Illinois-Based Companies Charged with Fraudulent Telemarketing and Placing Unwanted Calls Settle Federal Charges

Defendants Agree to a $1 Million Bond and a Ban from Selling Credit-Related Products

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The Federal Trade Commission today announced that it, along with the Illinois Attorney General's office, has reached a settlement with 1st Financial Solutions, Inc., which allegedly used a nationwide network of telemarketers to sell consumers major credit cards, cards that no one ever received. The settlement requires 1st Financial, three individuals and 10 other companies to post a $1 million bond before engaging in telemarketing. The defendants also are banned from selling credit-related programs, products and services. In November 2001, federal authorities filed a complaint against 1st Financial, John F. Boone, Michael Cooper, Robert C. Morgan, and 10 companies - including Rockwell Holding, Inc., and American Benefits Club, Inc. - alleging that they violated the Telemarketing Sales Rule (TSR) and the FTC Act in their marketing of credit cards. The FTC and the Illinois Attorney General's Office filed the complaint as a joint effort. The settlement resolves the charges of both agencies.

The complaint alleged that the defendants used telemarketers to offer Visa and MasterCard credit cards to consumers for fees ranging from $99.95 to $219.95. The defendants never provided credit cards or any extension of credit, according to the complaint. Most of the time, consumers received nothing at all. Some received either promotional literature offering things like gasoline discounts and auto club memberships, or an "ATM" debit card - a "stored value card" - that consumers could only use if they deposited money into an account to cover the purchase. The complaint also charged that the defendants continued to call consumers that had asked that calls cease, a violation of the TSR. The court issued a temporary restraining order, imposed an asset freeze, and appointed a receiver.

In addition to posting a $1 million bond and banning the defendants from selling credit-related programs, products and services, the stipulated order settling the case prohibits the defendants from claiming that, after paying a fee, consumers would receive major credit cards. The settlement also prohibits the defendants from requesting or receiving a fee in advance of providing consumers with credit cards, in cases where the defendants guaranteed or represented a high likelihood of success in obtaining or arranging extended credit for consumers. Further, the stipulated order prohibits the defendants from violating the TSR's do-not-call provisions that prohibit a telemarketer from initiating outbound telephone calls to consumers who have said they do not wish to receive such calls. The order also prohibits the defendants from selling their customer lists. Finally, the stipulated order contains various record-keeping requirements to assist the FTC and the Illinois Attorney General in monitoring the defendants' compliance.

The Commission vote to authorize staff to file the stipulated order was 5-0. It was filed jointly by the FTC and the Illinois Attorney General's Office and entered by the U.S. District Court for the Northern District of Illinois, Eastern Division, on September 26, 2002.

NOTE: This stipulated order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Stipulated orders have the force of law when signed by the judge.

Copies of the stipulated order are available from the FTC's Web site at 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 at The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Contact Information

Media Contact:
Brenda Mack,
Office of Public Affairs
Staff Contact:
C. Steven Baker or John C. Hallerud
Midwest Region - Chicago