Business Opportunity Fraud Case Nets Court-Ordered Ban on Future Telemarketing, Franchise Sales
A federal district court judge has permanently banned the Fort Lauderdale, Florida-based firm, Public Telco Corporation, and its owner, Ronald Oman, from offering any franchise or business opportunity, from engaging in any form of telemarketing, and from selling or transferring any customer lists. Oman also is prohibited from using an alias. The judge issued the order after Public Telco and Oman failed to answer charges the Federal Trade Commission filed as part of a federal/state crackdown on business opportunity fraud called "Project Telesweep." The FTC had alleged that the defendants misrepresented the earnings potential and other aspects of their pay telephone business opportunities.
The judge in the case also entered judgment against the defendants for nearly $2.4 million, although the FTC said it is unclear what, if any, of that amount can be collected.
Project Telesweep is an unprecedented federal-state assault on the growing national epidemic of business opportunity scams preying on would-be entrepreneurs. On July 18 the Commission announced that charges were filed against Public Telco and more than 80 other firms across the United States by the FTC, the U.S. Justice Department, and grassroots business opportunity regulators in 20 state securities divisions and attorneys general offices. Law-enforcement officials participating in Project Telesweep also issued an extensive consumer bulletin offering would-be investors tips on how to avoid these scams.
In the Public Telco case, the FTC alleged that the defendants made false and misleading claims that consumers could expect a net profit of $150 to $200 per week per phone, provided phony references, and misrepresented the amount of assistance they would provide investors in placing the telephones in profitable locations and the amount and type of training they offered. The defendants also allegedly lied about their refund policies.
On Oct. 4, Judge James Lawrence King of the U.S. District Court for the Southern District of Florida, in Miami, entered the permanent injunction against Public Telco and Oman.
Copies of the injunction, as well as background information on Project Telesweep and the business opportunity fraud consumer bulletin, are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web site at: http://www.ftc.gov
(Civil Action No. 95-6635-CIV-King)