Canadian Defendants Fraudulently Pitched Advance-Fee Credit Cards and Free Gifts
At the request of the Federal Trade Commission, the U.S. District Court for the Northern District of Illinois has entered a final order and default judgment against a group of individual and corporate defendants based in Ontario, Canada, for their role in a cross-border telemarketing scheme that cost U.S. consumers millions of dollars.
Under the terms of the final order and judgment, the defendants – collectively known as Pacific Liberty – are barred from violating the FTC Act and the Commission’s Telemarketing Sales Rule (TSR). They are liable as well for approximately five million dollars, the total net sales they made through the cross-border scheme.
The FTC’s complaint charged the defendants with using outbound telemarketing to call U.S. consumers. For an advance fee of $319, which they electronically debited from the consumers’ bank accounts, the defendants promised that they could deliver Visa or MasterCard credit cards, along with free gifts such as cell phones. No consumers who paid the money received either credit cards or “complimentary” gifts.
Instead, consumers received only a “member benefits” package with items such as booklets on how to improve their creditworthiness. Some also received a “member merchandise” card valid only for purchases from a catalog supplied by the defendants. The defendants also called consumers offering them a brand-name personal computer if they agreed to have a fee debited from their bank account. No one received the promised computers. Instead, they received certificates purportedly redeemable for off-brand computers, but the consumers first had to pay additional fees. The FTC is not aware of any consumer who ultimately obtained a computer.
The court order and final judgment announced today state that the principle defendants failed to respond to an FTC motion for summary judgment, as well as to other information requests. According to the order, the Commission submitted considerable additional evidence to support the allegations in the complaint, including that the defendants engaged in deceptive acts or practices, and that they are accordingly liable for them. Specifically, the order states that the defendants: 1) misrepresented that after paying a fee, consumers would, or were highly likely to, receive an unsecured major credit card such as a Visa or Mastercard; and 2) requested and received a fee from consumers before arranging to provide them with such a card. In addition, the court found the defendants or their employees misrepresented or failed to disclose a variety of information to consumers, including that they would receive a specific brand-name computer and the total cost to buy and receive the computer.
The court further found that the corporate defendants operated as a common enterprise while engaging in the deceptive acts or practices alleged in the complaint, that defendants Oleg Oks and Aleksandr Oks participated in and had control of the corporate defendants, and that they were aware of the illegal acts and practices taking place. Accordingly, the court found the defendants violated Section 5 of the FTC Act and the TSR, barred them from violating the Act and Rule, and ordered them to pay $4,997,695.60.
The complaint named the following defendants: Oleg Oks, aka Oleg A. Oks and Oleg Alex Oks; Aleksandr Oks; Philip Nemirovsky; and Boris Pekar. The complaint also charged the following corporations, all based in Ontario, Canada, as defendants: 1530605 Ontario, Inc., also dba Pacific Liberty; 159927 Ontario, Inc., also dba Pacific Liberty Group and Pacific Liberty W Group; 1565205 Ontario, Inc., also dba Pacific Liberty and Pacific Liberty W; 1585392 Ontario, Inc., also dba Liberty Wide Info Services, Liberty Wide Info Services Group, Liberty Wide Services; and Liberty Wide; 1620142 Ontario, Inc., also dba Liberty Sun Info Services and Liberty Sun Info; 1619264 Ontario, Inc., also dba C & B Communications Group; 1629930 Ontario, Inc., also dba Atlantic One Info Services Grp and Atlantic One Info Services Group; and 1485635 Ontario, Inc. (dissolved), also dba Nationwide Credit Service Inc., Nation Wide Information Services Group Inc., and Nationwide Information Services.
This case was brought with the assistance of the U.S. Postal Inspection Service and the Toronto Strategic Partnership. The Toronto Strategic Partnership consists of the FTC, Competition Bureau Canada, the Toronto Police Service – Fraud Squad, the U.S. Postal Inspection Service, the Ontario Ministry of Government Services, the Ontario Provincial Police – Anti-Rackets, the Royal Canadian Mounted Police, and the United Kingdom’s Office of Fair Trading.
In September 2007, the Competition Bureau Canada announced that Oleg Alex Oks and Aleksandr Oks had pleaded guilty to criminal charges of deceptive telemarketing. Oleg Oks was sentenced to a year in jail and two years probation. Aleksandr Oks received a six-month conditional sentence and 12 months probation. Both were barred from telemarketing for 10 years.
The Commission’s complaint was filed under seal in the U.S. District Court for the Northern District of Illinois, Eastern Division, on September 19, 2005, and the court issued a temporary restraining order against the defendants that day. The seal was lifted on September 26, 2005. The FTC subsequently filed a motion for summary judgement against defendants Oleg Oks and Aleksandr Oks and motion for default judgment against the remaining defendants. The order for permanent injunction and final judgment against the defendants was entered in the U.S. District Court for the Northern District of Illinois, Eastern Division, on March 18, 2008.
Copies of the Commission’s documents related to this case can be found as a link to this press release on the FTC’s Web site. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click: http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://www.ftc.gov/bcp/consumer.shtm.
(FTC File No. 052-3004; Civ. No. 05-C-5389)
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