Consumer Protection Mission (Detail)
(American Fortune 900, Inc.)
Rory Cypers
The Commission negotiated a settlement with Rory Cypers, a principal of American Fortune 900, concerning his role in the company's allegedly deceptive marketing of investments in 900-number telephone lines. The Commission alleged that the company depleted a substantial portion of investors' capital in paying sales commissions and other expenses and misrepresented the number of operational 900-number lines in which it had a financial interest. The settlement with Cypers includes $100,000 for consumer redress; in addition, he must post a $300,000 performance bond before engaging in any type of telemarketing and must disclose the existence of the bond to customers.
Caribbean Clear, Inc.; Patricia Benton; Jerry Minchey
The Commission obtained a settlement of civil contempt allegations with Caribbean Clear and two former corporate officers, which includes a $70,000 redress fund for consumers who purchased the Caribbean Clear disinfectant system for swimming pools since 1992. The Commission alleged that the company could not substantiate advertising claims that the system can be used without chlorine or similar chemicals and that it makes pool water safe enough to drink, and that the company therefore violated a 1992 order prohibiting such unsubstantiated claims. The settlement also requires Caribbean Clear to notify purchasers about the need to use appropriate chemicals with the system.
Chase McNulty Group, Inc.; E. Lee Elliott; Anthony L. Rick; Jeffrey D. Trotter
Chase McNulty and its officers settled allegations that they engaged in a variety of deceptive practices in connection with the marketing of investments in a new wireless communications technology called interactive video and data service (IVDS). The Commission alleged that the defendants misled investors as to the profitability of the investment, the use of investor proceeds, the capital needed to develop IVDS systems, and the technological capabilities of such systems. Under the settlement, the defendants are prohibited from making such misrepresentations in connection with the sale of any investment or telemarketed product or service. In addition, the individual defendants are required to turn over virtually all of their significant assets (totaling $160,000) for consumer redress, and a $1 million judgment was entered against the corporate defendant, Chase McNulty. The individual defendants are each required to post a $350,000 performance bond before engaging in the telemarketing of any product or service, unless they are employed by a regulated broker or agency.
Consumer Credit Advocates, P.C.; Consumer Credit and Legal Services, P.C.;
David B. Markowitz; John E. Petiton
The Commission reached a settlement with two closely related law firms that were behind a deceptive advertisement for credit repair services posted on thousands of Internet news groups. Consumer Credit and Legal Services and two of its officers created Consumer Credit Advocates, which advertised that it could remove derogatory information from clients' credit reports even when that information was accurate and not obsolete. The settlement bans the defendants from engaging in fraudulent credit repair practices and requires them to warn customers that consumers have no legal right to have accurate information removed from their credit reports. The order also requires the defendants to pay $17,500 in consumer redress and prohibits them from instituting collection procedures against their current and former credit repair clients.
Credit Doctor (Jayco Associates, d/b/a); Jerry J. Jewell
Jayco Associates, doing business as Credit Doctor, and corporate officer Jerry Jewell agreed to settle allegations that they misrepresented the credit repair services they provided and required advance payment, in violation of the Telemarketing Sales Rule. The settlement requires the defendants to pay $15,000 for refunds to consumers, prohibits them from trying to collect payments on past contracts, and requires them to withdraw negative credit reports they sent to credit reporting agencies about consumers who did not pay them. The order also prohibits the defendants from making similar deceptive claims about credit repair services and from violating the Rule in the future.
Desert Financial Group, Inc.; Keith Parker
Desert Financial and its president agreed to settle allegations that they falsely told consumers, many of whom were senior citizens, that for an upfront fee, sometimes exceeding $1,000, they could recover money the consumers had lost to other telemarketers. In fact, according to the Commission, little, if any, money was recovered from the defendants' efforts. The settlement with Keith Parker requires him to post a $300,000 bond before engaging in telemarketing activities in the future and to pay $11,000 for consumer redress. The settlement prohibits Parker from misrepresenting any fact material to a consumer's decision to make a charitable contribution, to enter a contest, or to purchase recovery room services or any other product or service. The Commission is seeking a default judgment against Desert Financial once the settlement with Parker is approved by the court.
Fraud Action Network System (FANS), Inc.; Michael Starrion; Rena Warden
A federal district court permanently banned a telemarketer and two individuals from engaging in any prize-promotion telemarketing activity or recovery service. The judge issued the order after FANS and two of its officers failed to answer Commission allegations that they misrepresented that their "recovery room" services would obtain money that consumers had lost in previous telemarketing schemes and that they violated the Telemarketing Sales Rule by requesting payment in advance. The judgment provides for over $378,900 for consumer redress.
Freedom Medical, Inc.; Freedom Medical of Wisconsin; Sierra Medical, Inc.;
Robert D. Atkins; Robert L. Grden; Brian A. Patten; Daniel Smeltzer
Three related companies and four individuals agreed to settle allegations that they deceptively telemarketed medical equipment to consumers nationwide and engaged in fraud against health insurance companies. According to the Commission, the defendants marketed medical equipment to disabled persons, then obtained physicians' approval and submitted claims to health insurers; the claims in many instances were for more expensive equipment and for items and accessories that had not been ordered by consumers. The agreement requires the defendants to pay a total of $269,650 for consumer redress. In addition, Brian Patten and Robert Grden are banned for ten years from selling or marketing any medical equipment, product, or service, and Robert Atkins is required to post a $50,000 performance bond before selling or marketing medical equipment. All defendants are prohibited from making misrepresentations like those alleged in the complaint.
Fresh-O-Matic Corporation
Fresh-O-Matic, a company that markets business opportunities involving soft drink vending machines, agreed to pay $100,000 for consumer redress to settle allegations that it failed to provide key information to potential purchasers of its distributorships, as required by the Franchise Rule. The Commission alleged that the company also misrepresented potential earnings and the location assistance it would provide to investors. The consent order requires the company to comply fully with the Rule and prohibits it from misrepresenting any material aspect of a franchise or business opportunity.
Global Development Services, Inc.; Kenneth A. Rogers
Global Development and its president agreed to pay $1 million for consumer refunds as part of a settlement of allegations brought by the Commission. According to the allegations, the defendants, who marketed invention promotion services, misrepresented the financial gains their clients were likely to achieve and did not address the specific market potential, patentability, feasibility, or merit of clients' inventions. The settlement also requires Global and Kenneth Rogers to give customers a written notice stating that not one of their clients has received profits of any kind from an invention as a result of Global's services.
Hang-Ups Art Enterprises, Inc.; Max Klein
Hang-Ups Art and its president agreed to pay $150,000 into a fund for consumer redress as part of a settlement of allegations that they sold counterfeit art prints. The Commission alleged that the defendants bought and sold purported limited-edition prints attributed to well-known artists such as Marc Chagall, Joan Miro, and Pablo Picasso, and represented to consumers that the prints were the work of the named artists, while knowing that they were counterfeit. The settlement also contains strong prohibitions against false claims about the nature of any artwork the defendants sell in the future.
Independence Medical, Inc.; Ability Medical, Inc.;
American Medical Independence (A.M.I.); Independence Medical of America, Inc.; Jeffrey S. Marmer; Jerry Rodney Rogers; Jerry Wilburn Rogers; Violet Cassie Rogers
Independence Medical, three related companies, and company officers and agents agreed to pay redress totaling $38,500 to settle allegations stemming from their role in an allegedly deceptive scheme to telemarket medical equipment to consumers nationwide. The Commission alleged that these defendants, along with a number of other corporate and individual defendants, marketed one type of equipment to consumers but then obtained physician approval and made insurance claims for other, more expensive equipment. In some cases, the Commission alleged, insurance claims were filed for items never ordered by consumers. The settlement bars Jerry Rodney Rogers from any aspect of marketing medical products or services for ten years, and it requires Jeffrey Marmer to obtain a $100,000 performance bond before engaging in the sale of durable medical equipment and to pay a judgment of $31,000. Jerry Wilburn Rogers and Violet Cassie Rogers are required to obtain a performance bond of $50,000 before engaging in the sale or rental of medical equipment and to pay a judgment of $7,500.
(International Charity Consultants, Inc.)
Future Images, Inc.; Regeneration & Renewing, Inc. (d/b/a AWARE or Aware-Regeneration and Renewing); Topp Kat, Inc.; Toppkat, II. Inc.;
Sherri L. Harvey; William Jervis; Joseph Rubbico; Michael Kody Sawyer
Eight defendants in a charitable solicitation fraud case agreed to pay more than $4.1 million in consumer redress as part of a settlement. The Commission alleged that the defendants used a fraudulent prize-promotion pitch to induce consumers, many of them elderly, to donate money to two purportedly charitable organizations, one of which AWARE was not a true nonprofit organization. The court order bans William Jervis, Joseph Rubbico, and Michael Sawyer from participating in telephone prize promotions and requires all of the defendants to post a $5 million performance bond before engaging in telemarketing activities in the future. These eight defendants are among 24 originally charged in this case.
International Computer Concepts, Inc.; Helen Schumaker; Larry Schumaker
A federal district court judge ordered International Computer and its officers to pay nearly $1.6 million in consumer redress in settlement of allegations that they misrepresented the potential earnings of their business opportunities and used fraudulent references, among other violations of the Franchise Rule. The company sells franchises consisting of computer software display racks to be placed in retail stores. The order also permanently bans the defendants from involvement with business opportunities and franchises in the future.
Mackie Services, Inc.; Panoramic Multimedia, Inc.; Stanley L. Katz; Randy Prefer
Two companies and their principal officers settled allegations that they exaggerated the earnings potential of their business opportunities involving CD-ROM display racks and otherwise violated the Franchise Rule. The Commission alleged that the defendants overstated potential profits and the value of the CD-ROM titles they supplied. In addition, they allegedly used fraudulent references and failed to provide investors with important documentation. The defendants are barred from marketing any franchise or business venture in the future and are required to pay $20,000 into a consumer redress fund.
Motion Medical, Inc.; Anton Albert Wood
Motion Medical and its president agreed to settle allegations stemming from their participation in an allegedly deceptive scheme to telemarket medical equipment to consumers nationwide and file false claims with health insurance companies. According to the Commission, the defendants marketed medical equipment to disabled persons, then obtained physicians' approval and submitted claims to health insurers, which in many instances were for more expensive equipment and for items that had not been ordered by consumers. The settlement prohibits the defendants from misrepresenting any product or service they telemarket in the future and requires Anton Wood to obtain a $150,000 performance bond before he engages in the sale of durable medical equipment. In addition, the defendants are required to pay a total of $346,700 for consumer redress.
MTK Marketing, Inc. (d/b/a District Supply Center and Central Supply Center);
Acacia Properties, Inc. (d/b/a National Supply Center);
Copy Resource Center, Inc. (d/b/a District Supply Center and Central Supply Center); Intel Marketing of California, Inc. (d/b/a District Supply Center);
Nationwide Transport, Inc. (d/b/a District Supply Center);
Paragon Shipping, Inc. (d/b/a National Supply Center);
Telco Marketing, Inc. (d/b/a Central Supply Center);
Dennis Connelly; Jeanine Dora; Erick Graziano (a/k/a Eric Knight);
Donna Green; Sam June; Colleen McCullough;
James Rem (d/b/a Central Supply Center and JR Associates); Donald Ryan
The Commission negotiated four settlements with 15 defendants in its case against perpetrators of an allegedly deceptive "toner phoner" scheme. The defendants were alleged to have victimized small businesses by misrepresenting themselves as the businesses' regular suppliers, shipping unordered photocopier toner and other office supplies, and charging exorbitant prices. The settlements include a combined payment of more than $17 million for consumer redress. The settlements also prohibit the defendants from engaging in deceptive acts and practices, permanently ban defendants Dennis Connelly and Sam June from engaging in the telemarketing of office supplies, and require the other individual defendants to post bonds ranging from $25,000 to $200,000 before engaging in the telemarketing of office supplies.
National Bureau of Credit, Inc. (Johnny Ray Dunn, d/b/a this company and Carolina Federal Financial Services, Carolina Firstate Bankcard & Loan Program Services, Carolina Firstate Financial, Fidelity National Financial Services, National Bureau of Consumer Affairs Department, and NBC Services)
The Commission negotiated an agreement with Johnny Ray Dunn settling allegations that he engaged in misrepresentations and fraudulent practices in connection with the offering of advance-fee credit cards and loans. Dunn represented that he had an "excellent record" with an independent consumer protection agency, the National Bureau of Consumer Affairs, which was actually one of the names under which he did business, the Commission alleged. The settlement requires Dunn to pay $3,500 in consumer redress, bars him from marketing advance-fee credit services and from violating the Telemarketing Sales Rule's provisions against deceptive or abusive marketing, and prohibits him from making misrepresentations in connection with any product or service he sells in the future.
Nishika, Ltd.; American 3-D Corporation; American 3-D, Ltd.; Bentley Industries, Inc.; Nishika 3-D Camera Sales, Inc.; Nishika Corporation;
James D. Bainbridge; Daniel Alan Fingarette
The Commission negotiated two settlements with defendants in a nationwide prize-promotion telemarketing scheme. The Commission filed a complaint against the Nishika and American 3-D companies and James Bainbridge, who is president, owner, or principal of these five companies, and against Bentley Industries and its owner and president, Daniel Fingarette. The defendants allegedly induced consumers to pay inflated prices for cameras and other items by misrepresenting that they had won valuable awards. The first agreement includes $9.6 million for a consumer redress fund and $1.7 million for consumers listed as creditors in the companies' bankruptcy proceedings. The second bars the defendants from engaging in similar deceptive schemes in the future.
North American Supply, Inc.; American Computer Industries, Inc.;
Otis Brown; Larry Ellis; Harold Moskowitz; Ron Moskowitz
The Commission reached settlement agreements that will recover money for redress to small businesses allegedly defrauded by North American Supply or its predecessor, American Computer Industries. The Commission alleged that the defendant corporations ran deceptive schemes to sell small companies overpriced photocopier toner and other office supplies by telephone. The two consent judgments make the defendants liable for redress in the following amounts: North American Supply and American Computer Industries, $1.3 million; Larry Ellis, $202,316; Harold Moskowitz and Ron Moskowitz, $325,000.
On Line Communications, Inc.; Richard Basile; Robert Corey (a/k/a Michael Allen)
The Commission reached a settlement with one defendant and obtained a default judgment against the others in its case against On Line Communications, a company that allegedly ran a fraudulent application service for paging system licenses issued by the Federal Communications Commission (FCC). The Commission alleged that the firm, its president, and a hidden principal misrepresented their paging license services, alleging that consumers are unlikely to derive any income or profit from such licenses, contrary to the defendants' claims. The settlement with Richard Basile requires him to turn over $39,150 in frozen assets for consumer redress and prohibits him from making false representations about any investment he offers in the future. The court entered a default judgment of $817,130 for redress against On Line Communications and Robert Corey after they failed to answer the Commission's allegations. The judgment also prohibits false claims and requires Corey to post a $300,000 performance bond before engaging in any telemarketing in the future.
Orion Products Corporation (d/b/a Natural Choice-USA); Antares Corporation;
Dana M. Bashor
Orion, Antares, and their president agreed to pay $1 million in consumer redress to settle allegations of violating the Franchise Rule. The Commission alleged that the defendants misrepresented the potential earnings and profits of their vending machine distributorships and other facts about the businesses, and that they used false references. Under the proposed settlement, the defendants are permanently prohibited from making misrepresentations about the income, profits, or sales volume that distributors could expect and about the extent of location assistance.
Public Telco Corporation; Ronald Oman
A federal district court entered a judgment against Public Telco and its owner for nearly $2.4 million for consumer redress. The Commission alleged that the defendants overstated the earnings potential of their pay telephone business opportunities, provided false references, misrepresented the assistance they would provide investors, and lied about their refund policies. The defendants are permanently banned from offering any franchise or business opportunity, from engaging in any form of telemarketing, and from selling or transferring any customer lists.
Research Awards Center, Inc.; Financial Research Group, Inc.;
Quality Marketing, Inc.; Fernando "Tom" Alvarez;
Nicholas Creighton Parr (a/k/a Nicholas Creighton and Creig Parr)
The Commission settled with three corporations and two individuals in connection with allegations that they mailed millions of deceptive solicitations in a massive sweepstakes scheme in which they falsely promised consumers that they were "guaranteed winners" of valuable prizes. The settlement requires Fernando Alvarez to pay $900,000 for consumer redress; it bars all five defendants from offering sweepstakes or similar promotions, prohibits them from making false statements in offering any product or service by direct mail, and requires each of them to obtain a $1 million performance bond before offering products or services by direct mail in the future.
Satellite Broadcasting Corporation; Media Management, Inc.;
AL Financial Services, Inc.; Satellite Broadcasting Royalty Trust; Satellite Systems, Inc.;
T. Michael Haws; Lonny Remmers; Allan Wells (a/k/a Joseph Champion)
Five companies and three individuals who are company officers agreed to pay a total of more than $700,000 for consumer redress in three settlements relating to allegations that they misrepresented investment opportunities in satellite television broadcasting services. The Commission alleged that the defendants induced consumers to invest in a plan to market and distribute direct broadcast satellite (DBS) television programming by falsely representing the investment as a "low-risk" and "instant income" venture and falsely telling investors that they had already acquired the rights to market DBS programming transmitted by DIRECTV, Inc., the largest provider of DBS programming in the United States. The settlements permanently prohibit the defendants from misrepresenting any investment opportunity and require the individual defendants to post performance bonds before engaging in any future telemarketing activities.
(Second Income, Inc., d/b/a Creative Promotions and Silver Shots, Inc.)
Alan L. Rosofsky; M. David Silverman
The Commission negotiated settlements with two individuals named in the business opportunity fraud case against Second Income. The Commission alleged that the defendants 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 defendants violated the Franchise Rule by failing to provide required disclosure documents to prospective franchisees. The two settlements provide for combined consumer redress of $80,000 and prohibit the defendants from making deceptive claims about any business opportunity and from violating the Franchise Rule in the future.
Southeast Necessities Company, Inc. (d/b/a Dr.'s Choice); Allstate Locating, Inc.; Germaine Easley; David Kallen; Marc Frank Kallen;
Janice Lynn Zoyes; Michael George Zoyes
Two companies and five individuals paid $360,000 to settle allegations involving their allegedly deceptive marketing of business opportunities. The money will be used as redress for consumers who invested in the defendants' display racks of "Dr.'s Choice" diet and vitamin products. The Commission alleged that the defendants misrepresented the earnings and success of the businesses and the availability of profitable retail locations for the display racks, furnished fraudulent references, and failed to make key pre-purchase disclosures required by the Franchise Rule. The settlement permanently prohibits the defendants from engaging in telemarketing and from selling any franchise or business opportunity.
(Telecommunications of America, Inc.)
Stephen Jonathan Burns; Barry Taylor
The Commission obtained settlements with two officers of Telecommunications of America in connection with allegations that they violated the Franchise Rule in selling pay telephone business opportunities. The settlements require that the defendants comply with the Rule in the future and prohibit them from making false or misleading statements when offering any franchise or business opportunity. In addition, Barry Taylor is required to pay $10,000 and Jonathan Burns is required to pay $7,500 for consumer redress.
Total Care, Inc.; Irwin Gonor
Total Care and its president agreed to settle allegations that they were involved in a fraudulent telemarketing scheme that preyed on older consumers. According to the Commission, the defendants made unsolicited telephone calls to consumers nationwide, many of them senior citizens, and promised them valuable prizes or awards if they purchased certain merchandise. In many instances, the Commission alleged, the prizes were worth little or nothing. The settlement requires the defendants to pay more than $2.5 million in consumer redress.
U.S. Telemedia, Inc.; Robert A. Brandzel
U.S. Telemedia, a firm that marketed computer memory chips over the Internet, settled allegations that its marketing was deceptive and that it violated the Mail/Telephone Order Merchandise Rule. The Commission alleged that U.S. Telemedia and its principal officer failed to deliver merchandise in the time promised and failed to provide refunds to consumers who either did not get the chips they ordered or did not get them in a timely manner. To settle the allegations, the defendants agreed to pay $5,500 in consumer redress and are barred from misrepresenting merchandise or shipping schedules in the future and from any other violations of the Rule.
United Consumer Services, Inc. (formerly United Recovery Services, Inc.);
Wayne Axelrod; Wendy Heitkamp
A federal district court judge upheld Commission allegations against a company and two principals who operated a deceptive "recovery room" telemarketing scam. The Commission alleged that the defendants targeted victims of a previous telemarketing scheme who had lost money by investing in specialized mobile radio licenses and that they made a variety of deceptive representations in promising to recover the victims' losses for upfront fees. The judgment requires that the defendants pay more than $161,000 in consumer redress and permanently bars them from offering recovery services.
United Wholesalers, Inc.; Innovators of Success, Inc.;
International Research Corporation; Long Life Industries, Inc.;
Steven Green; Philip G. Lynch; James W. MacDonald; Margaret A. MacDonald
Four corporations and four individuals agreed to transfer assets totaling approximately $1.3 million to the Commission and to pay an additional $202,000 for consumer redress as part of the settlement of allegations that they used deceptive and illegal tactics in a massive telemarketing scheme that preyed on businesses and health care facilities across the country. The defendants allegedly misrepresented that they were the regular suppliers of business supplies and their prices were the regular prices. Further, they allegedly shipped unordered merchandise and intimidated customers into paying invoices for the unordered goods. The settlement prohibits the defendants from making misrepresentations in connection with any telemarketing activity, from using aliases, from shipping or billing for unordered merchandise, and from transferring their customer lists. In addition, for a period of five years, the individual defendants are required to post a $500,000 performance bond before reentering the telemarketing business.
USM Corporation (d/b/a Senior Citizens Against Telemarketing (SCAT)
and SCAT Services); Anita Sowards
SCAT and its president agreed to pay approximately $25,000 for possible consumer redress, to settle allegations that they engaged in a deceptive telemarketing "recovery room" scheme that preyed on elderly consumers. The Commission alleged that the defendants falsely represented that they were affiliated with a government consumer protection agency and that, for an upfront fee, they would recover money the consumers had lost to previous fraudulent telemarketers. The settlement permanently prohibits the defendants, in connection with any type of telemarketing, from misrepresenting any fact that may influence a consumer's decision to make a charitable contribution, enter a contest, or purchase any good or service.
Windward Marketing, Ltd.; Crestwood Enterprises, Inc. (both corporations d/b/a Magazine Distributors of America, Magazine Express, Magazines of America, Magazines Limited, Magazines Unlimited, Premium Magazine, and Wholesale Magazine);
Kent L. Holbrook; Matthew Corbitt Mizell, Jr.
The Commission negotiated settlements with a group of telemarketers who allegedly perpetrated a magazine subscription telemarketing scheme using a variety of company names. The Commission alleged that the defendants used false promises of valuable prizes and a variety of other misrepresentations to obtain the numbers of consumers' checking accounts, which the defendants then debited without authorization. A federal district court issued a preliminary injunction halting the allegedly deceptive practices. In one settlement, Matthew Mizell, former president of corporate defendant Crestwood Enterprises, agreed to pay $493,000 in consumer redress. In another, Kent Holbrook, current president of Crestwood Enterprises, agreed to relinquish any claim on the assets of the company, including $150,000 in funds frozen at the Commission's request for use as redress. That settlement also includes a $13.4 million judgment against Crestwood Enterprises.
(Wolf Group)
30 corporations; James E. Holler; Clyde G. King; Vincent Leonardo; Marvin Wolf
A federal district court judgment against four individuals and 30 corporate defendants requires over $31 million for consumer redress to settle allegations that they were involved in deceptive selling of vending machine business opportunities. The Commission alleged that the defendants used a variety of deceptive claims and practices, including using fraudulent references and misrepresenting investors' potential earnings and the assistance they would get in locating the vending machines. According to the complaint, many investors never even received their machines. The Commission alleged that the defendants also violated the Franchise Rule by failing to give potential investors critical pre-purchase information about the franchisors that may have tipped off consumers to the deceptive scheme.