FTC Charges Against a Fraudulent Payphone Business Opportunity Result in Injunctions Against All Defendants

Advanced Public Communications, Corporation, James L. Bianco, Jr. and Michael Drucker, three of the four defendants named in a lawsuit filed by the Federal Trade Commission as part of a nationwide crackdown on fraudulent business opportunities, have been permanently banned from selling franchises, business opportunities or other income-generating products or services by a federal judge in the Southern District of Florida. The ban is part of an Order of Default Judgment entered by the court against all three defendants. The FTC had filed a complaint against Advanced Public Communications Corporation, based in Miami, Florida, as well as Bianco, Drucker and another individual, Michael Portman, alleging that they marketed phony payphone route business ventures by promising astronomical earnings, preselected locations, exclusive territories and complete start-up assistance to potential purchasers. In addition to the Order of Default Judgment, the court has approved a settlement between the FTC and Portman, under which Portman is prohibited from making material representations in marketing franchises or business opportunities, including payphone route business opportunities.

The settlement and Order, announced today, end the litigation in this case, which was among 35 cases brought by the FTC and the Department of Justice as part of "Project Biz-illion$," a multi-prong state/federal attack on traditional business opportunity scams. This case, like most "Project Biz-illion$" actions, was launched against defendants that advertised in the classified sections of daily newspapers to peddle business opportunity scams -- in this case -- payphone route opportunities. The defendants not only made unsupported earnings claims and failed to give consumers critical pre-purchase information about the business opportunity as required by the FTC's Franchise Rule, but also never delivered the actual payphone equipment that consumers had purchased, the complaint alleged.

According to the FTC, the defendants attracted potential purchasers with ads that promised potential earnings of $10,000 per month through local payphone route ownership. When consumers responded to the ads, the defendants made false and misleading claims about the earnings that could be realized, the availability of local, profitable payphone locations, and the start-up assistance and equipment they would provide as part of the business venture. Consumers typically invested $3,000 to $9,000, which purportedly included a payphone equipment package, including two to seven payphone machines, software, service and maintenance contracts, and shipping charges. They were promised that their equipment would arrive within 14 to 45 days of purchase. In fact, the FTC alleged, the defendants never delivered any payphone equipment to any of their purchasers, did not have preselected locations available, and did not provide any assistance with any aspect of the business once the consumers' investment was received. In most instances, consumers lost their initial investment as well as additional fees they paid to location marketing companies or for business licenses. The FTC also charged that the defendants failed to comply with the provisions of the Franchise Rule, designed to help potential purchasers protect themselves from false profitability claims.

Under the terms of both the consent judgment with Michael Portman, and the default judgment against the remaining defendants, the defendants are prohibited from misrepresenting any fact material to a consumer's purchasing decision in connection with the sale of business opportunity ventures. Moreover, the default defendants are permanently banned from selling franchises, business opportunities and income-generating ventures. The settlement and default judgments contain various recordkeeping and reporting requirements designed to assist the FTC in monitoring the defendants' compliance. Defendant James L. Bianco, Jr., who, the FTC alleges, was the "mastermind" behind the scam, also has pled guilty to two counts of grand theft in the state of Florida for his involvement with Advanced Public, and was sentenced to probation and required to pay restitution.

The Commission vote authorizing staff to file the proposed settlement as to Michael Portman was 5-0. The stipulated judgment and order for permanent injunction was filed in the U.S. District Court for the Southern District of Florida, Miami Division, on March 7, 2001 and approved by the court. The Order for Default Judgment was entered and signed by the judge on February 26, 2001.

NOTE: This stipulated judgment and order 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 news release, stipulated judgment and the Order of Default Judgment and Permanent Injunction are available 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. Copies of other documents associated with "Project Biz-illion$" are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form. The FTC enters Internet, telemarketing, identity thief and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Eileen Harrington or Karen Leonard
Bureau of Consumer Protection
202-326-3127 or 202-326-3597

(FTC Matter No. X000024)
(Civil Action No.: 00-0515-C IV-UNGARO-BENAGES)