In July 2000, the Federal Trade Commission filed charges against Global Network Enterprises, Inc. and Republic Enterprises, Inc., based in Costa Mesa, California, and individual defendants Cecilia M. Castillo and Ian Anthony Suite, as part of "Project Prize Fighter"-- a joint law enforcement effort that targeted companies involved in the deceptive telemarketing of prize promotions. The defendants have agreed, as part of a settlement of the FTC's charges, to obtain a $500,000 performance bond before engaging in, or assisting others in telemarketing, and the marketing of prize promotions or the advertising, marketing, promotion, or offering of a prize. In addition to the performance bond, the settlement prohibits the defendants from engaging in the deceptive conduct outlined in the FTC's complaint.
"Project Prize Fighter" resulted in 24 law enforcement actions against more than 40 defendants in nine states. The defendants targeted consumers who had previously entered sweepstakes and told them that they had won but needed to pay some charge or fee in order to receive their prize.
According to the FTC, Global Network and Republic Enterprises operated out of the same location, using the assumed name TCM. The defendants contacted customers nationwide who had participated in sweepstakes contests in the past and falsely told them that they had won $5,000 or more in sweepstakes money. In order to receive their prize money, the defendants told consumers that they had to pay $289 in state sales or gift taxes. The defendants then asked consumers for their checking, savings or other bank account information, with the assurance that no money would be withdrawn from their account until they actually received the prize money. Within a few days of the initial call, the consumers' accounts were debited. The FTC alleged that the defendants violated the FTC Act and the Telemarketing Sales Rule (TSR) by misrepresenting that consumers had won a prize and that if consumers made a payment to the defendants, they would receive the prize. The settlement announced today ends the litigation in this case.
The settlement prohibits the defendants from falsely representing that consumers will receive a prize; that their bank accounts will not be debited before they receive a prize; and any fact material to a consumer's decision to participate in a prize promotion. The settlement also prohibits the defendants from selling or transferring any customer lists or customer information. In addition to posting a $500,000 performance bond, the settlement contains a suspended judgment of $800,000, which would be triggered if it is found that the defendants made omissions or misrepresentations in their financial disclosures to the FTC. The settlement further contains various reporting requirements to assist the FTC in monitoring the defendants' compliance.
The FTC wishes to acknowledge the assistance provided in its investigation by the Attorney General of the State of North Carolina, the U.S. Postal Inspection Service and the County of Orange Boiler Room Apprehension ("COBRA") Task Force in Santa Anna, California. COBRA conducted a related criminal investigation which led to federal indictments of the individual defendants and the seizure of the companies' corporate assets.
The Commission vote authorizing staff to file the proposed stipulated final judgment and order was 5-0. The settlement was filed in the U.S. District Court, Central District of California, Southern Division, in Santa Anna. The settlement, which requires the court's approval, was signed by the judge on February 1, 2001. The FTC's Southwest Region - Dallas Office handled the matter.
NOTE: This stipulated final judgment and order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Stipulated judgments have the force of law when signed by the judge.
Copies of the news release and stipulated final judgment and order, as well as other materials related to "Project Prize Fighter" 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 complaint form. TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. 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.
(FTC Matter No. X000083)
(Civil Action No. SACV 00-625GLT (ANX))
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