Marquette, Inc., a Georgia based company, and two of its officers, have agreed to pay $146,750 in consumer redress as settlement of Federal Trade Commission charges announced as part of "Project Telesweep" -- a nationwide crackdown on business opportunity fraud. The FTC had alleged that the defendants made numerous misrepresentations in the sale of their medical billing software business opportunities. The defendants also failed to give potential investors complete and accurate information about the business opportunity they sold and documentation to support claimed earnings, as required by the FTC's Franchise Rule. In addition to paying $146,750 as part of the settlement, the defendants also agreed to an injunction against future misrepresentations and Franchise Rule violations.
The FTC’s Franchise Rule requires franchisors to give potential buyers detailed up-front disclosures about the financial and litigation history of their firms and their current and past franchisees, and also to provide documentation supporting any claims they make about future earnings.
Charges against Marquette, Inc.; Lawrence Ken Swenson, Jr.; Amy Felton; Russell Brantmyer and Monte Bolt were filed in July 1995 as part of “Project Telesweep,” a joint enforcement effort by the FTC and 20 state Attorneys General and securities regulators to crack down on deceptively marketed business opportunity schemes. Project Telesweep snared nearly 100 business opportunity marketers for failure to provide critical pre-purchase information about the business opportunities to potential buyers, as required by the FTC's Franchise Rule. Many firms also were charged with making exaggerated earnings claims, false promises about the amount and type of assistance they would provide franchisees, and using false references (shills) as an integrated part of their marketing scheme.
Today's settlement ends the litigation in this case against Marquette, Inc.; Lawrence Ken Swenson, Jr.; Amy Felton; and Russell Brantmyer. The case against Monte Bolt is still pending.
In the complaint filed in federal district court detailing the allegations in this case, the FTC alleged that the individual defendants, through Marquette, Inc., induced consumers to purchase their medical billing software business opportunities by using cleverly crafted misrepresentations made during the sales presentation. The FTC alleged that the defendants falsely represented:
- that Marquette was acting as a clearinghouse for processing physicians' claims to insurance companies;
- the amount of assistance they provided to prospective purchasers;
- the amount of earnings that could be expected; and
- the promise of an exclusive territory to prospective purchasers.
In addition, the FTC alleged, the defendants gave purchasers the names of phony references -- shills -- to induce them to purchase the business opportunities, which sold for an average of $4,995.00.
The FTC also alleged that the defendants violated the Franchise Rule by failing to give prospective purchasers the required disclosure documents or earning claims documents.
The consent order to settle these charges, which requires the court’s approval to become binding, would require Marquette, Inc., Lawrence Ken Swenson, Jr. and Amy Felton to comply with all aspects of the FTC's Franchise Rule. In addition, the settlement would prohibit them from making false statements or misrepresenting material aspects of any franchise or business venture they offer, including the specific misrepresentations made in this case.
Also, under the terms of the proposed settlement, Marquette, Swenson and Felton would be required to pay $146,750 for consumer redress. The defendants would make an initial payment of $125,000, with the balance to be paid monthly for one year. The order would dismiss the charges against individual defendant, Russell Brantmyer.
The settlement also includes various reporting and recordkeeping provisions designed to assist the FTC in monitoring the defendants' compliance.
The FTC's Atlanta Regional Office handled the investigation.
The Commission vote to authorize filing of the proposed consent order was 5-0. It was filed in the U.S. District Court for the Northern District of Georgia, in Atlanta, on January 27, 1997.
NOTE: This consent order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Consent orders have the force of law when signed by the judge.
Copies of the consent 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. X950076)
(Civil Action No. 1:95-CV-1749-RLV)
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