Judge Bars NY Firm from Offering FCC License Services in Win for FTC

A federal district court judge has barred New York City-based Micom Corporation and company principal Joseph M. Viggiano from offering any investment that involves a license or permit issued by the federal government, and any application filing service in connection with a government-issued permit or license. The judge issued the order, which also includes a $1.6 million judgment and a ban on misrepresentations regarding any investment or telemarketed offering, after upholding Federal Trade Commission charges that Micom and Viggiano ran a scheme fraught with false and misleading promises to sell consumers application preparation and filing services for paging licenses issued by the Federal Communications Commission.

According to the judge, Micom and Viggiano didn’t even file the promised applications for a considerable number of clients, and Viggiano was in the process of setting up another telemarketing operation to broker FCC licenses at the time the FTC filed charges against him. In addition to the above provisions, the court’s order requires Viggiano to post a $500,000 perfor mance bond before engaging in telemarketing or assisting others in a telemarketing operation in the future.

The FTC filed its charges in this case in January 1995 as part of "Project Roadblock," a coordinated effort by the FTC and state securities regulators that targeted fraudulent high-tech investment schemes, many of which involved the sale of services related to FCC licenses for paging and 900 number systems. The crackdown involved 85 actions against high-pressure telemarketing operations pitching investments in these and other emerging telecommunications systems. An FTC alert titled "Telecommunications Scams Using FCC Licenses" (available on the FTC’s web site at www.ftc.gov) cautions consumers to hang up the phone if a telemarketer calls touting the profits and minimizing the risks of investing in communications systems and licenses, noting that FCC licenses are mere permission to use the airwaves to provide communi cations services. "A license holder must develop a communications system to make the license valuable and comply with FCC rules," the FTC alert states. "Fraudulent telemarketers often take most of the money they solicit from consumers as profit and commissions."

In the Micom case, the FTC alleged and the court found that the defendants falsely represented that consumers were likely to earn substantial profits through leasing or selling their licenses to paging businesses; they would derive income or profit from their licenses without constructing a paging system themselves; no entity or individual could obtain multiple paging licenses directly from the FCC for use in a given geographic area; the FCC typically required a paging license applicant to submit or conduct engineering and other studies and statements for these kinds of licenses; the purchase of such a license was a relatively low risk, excellent invest ment likely to generate substantial profits; and consumers would get a full refund for any license they did not receive. The judge added that the risk disclosures in the Micom Service Agreement were "inadequate in light of the overall effect of the repeated misrepresentations . . . ."

The order issued by the court bars Micom and Viggiano from:

• promoting, marketing or selling any application preparation or filing service for any licenses or permits issued by the U.S. government;
• promoting, marketing, or selling any investment which involves any license, permit, or interest in licenses or permits issued by the U.S. government;
• falsely representing any fact material to any investment, including the riskiness, liquidity, market or resale value, or expected income to be derived from the investment; and,
• any fact material to a consumer’s decision to purchase any telemarketed product or service.

Funds the FTC collects on the $1.6 million judgment will be used for consumer redress unless refunds are impractical; otherwise, they will be deposited in the U.S. Treasury. The final judgment was issued by Judge Sonia Sotomayor, U.S. District Court for the Southern District of New York, on March 12.

Copies of the judge’s order 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 news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases, consumer brochures and other documents are available on the Internet at http://www.ftc gov (no final period).

(Civil Action No. 9600472 (SS))