Law enforcement authorities on both sides of the border have moved to halt a Vancouver-based telemarketing scam targeting senior citizens in the United States. At the request of the Federal Trade Commission, the U.S. District Court in Seattle has ordered a temporary halt to the deceptive telemarketing practices, pending further proceedings. The Court also ordered a temporary asset freeze and appointed a receiver over any assets obtained. The Attorney General of British Columbia has initiated a parallel enforcement action and asset freeze in the Province of British Columbia, Canada.
The FTC charged that the telemarketers, who operated under a variety of names including Overseas Registry Services, Guaranteed Capital Holdings, International Bond Headquarters and NAGG Holdings Ltd., called consumers guaranteeing substantial monthly payments between $5,000 and $12,000 in return for a one-time payment of up to $5,000. Alternately, the telemarketers called claiming to be marketing bonds -- in some cases British Premium Savings Bonds -- purchase of which would qualify consumers for cash prizes, monthly cash payments or bond investments with the chance to participate in monthly drawings for cash prizes. Consumers then received mailings that included a purported British National Savings Premium Savings Bond certificate and other documents indicating that the consumer's name or bond numbers would be entered into the Premium Savings Bond program's monthly drawings for cash winnings. In fact, the consumers who paid the defendants received nothing of value. According to the FTC, National Savings, the second-largest savings institution in the United Kingdom, is the only organization authorized to sell Premium Savings Bonds. Because the bonds have a lottery feature, they cannot legally be sold in the United States. The FTC also charged that some of the defendants placed unauthorized charges on consumers' credit cards and in some instances simply charged consumers' credit card accounts without ever having contacted them.
The FTC alleged that the defendants' activities violated the FTC Act and the Telemarketing Sales Rule (TSR). It charged that the defendants misrepresented that consumers would receive payments by purchasing bonds; misrepresented that consumers agreed to buy bonds and owed the defendants money; unfairly charged some consumers whom they never contacted; and failed to disclose to consumers that the sale of the bonds is a crime. Alleged violations of the TSR included making false or misleading statements about the "cash awards"; falsely claiming that consumers' credit cards would not be charged without authorization; and failing to disclose that sale of the bonds is a federal crime. In addition, the agency charged a number of the defendants with assisting deceptive telemarketers to violate the law by providing them with access to their merchant accounts for processing credit card charges.
The 14 corporate and individual defendants named in the FTC's civil complaint are: Canada Prepaid Legal Services, Inc., d.b.a. BSI Premium Bonds; David John Edwin Hyde; Joseph Shawn Proulx; E.R.S. Holdings Ltd.; Neil John Schuler; ITH Enterprises Ltd.; Kailey Lewis Babuin; NAGG Holdings Ltd.; Wayne Weis; Timothy Ryan Babuin; 557631 B.C. Ltd., d.b.a. Guaranteed Capital Holdings; Fernando Villagran; Calgary Concrete and Home Improvement Corp., d.b.a. Union Global Trading; and Martin Roy Lamb.
The Commission vote to file the complaint was 5-0. It was filed in U.S. District Court for the Western District of Washington in Seattle on December 11, 2000, under seal. The seal was lifted on December 15, 2000.
NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.
Copies of the complaint 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 the consumer 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 online complaint form. 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.
Claudia Bourne Farrell or Brenda Mack,
Office of Public Affairs
202-326-2181 or 202-326-2182
Mary Benfield or Charles Harwood,
FTC Northwest Region
(FTC File No. 002 3045)
(Civil Action No.: CV00-2080Z)