Individual Named in the FTC's "Project Roadblock" Investment Fraud Case Agrees To Settle

Richard Basile, one of the defendants named by the Federal Trade Commission as part of "Project Roadblock," a nationwide, multi-agency sweep of high-tech investment frauds involving the emerging telecommunications systems, has agreed to pay approximately $40,000 to settle FTC charges. The Commission had alleged that defendants, On Line Communications, Inc., Richard Basile and Robert Corey made numerous misrepresentations in connection with their offering of investments in application services for Federal Communication Commission (FCC)-issued paging licenses. The defendants allegedly represented that these licenses were scarce, highly sought-after commodities, and an excellent investment. In addition to requiring Basile to pay approximately $40,000, the settlement would permanently prohibit Basile from engaging in misrepresentations in connection with the sale of investments involving FCC licenses and other investment offerings.

Of the defendants named in the eight cases the FTC filed as part of Project Roadblock, this is the first defendant who has agreed to settle. Project Roadblock -- the coordinated state-federal campaign involving 85 actions -- targeted high-pressure telemarketing operations that peddled over a quarter of a billion dollars of the new generation of investment swindles, including FCC-awarded paging licenses and pay-per-call 900-number partnerships.

The settlement stems from an FTC complaint filed in federal court in January 1996, alleging that the defendants misrepresented the marketability, scarcity, and profit potential of the paging licenses that their clients would obtain from the FCC. The complaint also alleged that the defendants routinely misrepresented FCC regulations regarding the paging licenses. Consumers purportedly paid approximately $6,000 to $50,000 for the defendants' services. (The charges against On Line Communications and Robert Corey are still pending.)

Under the proposed settlement of the charges against Basile, which requires the court's approval to become binding, he would be prohibited from:

• misrepresenting the marketability, scarcity, riskiness, and profit potential of investment offerings;
• misrepresenting FCC regulations regarding telecommunications licenses; and
• marketing FCC licenses without disclosing the FCC's anti-trafficking regulations.

The settlement would further prohibit Basile from falsely representing any fact material to a consumer's decision to purchase any investment offering involving telecommunications licenses or telecommunications businesses, or, in connection with telemarketing, to purchase any good or service, to enter a contest for a prize, or to make a charitable contribution.

In addition, the settlement would prohibit Basile from acting as president or sole director of any business entity engaged in telemarketing, and from acting as the sole bank account signatory for any such entity, unless he takes reasonable steps to closely monitor its operations.

The settlement requires Basile to pay approximately $40,000 to the FTC within five days.

Finally, the settlement includes various reporting requirements necessary to assist the FTC in monitoring Besile's compliance.

The Commission vote to authorize the staff to file the stipulated final order was 5-0. The order was filed in the U.S. District Court for the District of Nevada, in Las Vegas, on June 26, 1996.

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

Copies of the stipulated final order and other documents associated with Project Roadblock are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest FTC news as it is announced, call the FTC's NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web Site at: http://www.ftc.gov

(Civil Action No. CV-S-96-00055-LDG (RHL))

(FTC Matter No. X960022)