Miami-Based Vending Machine Franchisors Banned from Marketing Business Ventures

The Federal Trade Commission has accepted two separate settlements with the operators of a bogus business opportunity venture. In separate settlements, one settlement with Jesse Alper and the other settlement with Inspired Ventures, Inc., Victor Alper, I.V.I. Management Corporation, and Source Systems, Inc., the defendants are banned from marketing business ventures and from telemarketing. The FTC alleged that the defendants, based in Miami, engaged in deceptive business practices in the sale of their vending machines. I.V.I. Management managed the advertising for the scheme, and Source Systems supplied the bulk candy for the vending machines.

The FTC’s complaint against the defendants was filed in June 2002, as part of “Operation Busted Opportunity” – a coordinated attack on business opportunities and work-at-home fraud by the FTC, the Department of Justice (DOJ), and 17 state law enforcement agencies. According to the complaint, the defendants advertised their candy vending machines, called “Sweet Tooth Sam, the Money Making Man,” on the Internet, in newspaper ads, and by telephone. The ads contained statements that prospective buyers would receive “500% Profits” or “$4000 per month.” In addition, the defendants allegedly directed consumers to call “shill” references. According to the FTC, the defendants’ references posed as regular consumers and assured callers, with fabricated stories, that Inspired Ventures was a legitimate and profitable business opportunity. The FTC alleged that the defendants’ earnings claims were false and that consumers did not achieve the promised profits, but instead lost thousands of dollars. The smallest Inspired Ventures package consisted of 30 machines, candy, shipping, and locating fees, and required an upfront fee of approximately $14,000. Larger plans included 100 machines, costing up to $30,000.

In separate proposed stipulated final judgment and orders, all of the defendants are banned from marketing business ventures and from telemarketing. The settlements also prohibit the defendants from making false or deceptive statements and from selling their customer lists. In addition, the orders require that all frozen funds of the corporate defendants be paid to the FTC and include an avalanche clause that will trigger a $2,653,969 judgment if it is found that the defendants materially misrepresented their financial conditions.

The Commission vote authorizing staff to file the two stipulated final judgments and orders was 5-0. The stipulated final judgments were filed in the U.S. District Court, Southern District of Florida, Miami Division, and entered by the court on February 24, 2004.

NOTE: These stipulated final judgments are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Stipulated final judgments have the force of law when signed by the judge.

Copies of the two stipulated final judgment and orders 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 http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC Matter No. X020067)
(Civil Action No. 02-CV-21760)