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As part of a nationwide, multi-agency telemarketing sweep called "Senior Sentinel," the Federal Trade Commission has brought charges in federal district courts against five telemarketers who preyed on senior citizens. Project Senior Sentinel, coordinated by the Department of Justice and the Federal Bureau of Investigation, is aimed primarily at bringing criminal charges against telemarketers who defraud the elderly, and culminated in hundreds of arrests and indictments across the country.
"Telemarketing fraud costs consumers $40 billion dollars each year, and many of the scams target the elderly in particular," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "The FTC's involvement in Project Senior Sentinel follows extensive FTC law enforcement and regulatory efforts and is the most massive effort of its type. It stands a great chance of success in reducing those losses because it focuses the resources of several consumer protection law enforcement agencies on the most callous breed of scam artists." "The FTC role was three-fold." Bernstein said. "We provided key information about victims from a national database on telemarketing fraud; we provided funding in support of a library of audio-taped evidence of fraudulent telemarketing schemes in action; and we brought the civil actions announced today and assisted the Justice Department in the filing of several other cases brought under Project Senior Sentinel."
The FTC's largest contribution to the Senior Sentinel project was to provide information from the National Association of Attorneys General/FTC Telemarketing Complaint System. The FTC/NAAG database is designed to help the more than 90 law enforcement organizations now participating to identify consumer victims of telemarketing fraud and to coordinate the prosecution of fraudulent telemarketers. The information can be used to target the worst law violators, identify law enforcement agencies that have opened investigations, and gather information on companies under investigation. The FTC supplied criminal authorities with information from several hundred complainants who lost money to various targets of the takedown.
Four of the five FTC civil cases under Senior Sentinel involve fraudulent promotions of prizes or awards. In each case, the telemarketers promised consumers valuable prizes or awards that allegedly were never delivered or, if delivered, were worth a fraction of their claimed value. The fifth case involves a "recovery room," where the defendants are charged with falsely claiming that they will recover most, if not all, of the money that consumers have previously lost to other fraudulent telemarketers.
The FTC's complaints in the five cases were filed under seal this week and last. Seals have now been lifted on cases against:
1. Desert Financial Group, based in Las Vegas, and its President, Keith Parker; 2. EDJ Telecommunications, Inc., doing business as International Marketing, based in Las Vegas, and its officers, David Ramos and Judy Burr; 3. Ideal Concepts, Inc.,based in Beverly Hills, California, and its President, Michael Garganese; and 4. Total Care, Inc., based in Los Angeles, California, and its President Irwin Gonor. 5. The fifth case is still under seal.
In addition to imposing temporary restraining orders prohibiting the challenged deceptive practices, the courts in these cases have temporarily frozen the defendants' assets to preserve funds for consumer redress. The FTC is seeking permanent injunctions against the defendants' deceptive practices.
According to the FTC, the defendants in the prize-promotion cases made unsolicited telephone calls to consumers nationwide, many of whom are senior citizens. In these calls, the defendants allegedly told consumers that they will receive, or had been selected to receive, a valuable prize or award, such as a new car or a large sum of money. The defendants then told consumers that in order to receive the prize or award they had to:
* purchase certain products from them such as publications, perfumes, bath and beauty products, or other merchandise; or * participate in a "Say No To Drugs" program by buying items such as pen and pencil sets, calendars, caps, or frisbees.
Consumers typically paid from $398 to as much as $4,000 for these products. In many instances, according to the FTC, the defendants misrepresented to consumers that the value of the prize or award they were to receive was worth significantly more than what they were paying for the products. In fact, according to the FTC, the prizes, if received, had little or no value at all.
In the Desert Financial case, the defendants allegedly told consumers, again, many of whom are senior citizens, that for an upfront fee, they could recover all or most of the money the consumers had lost to other telemarketing companies. In fact, according to the FTC, in most or all instances, consumers recovered little, if any, money from the defendants' efforts.
The Commission vote to file the complaints was 5-0. The complaint against Desert Financial was filed under seal in the U.S. District Court for the District of Nevada, in Las Vegas, on Dec. 5, 1995. The complaint against EDJ Telecommunications was filed under seal in the U.S. District Court for the District of Nevada on Nov. 28, 1995. The complaints against Ideal Concepts and Total Care were filed under seal in the U.S. District Court for the Central District of California, in Los Angeles, on Dec. 5 and Dec. 1, respectively.
The Commission received assistance from numerous law enforcement agencies in these matters, including: the U.S. Attorneys' Offices in Las Vegas and San Antonio; the Federal Bureau of Investigation's offices in Chattanooga, Denver, Los Angeles, Phoenix, New York City, and San Diego; the Attorneys General Offices in California, Iowa, Nevada, and Texas; the Los Angeles Police Department; and the Texas Secretary of State's Office. The Commission would like particularly to acknowledge the contributions of the Federal Bureau of Investigation in Las Vegas and the San Diego Boiler Room Task Force.
The matters are being handled by the FTC's Denver, Los Angeles, and San Francisco Regional Offices and its Division of Service Industry Practices in Washington, D.C.
NOTE: The Commission files 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 complaint is not a finding or ruling that the defendants have actually violated the law. These cases will be decided by the court.
(Desert Financial -- File No. 965 3452; Civil Action No. CV-S-95- 01173-
(EDJ Telecommunications -- File No. 952 3443; Civil Action No. CV-S-95- 1151-LDG(LRH);
(Ideal Concepts -- File No. 962 3000; Civil Action No. 95-8403 TJH (AJWx));
(Total Care -- File No. 952 3469; Civil Action No. 95-8229 AWT (Ex)) (SeniorSen)
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