Must Post $1.5 Million Bond Before Engaging in Telemarketing
Allstate Business Consultants Group, Inc., based in Ft. Lauderdale, Florida; Edward Wong, president; and Enrico Pace, CEO of the company, have agreed to permanently discontinue their marketing and sale of franchises and have agreed to post a $1.5 million bond for protection of their customers before engaging in telemarketing activities. The ban on the marketing and sale of business ventures and the bond are included in a settlement that the defendants have signed to settle Federal Trade Commission charges announced as part of a nationwide crackdown on business opportunity fraud.
According to the FTC, Allstate, Wong and Pace were engaged in deceptive and illegal sales of candy vending business opportunities. The FTC charged them with making a number of false claims about the earnings potential as well as other aspects of the business, and also with using phony references -- shills -- to induce consumers to purchase the vending opportunities, which sold for an average of $8,000 a piece.
The settlement announced today ends the litigation in this case, which was brought as part of "Project Telesweep" in July 1995. Project Telesweep was a nationwide crackdown by the FTC and state attorneys general and securities regulators to target the growing problem of business opportunity fraud. Many of the Project Telesweep cases were launched against defendants pitching vending machines and display rack distributorships, making false earnings claims and using false references (shills) as an integrated part of their marketing scheme, and/or failing to give consumers critical pre-purchase information about the business opportunities, as required by the FTC's Franchise Rule.
The order, signed by the judge, bans the defendants from marketing or selling franchises or business ventures and requires them to post a $1.5 million bond before engaging in telemarketing.
The order also permanently prohibits the defendants, in connection with telemarketing activities, from making any false or misleading statement or representation of material fact. It requires the defendants to take reasonable steps to monitor their telemarketing sales presentations. Also, the defendants are required to provide copies of the order to their officers and employees for five years.
The order also prohibits the defendants from providing the names of any consumers who purchased goods or services from them to anyone other than the court-appointed Receiver, and prohibits the defendants from using false names or misrepresenting their identities in the course of business dealings or in publicly-filed documents.
The order also requires the Receiver to deposit all remaining funds in the receivership account into the U.S. Treasury within one year of the entry of the order. The freeze on the defendants' assets will be lifted upon entry of the order.
The consent order also contains various reporting provisions designed to assist the FTC in monitoring compliance.
The FTC vote to authorize filing of the stipulated final judgment and order was 5-0. It was filed in the U.S. District Court for the Southern District of Florida, West Palm Beach Division, on Aug. 23. The judge signed the order on Aug. 30.
NOTE: This stipulated final judgment and order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Final judgments have the force of law when signed by the judge.
Copies of the stipulated judgment and order, and other documents associated with Project Telesweep, 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 happens, call the FTC’s NewsPhone at 202-326-2710. FTC news releases and other documents also are available on the Internet at the FTC’s World Wide Web Site at http://www.ftc.gov
(FTC File No. X950061)
(Civil Action No. 95-6634-CIV-Ryskamp)
Office of Public Affairs
Eileen Harrington or Sarah G. Reznek
202-326-3127 or 202-326-2213