Canadian Telemarketers Agree to Settle Charges That They Operated a Bogus Lottery-Bond Scheme Targeting U.S. Citizens

B.B.M. Investments, Inc., (B.B.M.) of Vancouver, British Columbia, and its owner, Timothy Ryan Atkinson, will be permanently banned from marketing foreign lottery-related goods or services in settlement of Federal Trade Commission charges that they targeted U.S. citizens in a fraudulent lottery-bond scheme. According to the FTC, the defendants deceptively telemarketed British bonds, touting them as National Premium Savings Bonds issued by National Savings, the second largest savings institution in the United Kingdom. The defendants falsely represented that they were authorized to market these bonds and convinced consumers that their program was risk-free, the FTC alleged.

In January 2000, the FTC filed a complaint against the defendants and obtained a temporary restraining order prohibiting B.B.M. from selling or promoting its bond program to U.S. consumers. In its court filing, the FTC asserted that the defendants' telemarketers made numerous misrepresentations to induce U.S. citizens to buy their purported National Premium Savings Bonds. Relying on statements made by the telemarketers, consumers paid B.B.M. thousands of dollars expecting to receive tax-free, no risk bonds that would be entered into the Premium Savings Bond program monthly drawing for cash prizes. Instead, the FTC alleged, consumers typically paid B.B.M. between $1,000 and $3,000 and received nothing at all. According to the FTC, National Savings is the only organization authorized to sell Premium Savings Bonds, and buying and selling foreign bond instruments with a lottery feature is illegal in the U.S.

The proposed stipulated final judgment and order, which ends the litigation in the case, would, among other things:

prohibit the defendants from marketing any lottery-related goods or services and from making certain misrepresentations in connection with the legitimate sale of government securities;

permanently ban the defendants from promoting, selling or participating in the sale of tickets, chances, interests or registrations in any lottery to U.S. citizens;

prohibit the defendants from receiving any monies from any business involved in marketing lottery-related goods or services to U.S. citizens, including any investment program, security or product containing a lottery feature; and

prohibit the defendants from distributing their customer lists to others.

The proposed settlement also contains a right to reopen provision in the event the defendants failed to disclose or made any material misrepresentations in their sworn financial statements. Finally, the proposed settlement contains various recordkeeping and reporting requirements to assist the FTC in monitoring the defendants' compliance.

The FTC received invaluable assistance from the British Columbia Ministry of Public Safety and Solicitor General, Consumer Services Division, and the Royal Canadian Mounted Police, Vancouver Commercial Crime Section.

The Commission vote to authorize staff to file the stipulated final judgment and order was 5-0. It was filed by the FTC's Northwest Region in the U.S. District Court for the Western District of Washington in Seattle on September 18, 2001, and requires the court's approval.

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

Copies of the stipulated final judgment and order, as well as other documents associated with this case, 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. 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 at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft 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.

(FTC File No. X000060)
(Civil Action No. C:00-0062Z)