FTC Halts Bogus Envelope-Stuffing Scam

At the Federal Trade Commission’s request, a federal court has halted a nationwide work-at-home scam that took more than $7 million from tens of thousands of consumers. The defendants allegedly lured consumers with false claims that they could earn up to $5,000 or more in weekly income by stuffing and mailing “special advertising letters” from home.

According to the FTC’s complaint, David S. Brookman and his companies mailed unsolicited flyers, claiming:

GET PAID FOR MAILING OUR SPECIAL LETTERS FROM HOME!
POTENTIAL EARNINGS OF UP TO $5000 OR MORE WEEKLY!
FREE POSTAGE, FREE CIRCULARS, FREE ENVELOPES.
Pay Checks Mailed Every Tuesday.
Don’t Get Left Out! Give us a try & receive a check in as little as ten days!

According to papers filed with the court, only 10 percent of consumers received any payment at all, and their total average earnings was $19.50, far less than the $99 to $399 they had to pay up-front to participate.

According to the FTC’s complaint, the “special advertising letters” consumers were being asked to stuff and mail turned out to be nothing more than solicitation flyers for a second bogus work-at-home program. Consumers who joined the second program were asked to pay an up-front fee, typically $99, purportedly to assemble and mail the defendants’ “Get Credit Now” booklets from home and receive $20 per booklet mailed. In fact, consumers in the booklet program were not paid for fulfilling orders and were expected to market the booklets and generate orders to make any money.

Brookman and his companies are charged with violating the FTC Act and the FTC’s Business Opportunity Rule, which requires business opportunity sellers to provide specific information to help consumers evaluate a business opportunity, and prohibits sellers from making earnings claims without substantiation. The FTC seeks to permanently shut down the operation, which has used different business names to avoid negative publicity.

The defendants are Brookman and his companies, Capital Enterprises Inc., formerly known as David Gates Inc. and also doing business as Gordon James Enterprises, Maxwell Gates Enterprises, Maxwell Scott Enterprises, Preston Lord Enterprises, and Warner Daniel Enterprises; Carson Lord Enterprises LLC; Java Enterprises LLC; Mason Grace Enterprises LLC, also d/b/a Mason Grace Ventures; and Preston Lord Enterprises of New York LLC, also d/b/a Preston Lord Enterprises.

The Commission vote authorizing staff to file the complaint for permanent injunction was 4-0. On October 26, 2015, the United States District Court for the Southern District of New York entered a temporary restraining order halting the defendants’ deceptive scheme and freezing their assets.  On October 30, 2015, the court entered a stipulated preliminary injunction order continuing the ban on the defendants’ activities and the asset freeze pending litigation.

NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.