Global Vending Defendants to Post Performance Bond as Part of FTC Settlement

Global Vending Services, Inc., headquartered in Las Vegas, and its principals, Nicholas G. Chomakos and Matthew A. Capicchioni, have agreed to settle Federal Trade Commission charges that they failed to provide the pre-sale disclosure documents required by the FTC's Franchise Rule to prospective purchasers of their snack and soda vending machine business opportunities. The settlement requires the individual defendants to post a $500,000 performance bond before engaging in the sale of business opportunities, requires them to comply with the Franchise Rule, and prohibits them from making misrepresentations when marketing business ventures.

In June 2002, the Department of Justice (DOJ) filed a complaint against the defendants on behalf of the FTC as part of "Project Busted Opportunity"- a law enforcement sweep targeting fraudulent business opportunities, alleging that the defendants violated the FTC's Franchise Rule. According to the FTC, Global advertised their vending machines opportunities in the classified section of newspapers throughout the United States. The ad contained the following:

Vending Machine Bus. Opp.
-SNACK AND SODA ROUTE.
Guaranteed. Great locations.
$100K + potential. (Global's 800 telephone number.)

The defendants allegedly told consumers who responded to the ad that they could earn specific amounts of money by buying the vending machine opportunity and that the defendants would help place their machines in lucrative locations. Those callers received an information package that included fact sheets on vending machines, machine specifications, and descriptions. The information packet, however, did not include the disclosures required by the Franchise Rule, the FTC alleged. The vending machines cost approximately $3,100.

In addition to the posting the performance bond, the settlement announced today prohibits the defendants from misrepresenting:

• the income, profit, or sales volume that a purchaser is likely to achieve, or actually achieved by prior purchasers;
• the length of time that it is likely to take a purchaser to recoup the entire purchase price;
• the independence or authenticity of any third party references;
• the availability or existence of profitable locations in a purchaser's geographic area; and
• the terms and conditions of any refunds or guarantees of profitability that relate to any location service or company to which the defendants refer purchasers.

In addition, the settlement prohibits the defendants from violating the Franchise Rule and from selling their customer lists. Finally, the settlement contains various recordkeeping provisions to assist the FTC in monitoring the defendants' compliance with the final order.

Consumers looking for more information about the Commission's efforts to combat telemarketing fraud can find information at: http://www.ftc.gov/bcp/cases/telemarkfraudenforcement/index.shtml

The Commission vote referring the matter to the Department of Justice for filing was 5-0. The stipulated judgment and order for permanent injunction was filed by the Department of Justice at the request of the FTC in the U.S. District Court, District of Nevada, Southern Division, and approved by the court.

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

Copies of the stipulated judgment and order, as well as other documents relating to Operation Busted Opportunity 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. X020088)
(Civil Action No. CV-S-02-0817-PMP-(PAL))