FTC Issues Second Project Scofflaw Report

The Federal Trade Commission has issued its second report highlighting efforts to detect and prosecute violators of FTC-obtained court orders. In January 2002, the FTC’s Bureau of Consumer Protection issued a “Report to the Commission on Project Scofflaw’s First Five Years.” The report issued today states that defendants sentenced in the year after the Five Year Report have been ordered to serve nearly 26 years of detention, and pay $15 million in restitution and over $39 million in consumer redress.

The FTC’s Bureau of Consumer Protection began “Project Scofflaw” in 1996 to establish procedures to detect repeat offenders and deter order violations through civil and criminal contempt actions. The Five-Year Report discussed Project Scofflaw’s history and the results of 27 civil and criminal contempt prosecutions since its inception. According to the report released today, the combined totals of law enforcement actions taken under Project Scofflaw account for prison sentences or home detention totaling almost 54 years against 17 defendants and $58 million in restitution or consumer redress.

The report released today discusses case results in five criminal actions and four civil contempt actions. For example, the report discusses a defendant who was sentenced to serve more than 10 years in prison for participating in a business opportunity scheme in violation of a court order and a defendant’s attorney who was sentenced to serve six months for assisting the defendant to violate a court-ordered freeze on the defendant’s assets. The report also discusses four civil contempt actions the Commission initiated in 2002. Most of those cases are ongoing.

In addition, the report discusses several other Project Scofflaw initiatives and results within the year after the Five-Year Report. In December 2002, the staff filed comments with the United States Sentencing Commission concerning proposed amendments to the sentencing guidelines, policy statements, and commentary to implement the Sarbanes-Oxley Act of 2002.

The comments shared with the Sentencing Commission some of the FTC’s experiences in stopping and deterring deceptive conduct, especially by recidivists, and recommended increasing penalties for “lower loss” frauds of less than $120,000 and enhancing penalties for obstruction of justice offenses. In addition, the Project Scofflaw team conducted compliance review surveys, searching databases and using other investigative techniques to look for any evidence of inaccurate information or non-compliance for selected defendants. The staff also reviewed and streamlined existing model order language that is designed to allow the Commission to track defendants and their activities, and conducted staff training on the use of the revised provisions and how to bring civil and criminal contempt actions.

The FTC voted authorizing staff to issue the Project Scofflaw Report was 4-0-1, with Commissioner Pamela Jones Harbour not participating.

Copies of the Project Scofflaw Report 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 Matter No. P964910)