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View Full Version : FTC Wins Court Judgment Against Massive Get-Rich-Quick Infomercial Scam



littleroundman
05-02-2012, 06:20 AM
Agency Alleges that Nearly One Million Consumers Lost More Than $450 Million

The Federal Trade Commission won a court judgment against the marketers of three get-rich-quick systems who deceived nearly a million consumers. As part of its ongoing efforts to stop scams that prey upon financially distressed consumers (http://www.ftc.gov/opa/reporter/advertising/protectconsumers.shtml), the FTC is seeking more than $450 million in monetary relief.

On April 20, 2012, Federal District Judge Jacqueline H. Nguyen, of the U.S. District Court for the Central District of California, granted the FTC's request for summary judgment and asked the agency and defendants to submit arguments on the appropriate remedy for the violations. The marketers are behind the infomercials for "John Beck's Free & Clear Real Estate System," "John Alexander's Real Estate Riches in 14 Days," and "Jeff Paul's Shortcuts to Internet Millions. (http://www.ftc.gov/os/caselist/0723138/120501johnbeckorder.pdf)" The court found that the infomercials misled consumers in violation of the FTC Act, and that despite the marketers' easy-money claims for the systems, which cost $39.95 each, nearly all the consumers who bought them lost money.

Regarding the John Beck system, the court found that the defendants falsely represented that consumers could purchase homes at tax sales in their own area for pennies on the dollar and that they could make money easily with little financial investment. The court found that the earnings claims in the John Alexander infomercial were false, and that the Jeff Paul infomercial misled consumers by creating an overall impression that "a typical consumer can easily, quickly, and 'magically' earn thousands of dollars per week simply by purchasing and using" the system. In contrast to the infomercials' easy-money claims, the court found that less than one percent of consumers who purchased the systems made any profit whatsoever.

Consumers who purchased the systems were automatically enrolled in continuity programs that charged recurring fees and cost an extra $39.95 per month. The court found that the defendants failed to adequately disclose that consumers who purchased the systems would be enrolled in the continuity plans and submitted consumers' payment information without their express informed consent, in violation of the FTC Act and the Telemarketing Sales Rule (TSR).

In addition, the defendants offered personal coaching services, which cost up to $14,995, to consumers who purchased any of the three systems. The court found that, contrary to the defendants' claims that consumers would quickly and easily earn back the cost of the coaching program and that the coaching would substantially enhance consumers' chances of making money, almost all consumers who purchased coaching programs lost money. The telemarketers also violated the TSR by repeatedly calling consumers who previously asked the defendants not to contact them.

The court found John Beck Amazing Profits LLC, John Alexander LLC, Jeff Paul LLC, Family Products LLC, and Mentoring of America LLC (http://www.ftc.gov/opa/2009/07/shortchange.shtm) liable for the misrepresentations in the infomercials and those made by the defendants' telemarketers. Gary Hewitt and Douglas Gravink were found to have controlled each of the corporate defendants and to be liable for injunctive and monetary relief. In addition, Beck, Alexander, and Paul were found liable for the misrepresentations concerning their own systems because they participated directly in the deceptive advertising, knew that the infomercials made material misrepresentations, "or at least were recklessly indifferent to the truth or falsity of the infomercials."

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC's online Complaint Assistant (https://www.ftccomplaintassistant.gov) or call
1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC's website provides free information on a variety of consumer topics (http://www.ftc.gov/consumer). Like the FTC on Facebook (http://www.ftc.gov/leaving/facebook/index.shtml) and follow us on Twitter (http://www.ftc.gov/leaving/twitter/index.shtml).

Read the full Federal Trade Commission press release (http://www.ftc.gov/opa/2012/05/johnbeck.shtm)

Lil Ol' Radical Me
05-02-2012, 11:24 AM
Nice work FTC

laidback
05-02-2012, 12:09 PM
Nice work FTC

Agreed. It's about time they nailed some of these, "buy my system it'll make you rich" pushers...!

Whip
05-02-2012, 12:12 PM
Agreed. It's about time they nailed some of these, "buy my system it'll make you rich" pushers...!

I so hope they nail that morrison clown.

GlimDropper
05-02-2012, 10:46 PM
The really sad part of all of this is the "foot soldiers" here that are and will continue to do the lasting damage here. Mentoring of America, LLC is a boiler room telemarketing operation that seeks to charge upwards of $15,000 to "mentor" people when all they're doing is reading off a script and trying to keep their victims on the hook till the refund policy expires. I don't know why these operations find comfortable homes in the state of Utah but I've seen dozens of them come and go and once any given company name builds up a little too much bad news on Google, they change the company name and phone numbers and sometimes even go so far as to move to a new rent an office. But the scam remains the same.

So yes, I'm thrilled that John Beck, John Alexander and Jeff Paul are facing the justice they so richly have earned and even Mentoring of America will be shut down. But 90% of the people who work there will be back manning the telephones for some other scam tomorrow. I've talked with a lady who was a care giver to an elderly friend of her mother. One of these boiler room "mentors" got an 87 year old woman on a three way call with a credit card company (she didn't have a credit card in her name) and by some happy coincidence the credit limit ($7,500) was just enough to pay for the elite mentoring package with the promise that by time the credit card bill would arrive the sweet old grandmother would earn enough money off of investing in defaulted paper that she could pay the bill in full. Well, grandma learned something about defaulting on debts after that point.

THAT is what these mentors do and if they have any conscience at all they can't do it for long. But think of the money involved, you rent office space by the month (or week) and set up a phone bank with fresh numbers and with the flip of a script last weeks "expert real estate mentor" is this weeks "expert options trading mentor" and they work on straight commissions. If they don't sell they don't eat. It's all an upsell game, the $500 intro package doesn't really have all the info you need to (do what ever) so you need the $1,200 boot camp. Then the $5,000 three day intensive course, then the $7,500 coaching and mentoring program and if you have any money left on the table they'll start telling you about the advanced classes.

And for the record, this is exactly how that eminently respected wealth guru Robert Kiyosaki allows his "Rich Dad Education" to operate. Think BIG FTC, think BIG.