Office Supply Telemarketer Settles FTC Charges

A New Jersey telemarketer who allegedly bilked businesses and not-for-profits ranging from small retirement homes to The Chicago Symphony Orchestra by sending them unordered merchandise, billing them and then hounding and threatening them for payment, has agreed to settle Federal Trade Commission charges that his telemarketing practices violated federal laws. Michael P. McGowan, doing business as Amna Medical Products Corporation and Industrial Chemical Corporation, will be barred from any telemarketing business in the future under the terms of the settlement. In addition, a $317,000 suspended judgment has been entered. The judgment is collectable if the defendant has misrepresented his assets to the FTC.

McGowan, who, according to the FTC, has done business under at least nine aliases and as many corporate names, based his telemarketing operation in Pittsburgh, Pennsylvania, and later Union City, New Jersey. Last summer, McGowan and his companies were targeted in a joint federal, state law enforcement sweep of allegedly fraudulent business supply telemarketers who prey on businesses and not-for-profit organizations, including churches, private schools and YMCAs, which the FTC spearheaded, called Operation CopyCat. The sweep resulted in 17 law enforcement actions by the FTC, the U.S. Postal Inspection Service, and state attorneys general and local law enforcement officials in Illinois, Indiana, Michigan, New Jersey, Iowa, Pennsylvania and Colorado. The FTC has obtained more than $1.5 million in consumer redress in four earlier settlements with office supply telemarketers. One state case remains in litigation.

According to the complaint detailing the charges against McGowan, his telemarketing operations:

• placed cold calls to a business or organization and got the name of an employee;
• shipped unordered office supplies to the organization -- or shipped nothing;
• sent the business an invoice, using phony customer and invoice identification numbers and falsely claimed that the employee had placed an oral order for the supplies; and,
• harassed the accounts payable department, sometimes with threats of outside collection, if the account was not paid.

Under provisions of the agreement to settle the charges, McGowan will be barred from engaging in any telemarketing sales business in the future, including the practices alleged in the complaint. McGowan also is barred from the use of any aliases, pen names or pseudonyms in the course of any business dealings or in publicly filed documents. In addition, $11,800 in frozen assets of Amna Medical Products Corporation and Industrial Chemical Corporation will be divided between the FTC and the U.S. Postal Inspection Service, which brought a parallel suit. Finally, a suspended judgment in the amount of $317,170 -- the estimated amount of consumer losses -- has been ordered.

Suspension of the judgment could be lifted if the court finds that McGowan made any material misrepresentations or omissions in his financial disclosure or asset deposition.

The FTC brought this case with the assistance of the Department of Justice and the U.S. Postal Inspection Service in Newark, New Jersey.

The Commission vote to accept the consent judgment was 5-0. It is subject to court approval.

NOTE: This consent judgment is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the complaint, consent and the legal 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

(FTC Matter No. X960 076)