The Federal Trade Commission has filed charges against PAL Financial Services, Inc., a telemarketing boilerroom the agency says took in more than $315,000 of the $2.36 million raised in an allegedly fraudulent scheme to pitch consumers investments in the chance to market and distribute Direct Broadcast Satellite (DBS) television programming in certain areas of Georgia. The FTC also named Media Management, Inc., which allegedly misspent more than $2 million of the money consumers invested, and Lonny Remmers, the president of both firms. The defendants are based in Santa Ana, California.
DBS technology allows consumers with a satellite dish, a decoder box and a remote control device to receive video and sound programming directly in their homes. There are three providers of DBS programming in the United States.
In a complaint filed in federal district court today, the FTC alleged that the defendants were key players in a scheme the agency had challenged in another complaint it filed in the court on April 17. In that complaint, the FTC named five other defen- dants, charging them with touting investments in the opportunity to market and distribute DBS programming that they, in all likelihood, would not have the rights to market or distribute. Those defendants are: Satellite Broadcasting Corporation; Satellite Systems, Inc.; Satellite Broadcasting Royalty Trust; company president T. Michael Haws; and a principal telemarketer, Joe Champion.
According to the FTC complaints, consumers contacted by perpetrators of the scheme were told that the investment was a low-risk, instant-income venture and that the defendants already had the right to market programming from DIRECTV, Inc., the largest DBS provider in the country, in one or more rural Georgia counties. In fact, the FTC charged, the defendants did not possess and were unlikely to acquire the rights to market DIRECTV programming in Georgia or anywhere else. The FTC also charged the defendants with making a variety of other false profit- related and other claims to consumers, who invested $10,000 to $125,000 each.
Upon filing of the first FTC complaint, the court issued a temporary restraining order prohibiting the named defendants from engaging in the challenged scheme, freezing their assets and appointing a temporary receiver to manage the corporate defen- dants. Subsequently, the court entered preliminary injunctions continuing the asset freeze and conduct prohibitions pending the outcome of a trial on the FTC charges. Because MMI acted in concert with the original defendants, the asset freeze extends to it. The FTC also is seeking a preliminary injunction against the new defendants, as well as permanent injunctions that would bar all the defendants from engaging in similarly deceptive schemes in the future. The FTC also is seeking redress for injured consumers.
The complaints were filed in U.S. District Court for the Central District of California, in Santa Ana, yesterday after- noon. A hearing on the FTC's request for the new preliminary injunction will be scheduled shortly. The Commission vote to file the new complaint was 5-0
NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.
Copies of the complaints 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. X950034) (April 17 Complaint Civil Action No. SACV-95-336 (LHM)(EEX)) (May 30 Complaint Civil Action No. not available at press time.) (sbc2)