Friday, December 22, 2006


FAL$E HOPE$ was a Federal Trade Commission operation announced on December 12, 2006, which cracked down on Bogus Business Opportunities. Coordinated with the Department of Justice, the US Postal Inspection Service, and law enforcement agencies in 11 states, the report contains more than 100 law enforcement actions! (In the interest of full disclosure, these publicity operations solicit previously investigated cases from parties who wish to be included in the press release. Although the Operation was announced publicly in December of 2006, many of the activities had concluded as early as February of 2005.)

DOJ Actions were primarily in Nevada and the South District of Florida, but had some great cases themselves! In just one such case, AmeriP.O.S., individuals were told they were buying the right to mark kiosks for prepaid debit cards, phone cards, and internet access. Eleven defendants were charged and received hard time from between 24 and 135 months! Restitution was also ordered in the amount of $16,659,826.94! Altogether this group will spend 729 months in prison.

The original DOJ Press Release shows this to have been part of "Project Biz Opp Flop". In Biz Opp Flop DOJ documented 4,000 consumers nationwide who lost more than $60 million in these fraudulent business opportunities. AmeriP.O.S. promised that for their $12,000 investment, purchasers would received several Point of Sale terminals and support in establishing their own territory for the business. 1,500 people fell for the scam. Other companies, "Cash Link", "Tel 2 Net", "Pantheon Holdings" and "Global Resources" were offering the same offer. Global Resources advertised on television, the Internet, and by high pressure telephone calls, promising earnings of $6,480 per month (with a $14,000 minimum investment = two month break even!) 150 investors sent Global Resources $2.5 million! Pantheon got $19 Million from 1,500 consumers! Perfumes Unlimited, another case included in Biz Opp Flop, claimed consumers could earn $150,000 per year selling perfume in racks placed in stores. 150 consumers gave them $1.5 Million to invest. Accomplices were recruited to lie about their own experiences with the business as references to the success of the product.

The US Postal Inspection Service provided their Work at Home/Distributorshipos Case Briefs to the FTC which included many work at home schemes such as "Wealth By Mail, Inc", "GTEC", "Armand & Company", and many others, including one in my home town of Birmingham, Alabama.

In that case, "Employment Solutions" advertised a work at home envelope stuffing business, for which he would send a "start-up" kit for $32. Many folks received the start up kits, but they didn't receive the profits he described!

Perhaps the most successful case among the USPIS actions was "National Brochures / AAA Information Center". In this case, Malcolm Lincoln received 10 years in prison, and his wife three years, and were each ordered to pay $28,282 in restitution to 200 victims. Victims spent between $35.95 and $745.95 to receive their work-at-home business kits, and were promised they would earn between $4 and $21.82 per envelope stuffed. No one ever received a payment. In total over 1,000 people were victimized and the defendants earned more than $400,000!

Some of the claims were ridiculous! "EDI Health Claims Network" said that the customers medical billing business would earn as much as $1,200 per month with just one client! After consumers paid their $5,985, they were told their first client could be found by looking in their local yellow pages!

Many of the business opportunities in the FTC report promise returns of more than $1500 per week, and some as high as $150,000 in their first year!

One company, USA BEVERAGES, INC, (see the separate press release: FTC Halts Bogus Business Opportunity Scam) used Voice Over IP and prepaid cell phones to make it seem that they were calling from the local area, when in reality, they were making their pitches for coffee display racks from Costa Rica. Their website claimed it was a 12 year old company in New Mexico. With this 12 year history, the promise that franchisees would make "no less than $1,055.60 per week" if they operated 13 display racks must have seemed legitimate! Investors gave up between $18,000 and $85,000 each to learn that it was not true.

1 comment:

  1. Anonymous5:46 PM

    interesting post, GarWarner. I find these pump and dump stock spams so vexing, especially when they imbed images thus making it more difficult for me to report them!


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