Consumer Protection Mission (Detail)
Acme Vending Company; Peter K. Smith
As part of a nationwide crackdown by federal and state regulators on business opportunity fraud, the Commission announced a settlement with Acme Vending and Peter Smith, marketers of snack and soft drink vending machine franchises. The settlement requires that the defendants comply with the Franchise Rule and prohibits them from making false or misleading statements when offering any franchise or business opportunity in the future.
(Allied Snax, Inc.)
James L. Roche
James Roche, individually and as an officer and director of Allied Snax, a now-defunct company, settled allegations that he misrepresented earnings claims and other aspects of his snack food distributorship programs. In addition, he agreed to settle allegations that he violated the Franchise Rule by failing to provide prospective franchisees with documentation required by the Rule. The settlement permanently bans Roche from promoting or selling any franchise or business venture.
Allstate Business Consultants Group, Inc.; Enrico Pace; Edward Wong
Allstate Business Consultants, its president, and its CEO agreed to permanently discontinue their marketing and sale of franchises for candy vending machines. They also agreed to post a $1.5 million bond for protection of their customers before engaging in future telemarketing activities. The ban and bond were included in an agreement settling allegations that the defendants made false claims about the earnings potential and other aspects of their business opportunities and also used false references to induce consumers to purchase the franchises, in violation of the Franchise Rule.
(American Vending Group, Inc.)
Kenneth Sterling
The Commission settled with Kenneth Sterling, president of American Vending, alleging that the company violated the Franchise Rule in its sale of display rack vending opportunities for gourmet coffees, by failing to provide critical pre-purchase information to potential buyers and making exaggerated earnings claims. The consent decree prohibits Sterling from violating the Rule and from making false statements or misrepresenting material aspects of any business venture he offers.
Building Inspector of America, Inc., The
The Building Inspector, which offered franchises for home inspection services, settled allegations that it failed to disclose to potential purchasers the litigation and bankruptcy history of the company and two of its officers. The Commission also alleged that the company made unsubstantiated claims about the earnings franchise buyers could expect, among other violations of the Franchise Rule. The settlement bars The Building Inspector from future violations of the Rule. In separate settlements, three of the company officers agreed to pay civil penalties.
Cambridge Exchange, Ltd., The; Wellington Art, Ltd., Inc.; Samuel Stier; Steven Stier
Two companies and two individuals settled allegations that they participated in a deceptive scheme to telemarket animation cels and other artworks to consumers nationwide. The Commission alleged that the defendants solicited consumers to purchase artworks by misrepresenting the investment value and profit potential of the art and also ran a deceptive prize-promotion scheme in which the artwork won was worth less than the "shipping and handling" fees consumers had to pay. The settlement prohibits the defendants from making false claims about the value or investment profit potential of any artwork or other item in the future.
Diamond Rug and Carpet Mills, Inc.
An investigation by the Commission and the Department of Justice revealed numerous instances in which Diamond apparently falsely labeled the fiber content and weight of its carpets, both of which are critical to carpet wear and cost. The investigation led to a guilty plea by the company to criminal violations of the Textile Act and a criminal fine of $100,000. In addition, the company signed a consent decree settling allegations of civil violations of the same statute. The consent decree requires the company to comply with the Textile Act in the future and to set up a control system to ensure proper fiber identification and prohibits it from misrepresenting the fiber weight of carpets it manufactures and distributes.
Georgetown Galleries, Inc. (Unique Selling Propositions, Inc., d/b/a); Richard Spring
Unique Selling Propositions, doing business as Georgetown Galleries, and its owner settled allegations that they misrepresented the investment value of the antiquarian art prints they sold. Under the settlement, Richard Spring and his company are barred from misrepresenting the investment value of the prints they sell and are required to disclose that buying artwork as an investment is high risk.
Giving You Credit, Inc.; Clear Your Credit, Inc.; Partners in Vision International, Inc.; Keith Berggren; Lois Symington; Paul Symington
The Commission alleged that the three companies and their principal officers developed a multi-level marketing plan to sell credit repair services through representatives who earned commissions on their sales and bonuses for recruiting new sales representatives. According to the complaint, one tactic the defendants used was to falsely claim that the Fair Credit Reporting Act requires deletion of an entire negative entry if it is not 100 percent accurate. The defendants settled the allegations under a consent decree that prohibits them from engaging in similar practices and requires them to cease collection efforts.
Infinity Corporation (Makiko Kato, d/b/a); Gregory Duvall
The Commission approved a settlement with Makiko Kato, doing business as Infinity, and principal Gregory Duvall. The company offers business opportunities to provide medical billing services using Infinity software. The settlement requires that the defendants comply with the Franchise Rule and prohibits them from making false or misleading statements when offering any franchise or business opportunity in the future.
Ivory Jack's Trading Company, Inc.; Northwest Tribal Art, Inc.;
Ngoc Q. Ly; Kurt L. Tripp
Two companies and their owners settled Commission allegations that they falsely represented that Native-American-style carvings they offered for sale were authentic Native-made artwork. As part of the settlement, the defendants are prohibited from misrepresenting that their artwork is made by Native Americans and are required to follow procedures to prevent such misrepresentations at the retail level for products they offer at wholesale. In addition, the two individual defendants are each required to pay $20,000 as disgorgement.
(Meridian Capital Management, Inc.)
Angelo DeLon
Angelo DeLon settled allegations stemming from his participation in an allegedly deceptive telemarketing scheme, run by Meridian Capital, that purported to recover money consumers had lost to telemarketing investment fraud. Under the terms of the settlement, DeLon is permanently prohibited from engaging in misrepresentations regarding any material aspect of telemarketing or recovery room services and is required to post a $50,000 bond before engaging in telemarketing or assisting others engaged in telemarketing.
North East Telecommunications, Ltd.; Strategies Telecom, Inc.;
Tannen Advertising, Inc.; Daniel L. Coutinho;
Mark R. Goldstein (a/k/a Steve Collins, Steven Roberts, and Steve Rogers);
Dilraj Mathauda (a/k/a Roger Ford); Anthony Vandeputte (a/k/a Ron Stewart)
The Commission negotiated a settlement with Strategies Telecom, which was part of a common enterprise that offered investments in paging licenses issued by the Federal Communications Commission (FCC). According to the Commission, the defendants (including three companies and four individuals who were executives or managers of the companies) misrepresented a number of facts, including that the licenses were valuable investments, that the fee charged was for studies required by the FCC, and that North East would assist clients in marketing their licenses. In addition, the defendants falsely represented that North East was a member of trade associations that deal with the FCC and its regulations. The settlement with Strategies Telecom prohibits the company from making the challenged false claims. Charges against the other defendants are pending.
Nu-Idea Technologies, Inc.; Film Centers of America, Inc.; Mr. Popcorn, Inc.;
T. Randall Bridges; James R. Davis (a/k/a Ron Davis); Joseph Gilmore
The Commission reached three settlements with Nu-Idea, two related firms, and three principals, who sold vending machine business ventures. The Commission alleged that the defendants violated the Franchise Rule by failing to give potential buyers required disclosures and documentation of evidence supporting earnings claims. The settlements bar future violations of the Rule.
Ray Williams Funeral Home, Inc.; David L. Northern, Jr.; Sarah C. Northern;
Jeffrey L. Rhodes
Ray Williams Funeral Home and its corporate officers settled allegations that they violated the Funeral Rule by failing to give test shoppers a required general price list. The Rule is designed to ensure that consumers know they can purchase only the goods and services they want or need. The consent decree prohibits future violations of the Rule.
(Second Income, Inc., d/b/a Creative Promotions and Silver Shots, Inc.)
Glenn Rosofsky
The Commission negotiated a settlement with an individual named in the business opportunity fraud case against Second Income. The Commission alleged that Glenn Rosofsky enticed consumers nationwide into purchasing coin-operated game vending machines as business opportunities by making false claims about potential earnings, profitable locations, and compliance with state licensing laws. The Commission also alleged that the defendant violated the Franchise Rule by failing to provide required disclosure documents to prospective franchisees. The settlement prohibits Rosofsky from making deceptive claims about any business opportunity and from violating the Franchise Rule in the future. It also requires him to post a $1 million performance bond for the protection of future customers.
Showcase Distributing, Inc.; Dale Merritt (d/b/a VC Network)
Showcase Distributing and Dale Merritt, also doing business as VC Network, settled allegations that they violated the Franchise Rule by misrepresenting the earnings potential of business opportunities featuring vending machines for gourmet popcorn and other products. The settlement bars them from misrepresenting future business opportunities and requires them to comply with the Franchise Rule. Merritt is also required to post a performance bond of $200,000 if he wishes to engage in the sale or promotion of any franchise or business venture in the next ten years.
Surface Science Corporation; David J. Kriel
The Commission approved an agreement with Surface Science and its president, settling allegations of business opportunity fraud. The company was attempting to market business opportunities for the right to sell Megalon engine lubricant, which purportedly guaranteed against engine wear. The settlement requires that the defendants comply with the Franchise Rule and prohibits them from making false or misleading statements when offering any franchise or business opportunity. This was the first franchise case in which the Commission was able to act before any actual sales were made and, thus, before any consumers lost their investments.
(Telecommunications of America, Inc.)
Robert Diehl
The Commission obtained a settlement with one of the corporate officers of Telecommunications of America, a company charged with business opportunity fraud involving pay telephone business ventures. Under the settlement, Robert Diehl must comply with the Franchise Rule in the future, which requires that certain documentation be given to prospective buyers, and he is prohibited from making false or misleading statements when offering any franchise or business opportunity. Additional settlements require two other officers to pay consumer redress.
United States Business Bureau, Inc. (d/b/a National Business Bureau);
Reuben Sierra Borja (a/k/a R.B. Borja and Reuben Sierra);
Paul Kalomeris (a/k/a Andrew North);
William Robert O'Rourke (a/k/a Billy Ray, R.C. Reinhold, Billy Ray Roark, Bill Roberts, Andrew Joseph Rourke, Terrence Michael Rourke, and William Rourke)
The Commission reached agreements with United States Business Bureau and three of its officers, settling allegations that they ran a fraudulent "better business bureau" that consumers could call for information on business opportunity marketers. Some of the businesses covered by the sham better business bureau were targeted in other cases brought by the Commission as part of the same nationwide crackdown. The settlements prohibit the officers from falsely implying that they are affiliated with a Better Business Bureau or with the government.
Yasik Funeral Home Stanley S. Yasik, Inc.; Joseph S. Yasik; Stanley J. Yasik, Jr.
Yasik Funeral Home and two corporate officers settled allegations that they violated the Funeral Rule in failing to give test shoppers the required general price list of goods and services. The consent decree prohibits the defendants from violating the Rule in the future.