Two Defendants in Pre-Paid Telephone Cards Scam Settle FTC Charges;

Steven Mishkin and Harris Cohen, two of the five individual defendants named in the Federal Trade Commission's 1998 lawsuit against Telecard Dispensing Corporation of Hollywood, Florida, have agreed to settle charges arising from their role in the allegedly deceptive practices in the sale of business opportunities involving prepaid telephone card vending machines. The FTC alleged, among other things, that the defendants, collectively referred to as the "Tashman Group," misrepresented how much purchasers could earn from the business opportunity, the exclusivity of territorial rights, the availability of prime locations for the machines within the prescribed territory, and the reliability of the prepaid telephone cards to be sold. Under the terms of the settlement, Steven Mishkin is banned from engaging in the sale of business opportunities and is required to obtain a $50,000 performance bond before engaging in other telemarketing, except when he is engaged in selling prepaid telephone cards for his current company, Transworld Telecom, Inc. Harris Cohen is required to obtain a $75,000 performance bond before engaging in the sale of any business opportunities.

In October 1998, the FTC filed a complaint in federal district court against Telecard Dispensing Corp., Stephen I. Tashman, Stephen M. Mishkin, Ernest F. Lockamy, Michael S. Dundee and Harris M. Cohen. The complaint alleged that the defendants made numerous false representations in the promotion and sale of their vending machine business opportunities. In addition, the FTC alleged that the defendants violated the FTC's Franchise Rule by failing to provide complete and accurate disclosure documents. The Franchise Rule is a pre-purchase disclosure rule intended to give potential investors key information about a business opportunity, including the legal and financial history of the seller and its principal officers.

In addition to the ban and bond requirements, the settlement also prohibits both defendants from making the types of misrepresentations alleged in the complaint and from violating provisions of the Telemarketing Sales Rule. The settlement further prohibits them from selling or transferring customer lists. In addition, the settlement includes a provision requiring the defendants' cooperation in the ongoing litigation of the remaining three defendants, and contains a "right to reopen" provision, if the Court finds that the defendants knowingly made a material misrepresentation or omission concerning their financial information provided to the FTC. Finally, the settlement contains routine record-keeping, monitoring and compliance provisions.

The Commission vote to file the proposed stipulated final judgment and order was 5-0. The settlement was filed in the U.S. District Court, Southern District of Florida, West Palm Beach Division, and signed by the judge on June 14, 2000.

NOTE: This stipulated final 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 release and stipulated final judgment are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); 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.

Brenda Mack

Office of Public Affairs

202-326-2182

Ronald Laitsch or Katharine Alphin

Southeast Region - Atlanta

404-656-1358 or 404-656-1350

(FTC File No. 982 3197; Civil Action No. 98-7058-CIV)