Final Defendant Settles with FTC in Cross-Border Telemarketing Fraud Case
Final Defendant Settles with FTC in Cross-Border Telemarketing Fraud Case:
Charles P. Farrugia, a defendant in a Federal Trade Commission lawsuit against a fraudulent telemarketing scheme based in Canada, has agreed to settle FTC charges for his role in allegedly scamming American businesses into paying for business directories and listings they didn't order.In May 2006, the FTC charged Datacom Marketing, Inc. (Ontario Corporation No. 1431798), Datacom Direct, Inc. (Ontario Corporation No. 1417524), Bernard Fromstein, Judy Provencher, Paul Barnard, Judy Neinstein, and Stanley Fromstein with running a cross-border fraud operation. Farrugia, who was acting as the corporate defendants' president when the case was filed, was added as a defendant in November 2006.
Under the settlement entered by the court on April 9, 2008, Farrugia is barred from misrepresenting that consumers have a preexisting business relationship, that consumers have agreed to purchase business directories or listings in directories, or that consumers owe money for business directories or listings in directories.
He also is barred from misrepresenting, or failing to disclose, any fact material to a consumer's decision to purchase or use any product or service. In addition, during outbound telephone calls, Farrugia is barred from failing to disclose the seller's identity, that the call's purpose is to sell goods or services, and the nature of the goods or services.
He also is prohibited generally from violating the Telemarketing Sales Rule.
The settlement also prohibits Farrugia and his agents from selling, disclosing, or otherwise benefiting from consumers' personal information obtained from the activities alleged in the Commission's complaint.
In addition, the settlement prohibits Farrugia from attempting to collect payment on any account established prior to entry of the court's order, and cashing checks, totaling about $470,000, sent by American consumers.
The settlement includes a $7,603,094 judgment against Farrugia, which will be suspended upon payment of $275,000 in a specified timely manner.
The full judgment will be imposed if the defendant fails to meet the specified payment terms or is found to have misrepresented his financial condition. The settlement also contains standard record-keeping provisions to allow the FTC to monitor compliance with the court's order."
So basically, the FTC is settling a $7.5 million consumer loss for .275 million, or less than 4 cents on the dollar.
I don't know whether this is a good deal or not, the FTC is hampered trying to recover money from cross border fraud criminals.
In recent cases in Ontario, the FTC has not fared well in our Courts.
But, it is worth remembering when the FTC reports on its prowess, it reports judgments obtained and not money received.
Read More From BizOp News
February 28, 2008
Russo Sentenced in Ponzi Scheme
Frank J. Russo: Sentenced in Ponzi Scheme
I had written about this real estate ponzi scheme before, but Frank Russo has now been sentenced.
According to the SEC Press Release:
"The Commission announced today that on February 25, 2008, Frank J. Russo, a defendant in a previously-filed Commission enforcement action, was sentenced in U.S. District Court for the District of Massachusetts to 18 years in prison to be followed by 3 years of supervised release.Russo pleaded guilty to charges of investment adviser fraud and mail fraud in a hearing just prior to his sentencing.
The criminal charges relate to the investment fraud allegations in the Commission's civil action.
In addition to his jail sentence, Russo was ordered to pay $20 million in restitution to defrauded investors and to pay a $500,000 fine.
The Court ordered forfeiture of Russo's residence and other assets. Russo entered a guilty plea to charges that from 1982 through 2006, he misrepresented to investors that they could expect "above average" positive returns, and that their investments would be safe.
In fact, according to prosecutors, he did not invest his victims' money as promised, lost more than $20 million in investor funds, and in order to conceal the losses and his misrepresentations, and to induce victims into further investments, Russo generated false account statements that reflected inflated balances and gains that did not exist."
What do you think? 18 Years about right?
Here are some related posts.
Frank Russo and the Amended Complaint, which adds relief defendants.
