Project Biz Op Flop
A year and a half ago, the Federal Trade Commission, the Department of Justice, and the U.S. Postal Services launched a coordinated attack on various fraudulent business opportunities. According to the press release, "Business opportunity and work-at-home fraud causes substantial consumer injury. In the FTC's cases alone, the defendants caused tens of thousands of consumers to lose a total of more than $100 million." (my emphasis)
Similarly, "In June 2002, the FTC, Department of Justice, and 17 state law enforcement agencies launched "Project Busted Opportunity," a law enforcement sweep targeting fraudulent work-at-home and business opportunity operations."
One item of interest in both sweeps is that the stipulated judgment in Associated Records Distributors,"with defendant Russell MacArthur bans him from advertising, promoting, or selling any franchises or other business opportunities, or from owning or working for any entity that engages in those activities. The settlement also prohibits MacArthur from making any material misrepresentations in connection with the sale of any goods or services and from violating the Commission's Franchise Rule."
Associated Records "sent unsolicited commercial e-mail and placed ads in newspapers throughout the country representing that "People just like you are making $150,000 per year! What are they doing? Going around to popular stores in their local area, and restocking shelves of the HOTTEST SELLING products ever!" According to the FTC, consumers who responded to the advertisements reached a telemarketer who falsely promised potential investors a profitable business opportunity operating display racks offering compact discs and audio cassettes for sale in retail locations, and stated that they would recover their initial investment within three or four months. The FTC alleges that the defendants also falsely promised to find profitable locations for the music display racks, and referred the potential investors to phony references paid to lie about their success. (my emphasis) I see, a stock clerk can make $150,000 a year.
Why is Mr. Russell MacArthur of special interest?
Technorati Tags: business opportunity, business opportunities, law enforcement agencies, state law enforcement, department of justice, ftc, tens of thousands, postal services, stipulated, russell macarthur, fraudulent
Well, less than two years after the Associated Records Distributors debacle, Mr. R. MacArthur found himself facing criminal charges with regard to another business opportunities fraud, American Entertainment Distributors.
According to the FTC, "American Entertainment Distributors and related parties, based in Hollywood, Fla., allegedly offered a fraudulent DVD movie rental vending machine business opportunity. The defendants induced consumers to buy their vending machines by promising substantial earnings potential and location assistance. The defendants charged consumers $28,000 to $37,500 for one machine and allegedly told consumers that they could expect to earn between $60,000 and $80,000 a year or to recoup their initial investment in six to 14 months. The court-ordered receiver has calculated that in less than one year consumers invested nearly $20 million in this program."
Now how hard was it for an experienced investigator to have done due diligence on American Entertainment Distributors? In this case, fairly easy.
- Check the Florida Corporations pages for the officers and directors of the company, and find out the company was really only 1 year old and that Mr. R. MacArthur was the President.
- Search the FTC for "Russell MacArthur" and come up his 2002 ban.
A $20 million fraud could have been avoided if consumers paid for and got competent business opportunities fraud advice.
Technorati Tags: business opportunity, business opportunities, law enforcement agencies, state law enforcement, department of justice, ftc, tens of thousands, postal services, stipulated, russell macarthur, fraudulent
