Court Finds Fraudsters Guilty of Civil Contempt, Liable for $2.37 Million

The Federal Trade Commission today announced that a U.S. district court judge in Nashville, Tennessee, has ruled Timothy Scott Jackson, Dora Helena Ortegon, and GIS, Inc. (GIS), guilty of civil contempt for violating a 2001 court order. According to the court, in misrepresenting the benefit to be gained from using government information packages sold through GIS from 2004 to 2005, Jackson violated the order, which had been sought by the FTC.

GIS and Ortegon, who were not parties to the order, were also found guilty of contempt for aiding and abetting Jackson in his violations. In finding them in civil contempt, Judge Robert L. Echols ordered the defendants to pay more than $2.37 million. In finding Jackson in civil contempt, the court found that he composed advertisements and wrote scripts used by GIS telemarketers in selling the grant information packages. According to the court, Jackson also controlled GIS at all times, even though he sought to hide his involvement by making his former wife, Dora Helena Ortegon, president of GIS during the last seven months of its operation.

Through GIS, Jackson misrepresented the benefits of the GIS grant information package, claiming that customers used the GIS grant information package were highly likely to receive a grant of $25,000 within 90 days. GIS also represented to customers that taxpayers and citizens were automatically entitled to government grants and that government grants were available to pay personal bills.

In contrast, the FTC presented the testimony of consumers who did not receive promised grants and the testimony of Rebecca Spitzco, the former program manager of www.grants.gov, a Web site operated by the U.S. Department of Health and Human Resources, that provides comprehensive information regarding grants offered through the U.S. government. Spitzco testified that government grants are seldom available to ordinary consumers, there are no government grants to pay consumers’ personal bills, and there are no government grants for which individuals were entitled simply by being taxpayers and citizens. Finding Spitzco’s testimony authoritative, the court found the claims made by Jackson through GIS misrepresented the availability of grants and the benefit that could be gained from using the GIS grant materials.

GIS operated in Nashville and was selling grant information packages between February 2004 and February 2005. By the time GIS shut down, it had sold grant packages to 27,000 consumers and had net sales of $2.78 million, according to the Commission.

Prior Case History: The Commission’s original complaint against Jackson and VGI was announced in March 2001, as part of the “Stamp Out Job Fraud” law enforcement sweep. According to the complaint, VGI placed classified ads in the employment sections of newspapers across the United States falsely claiming that entry-level Postal Service jobs were locally available. The ads announced that jobs were available at generous wages, and invited consumers to call a toll-free number to receive an application and exam information.

When consumers called, the complaint alleged that VGI misrepresented that their program was affiliated with, or endorsed by, the Postal Service; that permanent positions were available with the Postal Service in the geographic areas where the defendants placed the ads; that consumers who bought the defendants’ materials were likely to receive scores of 90 or higher on the Postal Service exam; and that consumers who purchased the defendants' materials were likely to obtain jobs with the Postal Service. None of the claims were true.

In August 2001, VGI and Jackson settled the FTC’s charges by agreeing to pay more than $190,000 in consumer redress and to be permanently banned from promoting or selling employment services. The stipulated final order settling the complaint also prohibited the defendants from misrepresenting, in the sale of any good or service: 1) the benefit of using the good or service; 2) the identity of the seller; and 3) that the seller is affiliated with any government entity or other organization.

After further investigation determined that the defendants were violating the terms of the stipulated final order through their affiliation with GIS, the FTC filed a contempt suit in the U.S. District Court for the Middle District of Tennessee, Nashville Division. The court held a hearing on September 12 and 13 to “show cause” why Jackson, GIS, Inc., and Ortegon should not be held in contempt for violating the order.

The FTC also alleged that Jackson failed to obtain signed acknowledgments that he received the VGI stipulated order by the time required, that Jackson failed to report his employment with GIS to the FTC as required, and that he failed to tell the truth about this relationship with GIS was asked by the FTC to do so. The court ruled in favor of the Commission earlier this month, finding the defendants in contempt for violating the final order through his control and operation of GIS.

The Civil Contempt Order: The contempt order, which was filed by the court on November 9, 2006, holds Jackson; GIS, Inc.; and Ortegon in civil contempt for failing to comply with the terms of the 2001 stipulated final order. It holds Jackson individually liable for disgorgement of ill-gotten gains totaling $371,506 and jointly liable with GIS, Inc., for restitution totaling $2,373,351.26. It also hold Ortegon individually liable for $36,494 and jointly liable with Jackson and GIS for $1,879,694.20. All of the money will be paid to the U.S. Treasury.

Copies of the contempt memorandum and order 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 www.ftc.gov. The FTC enters Internet, telemarketing and other fraud-related complaints into Consumer Sentinel, a secure, online database available to thousands of civil and criminal law enforcement agencies worldwide.

(FTC File No. X010030; Civil Action No: 3 : 01-1070)