Business Opportunity Defendants Settle FTC Charges

Defendants in a display-rack business opportunity for greeting cards and perfumes have agreed to settle Federal Trade Commission charges that they misrepresented the earnings potential and availability of profitable locations for their racks, used phony references to tout the scheme and used a sham better business bureau to lend credibility to the enterprise. One defendant is barred from telemarketing for life; another is required to post a $2 million bond before engaging in telemarketing; and three defendants are prohibited from selling business opportunities. The settlements bar all individual defendants from misrepresenting business opportunities in the future and from engaging in any business activities with one another. The settlements also impose a total of $3.9 million in monetary judgments on the six individual defendants, although the FTC said it is unclear what, if any, of that amount can be collected because of the defendants’ financial condition.

In August 1997, the FTC charged seven individuals and four corporations -- collectively called the Urso Group -- that marketed display rack business opportunities, with engaging in a host of deceptive practices that violated the FTC Act and the FTC’s Franchise Rule.

According to the FTC, the advertisements for the "profitable" business opportunity carried a phone number that led consumers to a Miami telemarketing boiler room where defendants enticed consumers to invest in the business opportunity by making numerous false statements concerning the amount of money they could reasonably expect to earn. They also urged interested consumers to call "successful distributors" to learn how profitable the existing distributorships were. The "successful distributors" were actually "singers" or phony references who lied about their purported success. Defendant Susan Perkins was a "singer."

The defendants named by the FTC in its complaint were: Raymond M. Urso; Bernard Koenig, also known as Bernie King; Marcia Koenig; David Bennett; Jeffrey Shoobs; Scott Gunn, a/k/a Scott Goodson a/k/a Scott Gates; and Susan Perkins. The corporations through which they defrauded the public were: Bridgeport & Associates, Inc.; Prestige Advertising, Inc.; Maria K. Associates, Inc.; and NBBB. The Final Orders announced today would settle the suit filed in U.S. District Court for the Southern District of Florida, in Miami, with all defendants except David Bennett and NBBB.

The settlements bar each of the defendants from engaging in future business activities with any of the other defendants and bar them from misrepresenting any material facts in the course of business. In addition:

• The settlement with Raymond Urso imposes a $2 million judgment, bans him from selling business opportunities and bars him from telemarketing unless he posts a $2 million performance bond. It also prohibits him from operating any of the businesses named in the original complaint and from using aliases.
• The settlement with Bernard and Marcia Koenig imposes a $1 million judgment and bans them from selling business opportunities in the future.
• Scott Gunn is barred from telemarketing and selling business opportunities. In addition, the settlement imposes a $350,000 judgment on Gunn.
• Jeffrey Shoobs and Susan Perkins face judgments of $500,000 and $100,000, respectively.

All the settlements contain recordkeeping provisions to allow the FTC to monitor compliance.

Finally, Bridgeport & Associates, Prestige Advertising and Maria K Associates, Inc., have been placed in permanent receiverships.

The Commission vote to approve the judgments was 4-0, with Commissioner Mary L. Azcuenaga not participating.

The consent judgments were approved by the court on March 6, 1998.

NOTE: Consent judgments are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Consent judgments have the force of law when signed by the judge.

(FTC File No. X970 068)