At the request of the Federal Trade Commission, a federal district court has entered final orders against three people based in Canada who allegedly defrauded U.S. consumers out of more than $9 million through the sale of phony advance-fee credit cards.
The orders bar the defendants from engaging in similar illegal conduct in the future and from calling consumers whose phone numbers appear on the National Do Not Call Registry.
The court orders announced May 9 settle the FTC’s charges against Sean Soma, Antonio Marchese and Sylvain Cholette, all of whom were involved in a scheme that did business as Centurion Financial Benefits. Litigation continues against several other defendants.
According to the FTC’s complaint filed in September 2005, since at least 2004 the defendants used outbound telemarketing to contact consumers in the United States, falsely offering major credit cards to people who agreed to have their bank accounts debited for an advance fee of $249.
The defendants claimed the credit cards would have a $2,000 credit limit, zero-percent interest and no annual fees. They often targeted their offers at consumers with poor credit histories.
Consumers who provided their bank account information did not receive a major credit card but instead were sent an application for either a “stored-value card” or “cash card” that had no line of credit associated with it and could be used only if the consumer first loaded funds onto the card. The complaint also alleged that the defendants violated the law by calling consumers on the FTC’s National Do Not Call Registry.
The court orders prohibit the defendants from making misrepresentations regarding credit cards or any other product, program or service offered to consumers. They also prohibit the defendants from violating the do-not-call provisions of the Telemarketing Sales Rule and from selling, leasing or transferring the information in their customer lists to anyone. In addition, the orders subject them to strict monitoring and compliance requirements.
The orders also contain an avalanche clause that would require the defendants to pay more than $9.8 million, the total amount of consumer injury caused by the scam, should they be found to have misrepresented their financial condition. The orders also require them to cooperate with the FTC in its ongoing litigation against the remaining Centurion defendants.
The orders were filed in the U.S. District Court for the Northern District of Illinois, Eastern Division, on April 25 and entered by the Court on April 27.
Meanwhile, on May 8 the FTC announced that Richard C. Neiswonger, based in Las Vegas, his business partner, William S. Reed, and their company, Asset Protection Group Inc., are banned for life from telemarketing and from selling any type of business program in the future.
The FTC previously charged that the businessmen and their company falsely claimed that consumers would make a substantial income and that they failed to disclose that the company’s references were paid to give favorable reviews.
An FTC order entered in 1997 barred those deceptive practices, but the businessmen violated the order by using the same deceptive business practices in a more recent scheme. In addition, they failed to disclose to consumers that one of them had spent time in federal prison for money laundering and wire fraud.
The civil contempt order was entered in United States District Court for the Eastern District of Missouri on April 23.