One of the Individual Defendants in a FTC "Recovery Room" Fraud Case Agrees To Settle

Angelo DeLon, one of the defendants sued by the Federal Trade Commission over his role in an allegedly deceptive telemarketing scheme that purported to recover money consumers lost to investment fraud, has agreed to post a $50,000 performance bond to protect consumers before engaging in, or assisting others in, any telemarketing activities in the future. The FTC alleged that the defendants called consumers who were victims of previous investment telemarketing scams -- often involving Federal Communication Commission wireless telecommunications licenses -- and told them that, for a fee, they could recover most or all of the money the consumers had previously lost. In addition to the bond requirement, the settlement would permanently prohibit DeLon from engaging in misrepresentations regarding any material aspect of any future telemarketing or recovery room services.

The settlement stems from an FTC complaint filed in federal district court in August 1995, leveling charging against Meridian Capital Management, Inc., Advisory Consultants, Inc., successor to and doing business as Meridian Capital Management; Jeffrey A. Jordan, Richard Randall and Angelo Delon. In December 1995, the complaint was amended to include Markos Mendoza and Russell Mann as defendants, and Suzan Randall as a relief defendant not alleged to have participated in the alleged misconduct but who has allegedly received and benefitted from funds that the defendants fraudulently raised. The charges against the other defendants are still pending.

The FTC alleged that Meridian Capital Management, a Las Vegas-based telemarketing firm ("Meridian"), made unsolicited calls to consumers throughout the United States, telling them that Meridian was located in Washington, D.C. and specialized in recovering money lost by consumers to fraudulent investment-promotion telemarketing firms. The defendants said that, for an advance fee of 10 percent -- from $1,000 to as much as $5,000 -- of the original "bad" investment, plus another 10 percent fee upon recovery, they would recover all money that the consumer had lost, plus interest and punitive damages, within 60 to 90 days. To support these claims, the FTC said, the defendants allegedly told consumers that they would recover the money from the individuals who were behind the original fraudulent telemarketing scheme, and that they would recover money from bonds or insurance policies required to be posted by states in which the firms had done business. The complaint further alleged that the defendants often claimed that they were on the verge of filing a class action lawsuit on behalf of their clients.

Under the proposed settlement of the charges against him, which requires the court's approval to become binding, DeLon would be prohibited from misrepresenting:

• that money previously lost by a consumer to a telemarketer has been, or is likely to be recovered;
• that a prize that a consumer never received from a telemarketer has been, or is likely to be recovered;
• the success in recovering money previously lost by consumers to a telemarketer or the success in recovering prizes that consumers never received from a telemarketer;
• that a consumer must pay an advance fee to be able to participate as a member of a class action lawsuit;
• that lawsuits will be filed against telemarketers, when necessary, to obtain whole or partial refunds for victims of fraudulent telemarketers;
• that a consumer's money likely can be recovered from bonds posted by other telemarketers; and
• any other fact material to a consumer's decision to purchase recovery services.

In addition, the settlement would prohibit DeLon, in connection with telemarketing, from falsely representing any fact material to a consumer's decision to purchase any good or service, or to donate to a charity. Also, the order would prohibit DeLon from violating, or assisting others in violating, any provisions of the newly-enacted Telemarketing Sales Rule, which includes requesting or receiving an advance payment for recovery services.

The bond provision included in the settlement would require DeLon to post a $50,000 performance bond before he engages in, or assists others in, telemarketing activities. The settlement further would require DeLon to disclose the existence of any bond he posts pursuant to these requirements in all written sales materials sent to consumers.

Finally, the settlement includes various reporting requirements necessary to assist the FTC in monitoring Delon's compliance.

The Commission vote to file the final order for permanent injunction was 5-0. The proposed final order was filed in U.S. District Court for the District of Nevada, in Las Vegas, on April 25, 1996.

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

Copies of the final order and other documents associated with this case, are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710 FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov

(Civil Action No.: CV-S-96-63-PMP (RLH))

(FTC File No. X950060)