Pay Telephone Business Scheme Defendants Banned from Selling Franchises under FTC Settlements

ComTel Communications Global Network, Inc., of North Miami Beach, Florida, and its officers, have reached an agreement with the Federal Trade Commission settling charges that they made false and deceptive claims regarding the high incomes investors could earn if they purchased a business opportunity involving pay phones. The defendants claimed that for an initial investment of $12,756 to $41,320, investors could buy pay telephones that purportedly would generate annual income of as much as $28,560 per phone.

Shortly after the FTC filed the case and the court issued a stipulated order halting the pay phone scheme, the defendants began operating a similar scheme -- this time based on toy rack displays rather than pay telephones -- through defendant International Toy Distributors, Inc. (ITD). In response, the FTC amended its complaint to target defendants' new scheme as well, adding ITD and its principals, David Silbergleit and Michael Greenberg as defendants. The complaint had initially named only ComTel Communications and its officers and owners, Marc Zimmerman, Eric Zimmerman and Victoria Zimmerman, and ComTel manager Philip Berger. It alleged that they made false earnings claims and failed to provide the required disclosure documents as mandated by the FTC's Franchise Rule. The settlements would ban all of the defendants from "engaging, participating or assisting in any manner or in any capacity whatsoever in the marketing or sale of any franchise or business venture, whether directly or though any intermediary." The proposed settlements also would require that before any of the individual defendants engage in any further telemarketing, they must post a performance bond -- ranging from $250,000 in the case of defendants Silbergleit, Greenberg, Berger and Victoria Zimmerman -- to $1 million in the case of defendants Marc and Eric Zimmerman.

The FTC brought the case in November 1996 as part of "Operation Missed Fortune," a joint federal/state law enforcement sweep targeting promoters of get-rich-quick self-employment schemes that resulted in more than 75 actions.

The five settlements announced today, if approved by the court, end the litigation. One order covers ComTel Communications and Marc and Eric Zimmerman; one covers ITD and David Silbergleit; and Berger, Greenberg and Victoria Zimmerman have agreed to separate orders. The defendants have agreed to collectively pay a $120,000 monetary judgment. The Zimmerman defendants have agreed to relinquish all of the funds frozen in all of the business and personal accounts; Berger has agreed to relinquish approximately $12,000; Silbergleit has agreed to pay $4,500; and Greenberg has agreed to pay $4,300. The settlements include provisions that would allow the Commission to reopen the orders to recover money for victims should the defendants be found to have misrepresented their financial condition.

Finally, the settlements contain various record keeping and reporting requirements to assist the FTC in monitoring the defendants' compliance.

The Commission vote to file the five separate stipulated final judgment and orders was 5-0. They were filed in the U.S. District Court, Southern District of Florida, on September 19, 2000, and require the court's approval to become binding.

NOTE: These 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.

Copies of the settlements in this case will be available shortly. Copies of the documents associated with "Operation Missed Fortune"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.