Arizona Loan Broker, Defendant in FTC Case Against Canadian Loan Scheme, Settles Charges

David Wayne Panella, an Arizona loan broker who does business as Consolidated Financial Services or Gateway Service Center, has agreed to settle Federal Trade Commission charges in connection with his role in a scheme to offer consumers loans for advance fees ranging from $200 to over $500. The FTC alleged in the case that consumers never received the promised loans. Panella allegedly operated a U.S.-based "turn-down" room, sending out denial letters to loan applicants who had answered ads and paid the up-front fee; the other six corporate and seven individual defendants in the case were based in British Columbia and Ontario, Canada, but pitched their services to American consumers, the FTC said.

The FTC has filed a Motion for Default Judgment and Order for Permanent Injunction and Monetary Relief against most of the other defendants. The other defendants are Ideal Credit Referral Services Ltd., Elite Credit Referral Services Ltd., New Consolidated Consultants, Inc., CAF Phone Systems, Direct Telemarketing Inc., Universal Client Services Inc., Cindy W. Forde (also known as Cindy Williams), Englhieberth Smith, Stephen Mark Fraser, Dion William Lockhart, Donald Patrick Hugh, and Karl Morris. (The Motion does not apply to defendants Stephen Mark Frazer and Dion William Lockhart, who could not be located.)

Under the proposed settlement with Panella, which requires court approval, he would be barred from knowingly providing substantial assistance or support to any telemarketer employing unfair or deceptive acts or practices to sell credit-related goods or services. The consent order also would bar Panella from violating the FTC’s Telemarketing Sales Rule, which among other provisions makes it illegal for any telemarketer who guarantees consumers a loan or other credit to ask for money in advance. In addition, the order would prohibit Panella from using or pro viding others with any financial, credit-related, or personal information about consumers that he obtained from the other defendants in the FTC’s case.

Based on sworn financial statements Panella provided, he would not be required to pay any redress under the order, but a provision in the order would permit the FTC to reopen the matter and seek redress if his financial disclosures prove inaccurate.

The FTC filed charges in the Ideal Credit case as part of "Operation Loan Shark," a crackdown by the FTC and 15 state Attorneys General on U.S. and Canadian loan boiler rooms pitching advance fee loans but never providing the promised credit. The FTC and the Attorneys General warned consumers looking for loans or other credit that legitimate lenders never "guarantee" or state that you are likely to get a loan or credit card before you apply, especially if you have bad credit, no credit or have filed for bankruptcy. In addition, the FTC warned, a telemarketer that guarantees consumers a loan but asks for money in advance is operating illegally.

The Commission vote to approve the settlement with Panella was 5-0. It was filed on April 16, 1997, in U.S. District Court for the Western District of Washington, in Seattle.

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

Copies of the documents associated with this case will be available shortly 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 on credit and other issues, as well as other documents also are available on the FTC’s web site at www.ftc.gov (no final period).

(FTC Matter No. X960063)
(Civil Action No. C96-0874R)