Family Operated Advance Loan Fee Business to Settle FTC Charges: Defendants to Pay $374,000


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Tod Silvers, owner of Interstate Inc., and three other defendants who ran a deceptive advance fee loan scheme business, have agreed to pay $374,000 in settlement of Federal Trade Commission charges that they allegedly promised consumers that they could provide them with unsecured credit cards regardless of their creditworthiness. In fact, the FTC alleged, the defendants only delivered a list of banks that issue credit cards and general credit information. The settlement would prohibit the defendants from making false representations regarding such services in the future.

The settlement would resolve charges the FTC filed against the defendants in June 1996 as part of Project Loan Shark, a joint crackdown by the FTC and 15 state Attorneys General on firms offering advance-fee loans that consumers never received. In the Interstate case, the FTC alleged that Tod Silvers, Robert and Alice Silvers, and Adelino Calvo, Jr., operated Interstate, Inc., which, under a variety of trade names such as Global E, Netstates, and MAG Group, advertised in publications nationwide. The defendants told consumers that for about $19 in processing fees they could obtain credit cards or loans regardless of their creditworthiness. Few, if any consumers ever received credit cards, the FTC alleged.

At the time the FTC filed its charges, the court granted its request for a temporary restraining order barring the challenged practices and freezing the defendants' assets. Later, the court granted a preliminary injunction extending the conduct prohibitions and asset freeze.

The proposed consent judgment to settle the FTC charges, if approved by the court, would prohibit the defendants from misrepresenting:

  • their ability to obtain or arrange extensions of credit;
  • that consumers can obtain extensions of credit regardless of their credit history; or
  • that they are members of, or that their services have been approved by, the Better Business Bureau.

The order would bar the defendants from violating the FTC's Telemarketing Sales Rule, which among other provisions makes it illegal for any telemarketer who guarantees consumers a loan or other credit to ask for money in advance. In addition, the order would prohibit the defendants from using or providing others with any financial, credit-related, or personal information about consumers that they obtained.

The settlement requires defendant Tod Silvers to pay $130,000 in consumer redress. Robert and Alice Silvers are also required to pay $244,000. In addition, the court-appointed receiver for Interstate, Inc., will turn over all of the receivership assets, after expenses have been paid, for the consumer redress fund. If redress proves to be impractical, the monies will be paid to the U.S. Treasury.

Finally the consent judgment contains various recordkeeping and reporting provisions that would assist the FTC in monitoring the defendants' compliance.

This case was investigated by the FTC's Chicago Regional Office. The Commission vote to approve this settlement for filing in court was 4-0. It was filed on November 26, 1997 in the U.S. District Court for the Central District of California, in Los Angeles, and requires the court's approval to become binding.

NOTE: This consent judgment is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the settlement will be available shortly. Copies of the documents associated with Project Loan Shark are available from the FTC's Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-3128; TTY for the hearing impaired 1-866-653-4261. To find out the latest FTC news as it is announced, call the FTC's 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:

(FTC Matter Number X960075)
(Civil Action No. 96-3977 RAP (Mcx)

Contact Information

Media Contact:
Brenda A. Mack
Office of Public Affairs
Staff Contact:
Russell W. Damtoft
Chicago Regional Office
55 East Monroe Street, Suite 1860
Chicago, Illinois
60603 312-353-8156