business opportunity (the settlement with the two Andrisani brothers and the five corporations they ran includes an exception to this ban for franchises or business opportunities marketed by publicly-held corporations). In addition, the settlements would mandate that each defendant post a bond of a specific amount for the protection of future customers before engaging in any future telemarketing activity. The bond amounts vary, from $200,000 to $5 million.
In addition, the settlements bar the defendants from making any false or misleading statements of material fact in connection with any future telemarketing activity. This prohibition extends to all marketing activities by all three Andrisani defendants and the 11 corporations they ran. The settlements also would require all defendants to monitor their employees to ensure they do not violate these bans, to terminate those who do so more than once, and to promptly investigate and address consumer complaints in connection with the business activity.
Further, the consent judgments would prohibit the defendants from transferring their marketing lists (unless in response to a court order) and from misrepresenting their true identities in future business dealings or in publicly-filed documents.
Under the settlements, Gerald Wald will continue as receiver over the corporations and will take control over and liquidate or transfer all the corporate assets into a consumer redress (O'Rourke/Andrisani Settlements--05/10/95)
account. Any individual assets turned over to the FTC under the settlements also will be put in the redress fund. In addition, a $148,414.70 judgment against Laura O'Rourke, individually, will be put in the redress account, as will any funds collected on a $5.5 million judgment for which William O'Rourke and the seven firms he ran are liable.
Finally, the settlements contain various reporting provi- sions that would assist the FTC in monitoring the defendants' compliance.
The Commission vote to accept the proposed consent judgments for filing in court was 5-0. They were filed May 9 in U.S. District Court for the Southern District of Florida, Miami Division.
NOTE: These consent judgments are for settlement purposes only and do not constitute admissions by the defendants of law violations. Consent judgments have the force of law when signed by the judge.
Copies of consent judgments, as well as other documents associated with this case, are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.
(FTC File No. X930055)
(Civil Action No. 93-6511 CIV-Ferguson)
The settling defendants, grouped by settlement, are:
C&B Products, Inc.
Gourmet Mini Cookies, Inc.
Intimate Apparel by Laurann, Inc.
Lipo Reduction Systems, Inc. (formerly Career Dynamics, Inc.)
Lockheart Advertising Agency, Inc.
Rainbow Polishing & Appearance Systems. Inc
Security Products International, Inc.
Carmella Andrisani A & Q Enterprises, Inc. C & A Industries, Inc.
C & C Advertising, Inc.
Karma's Skin Systems, Inc.
Rain Forest Natural Products, Inc
Christopher Andrisani American
Beverage Corporate Broscorp, Inc.
Grocery Shopping Association of America, Inc.
Interstate Locators, Inc.