"Singer" Defendant Banned from Business Opportunity Industry

Tom Davis, a telemarketer for Vendors Financial Services (VFS), who also posed to unwitting consumers as a successful distributor of products contained in vending machines, has agreed to a permanent ban from marketing any business opportunity, franchise or business venture as part of a settlement with the Federal Trade Commission. Davis was one of four defendants cited in the FTC case against Vendors Financial Services, Inc., an Englewood, Colorado company. The FTC had alleged that Davis acted as a phony reference or "singer" in touting the profitability of the business opportunity. The proposed settlement announced today, also would prohibit Davis from using fictitious names and from making any material misrepresentation in connection with the telemarketing of any product or service.

The FTC complaint against VFS was filed in federal district court in August 1998 as part of the Project VEnd Up Broke business opportunity sweep. Project VEnd Up Broke was a combined law enforcement effort that netted 40 enforcement actions against fraudulent vending business opportunities that promised lucrative earnings. The complaint named Vendors Financial Services, Inc., also doing business as T & H Management, Inc., Samuel John Levine, Jay Samuel Levine and Tom Davis, also known as Richard McLaughlin. VFS sold combination snack and soda vending machine business opportunities ranging in price from $2,840 for one vending machine to $42,800 for 20 machines. The FTC alleged that Davis and the other defendants misrepresented the earnings potential of the business opportunity, promises regarding exclusive territories, the availability of profitable locations, and the authenticity of references in the marketing of their garden variety snack vending machine scam. The FTC further alleged that the defendants -- except Davis -- violated the Franchise Rule by failing to provide the required disclosure document. (The case against Vendors Financial and the Levines is still pending.)

The proposed settlement also contains various other record keeping requirements to assist the FTC in monitoring Davis' compliance.

The Commission vote to authorize staff to file the stipulated final judgment for permanent injunction was 4-0. The stipulated final judgment was filed in the U.S. District Court for the District of Colorado in Denver on May 3, 1999. The settlement is subject to court approval.

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

Copies of the news release are available from the FTC's web site at http://www.ftc.gov and copies of the final judgment as well as other documents associated with Project VEnd Up Broke are available from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD 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 Matter No. X980074)
(Civil Action No. 98-N-1832)