California Telemarketer Charged with Criminal Contempt in FTC Investment Opportunity Case

The Federal Trade Commission today announced that a federal district court has ordered Lonny Remmers, a defendant already under order in a civil case filed by the FTC against Satellite Broadcasting Corporation and others, to show cause why he should not be held in criminal contempt for violating the court's final order resolving the FTC case. The government's action against Remmers stems from a January 1996 consent order settling FTC charges that Remmers and his co-defendants violated federal laws in the course of telemarketing bogus investments involving Direct Broadcast Satellite (DBS) television programming. The contempt action was filed by the U.S. Attorney's office in Los Angeles and the Department of Justice's Office of Consumer Litigation, with an FTC attorney appointed as a Special Assistant United States Attorney to participate in the prosecution of the case. The Federal Bureau of Investigation in Santa Ana, California, investigated this matter.

"The Remmers case reaffirms the FTC's continued policy of zero-tolerance of white-collar recidivists," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "This is the third time the FTC, the Justice Department, and the FBI have worked together on 'Project Scofflaw,' a comprehensive initiative to enforce federal district court orders obtained by the FTC," noted Bernstein.

In May 1995, the FTC filed a complaint alleging that Remmers, through his two companies -- PAL Financial Services, Inc. and Media Management, Inc. -- was engaged in fraudulent tactics to pitch consumers investments in a plan to market and distribute DBS television programming in certain areas of Georgia. According to the complaint, the defendants falsely represented that they had obtained the rights to distribute DBS programming offered by DIRECTV, Inc. and that investments in their venture would generate extraordinary returns with minimal risk. In fact, the defendants did not have the DIRECTV distribution rights they claimed to have, and their customers -- who put over $3 million into the program -- lost virtually all of their investments.

In January 1996, the court issued a final order against Remmers and PAL Financial Services, prohibiting them from misrepresenting the risk and potential profitability of any investments. The order also required Remmers to take actions to protect against possible future law violations, including a requirement that he obtain -- for 10 years -- a $150,000 performance bond before engaging in future telemarketing activities, and provide a copy of the bond to the FTC. The order further required Remmers, for five years, to give a copy of the court's final order to each of his future employers and to notify the FTC in writing of any changes in his employment status.

According to the documents filed in connection with the government's charges, Remmers violated the final order on two separate occasions by failing to obtain the required $150,000 performance bond before engaging in other telemarketing activities. In the first instance, the government alleges that Remmers pursued a fraudulent investment telemarketing scheme under a new name -- Dimension Capital Group ("DCG"). Through DCG, Remmers telemarketed investments in promissory notes supposedly backed by U.S. Treasury bills and guaranteed to return at least 12 percent annually. In fact, there were no Treasury bills to back up the investments. The government also alleges that Remmers violated the order by working as a consultant for another telemarketing business -- Neighborhood Acceptance Corporation ("NAC") -- before obtaining the required bond. In addition, the government charges that Remmers did not give a copy of the order to any of the directors, officers, or managers of NAC and failed to notify the FTC of any changes in his employment status since February 1996.

Documents filed by the government estimate that Remmers's order violations through DCG alone led to consumer losses of $761,000. If convicted on all four of the counts with which he is charged, he faces a possible prison sentence of 41 months or more.

Remmers was ordered to appear at a hearing in the U.S. District Court for the Central District of California in Santa Ana, on January 26, 1998.

NOTE: The issuance of an order to show cause why a defendant should not be held in criminal contempt does not constitute a finding or ruling that the defendant has actually violated the court's order. The order is merely an accusation, and the defendant is presumed innocent until and unless proven guilty. The case will be decided by the court or by a jury following trial.

Copies of the court documents and today's news release, as well as other news releases and legal documents filed in the Satellite Broadcasting, Lonny Remmers and PAL Financial Services cases, are available from the FTC's Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-3128; TTY for the hearing impaired 1-866-653-4261. To find out the latest FTC news as it is announced, call the FTC's NewsPhone recording at 202-326-2710.

(Remmers -- Case No. SACR 98-4-LHM, ancillary to No. SACV 95-473 LHM (EEx))