FTC Puts Brakes on International Bogus Billing Scam

At the request of the Federal Trade Commission, a federal judge has stopped a Canadian billing scheme that, since 2001, has targeted businesses and municipalities nationwide, and hotels and resorts in the U.S. and more than 25 other countries. The FTC charged three individuals and an Ontario corporation with defrauding U.S. businesses out of millions of dollars by billing and accepting payment for unauthorized listings and advertisements in non-existent business and travel directories, and for unordered and undelivered office supplies and consulting services.

“Tricking consumers into paying bills they don't owe for products and services they didn't order is one sure way to attract the attention of the Federal Trade Commission,” said Lydia B. Parnes, Director of the FTC’s Bureau of Consumer Protection.

The FTC’s complaint alleges that the defendants operated under bogus business names whose addresses were mailbox drops near Toronto, including American Register of Manufacturers, International Industrial Trade Directory, National Register, Official Register of Commerce and Industry, Traders International Trade Directory, Hotel & Conventions International, Hotel & Resorts International, Hotel Index, International Hotel & Accommodations Directory, International Hotel Index, Official Hotel & Resort Guide, Bradley Siddons & Associates, and Foremost Business Supplies.

According to the complaint, the defendants’ invoices for business and travel directory advertising included actual print advertisements that U.S. businesses had placed in legitimate publications such as the Thomas Register of American Manufacturers, Hotel & Travel Index, and the Officials Meeting Facilities Guide. The defendants allegedly cut ads from the publications and pasted them onto their own bogus invoices in an attempt to deceive consumers into paying the invoices.

According to the complaint, in many instances consumers paid the bogus bills, which ranged from a few hundred dollars to several thousand dollars, not realizing that the listings and advertising were unauthorized, or that the office supplies or consulting services were never ordered or received.

The FTC charged the defendants with violating Section 5 of the FTC Act by misleading consumers into believing they owed money for advertising and other products and services that were not ordered and never delivered.

On October 4, the federal district court in Chicago entered an ex parte temporary restraining order prohibiting the deceptive practices and freezing the assets of 1522838 Ontario Inc., d/b/a/ International Industrial Trade Directory, Gerhard Mintz, a/k/a Gerry Mintz, William George Fisk, a/k/a Michael Robert Petreikis, a/k/a Michael Kelly, and Emma G. Wanjiku.

The FTC investigated this case with the assistance of members of the Toronto Strategic Partnership, which, in addition to the FTC, includes the Toronto Police Service Fraud Squad, Telemarketing Section; the Ontario Provincial Police, Anti-Rackets Section; the Ontario Ministry of Government Services; Canada’s Competition Bureau; the Royal Canadian Mounted Police; the United States Postal Inspection Service; and the United Kingdom’s Office of Fair Trading. The Toronto Police Service announced on August 24, 2006 that it had arrested defendant William George Fisk and charged him criminally in Canada. See www.torontopolice.on.ca/newsreleases/pdfs/10559.pdf#search=%22Michael%20Petreikis%22. Fisk also is wanted in the U.S. under the name “Michael Robert Petreikis.”

The FTC received invaluable assistance in this matter from the Better Business Bureau Serving Mid-Western and Central Ontario.

The Commission vote to authorize staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division.

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 in English or Spanish (bilingual counselors are available to take complaints), 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 http://www.ftc.gov/ftc/complaint.htm. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to thousands of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. 062-3129)