A federal district court judge has jailed three individuals who allegedly engaged in a nationwide advance fee loan scam, the Federal Trade Commission announced today. The United States District Court for the Southern District of Texas found defendants Victor Stanley Wilcox, Belinda Sweeney, and Lee Sumner Churchill in civil contempt for violating June 2000 injunctions. The defendants were ordered to be imprisoned in the Federal Detention Center and to remain there until they pay $552,705 to the Court's registry or provide a full and complete accounting for that amount. The judge issued the order as part of an amended preliminary injunction sought by the FTC, which continues an existing freeze on the defendants' assets and requires them to comply with federal law pending the outcome of a trial on the allegations.
The FTC initially filed suit based on the defendants' operations in one location in Galveston, Texas. The court found that the defendants, operating from an office in St. Paul, Minnesota, had conducted business under the names Credit Approval Service, in Galveston, Texas; National Research Service, in Sioux Falls, South Dakota; and Consumer Information Service, in Mason City, Iowa, in violation of the preliminary injunctions. The defendants received over $500,000 in revenue from the unlawful operations since entry of the original orders. On Thursday, October 26, 2000, the court ordered the defendants either to turn over all proceeds to the court or complete a full accounting of that amount. In addition, the court entered an amended preliminary injunction against each defendant. The injunction, which is nationwide in scope, continues the freeze of their assets and bans the defendants from any future telemarketing or the marketing of credit services pending the outcome of a trial on the merits.
On June 7, 2000, the FTC filed charges in U.S. District Court in Galveston, Texas, against Lee Sumner Churchill. On June 16, 2000, the FTC amended its complaint to include as defendants Victor Stanley Wilcox and Belinda Sweeney. The complaint alleged that the defendants, operating under the name Credit Approval Service, deceptively marketed "credit cards" for an upfront fee. Consumers were promised that, for a $99 "processing" fee they would receive a Visa card, or for $129 they would receive both a VISA and a MasterCard credit card. Instead, consumers received a packet or kit of information which included a list of banks to which consumers could apply for a credit card. The defendants failed to tell consumers that they had to apply for a credit card with these banks.
According to the complaint, these practices violated the Federal Trade Commission Act and the FTC's Telemarketing Sales Rule. The court granted temporary restraining orders and later preliminary injunctions freezing the assets of the defendants and prohibiting them from engaging in the unlawful marketing of credit services.
The FTC acknowledges the assistance it received in this case from the United States Postal Inspection Service, Minneapolis-St. Paul Division, the St. Paul Police Department, the Mason City Police Department, the Sioux Falls Police Department, the Minnehaha County Sheriff's Department, and the Texas Department of Public Safety, all of whom provided substantial assistance in the investigation.
Copies of the advance fee loan sweep documents are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for consumers to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at www.ftc.gov The FTC enters Internet, telemarketing and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.
(Civil Action No. G-00-324)
(FTC File No. 002 3155)
Office of Public Affairs
Southwest Region - Dallas
1999 Bryan Street, Suite 2150
Dallas, Texas 75201