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Cross-Border Cops Crack Down on Bogus Advance-Fee Loans, Advance-Fee Credit Card Schemes

Cross-Border Cops Crack Down on Bogus Advance-Fee Loans, Advance-Fee Credit Card Schemes

November 16, 2004

FTC Survey Shows Advance-Fee Scams Top the List of Consumer Frauds

United States and Canadian law enforcers have joined forces to target a scam that affects millions of consumers a year, bilking each of them out of hundreds of dollars or more, for loans they never get. The “loans” are promoted by Ontario-based telemarketers who target U.S. citizens by running ads in U.S. newspapers that they pay for with stolen or compromised credit cards. The three-prong initiative, advanced by the Toronto Strategic Partnership, a group of law enforcement agencies in the United States and Canada that shares information and collaborates to combat cross-border fraud, involves law enforcement cooperation, an alert to consumers, warning them about these scams, and an effort to enlist newspapers across the country to check out questionable ads with law enforcers before running them. The FTC also announced an advance-fee credit card case developed through work with the Partnership. Since the Partnership was created in 2000, it has worked to bring 16 FTC cases and over 380 Canadian criminal charges.

“Our recent consumer fraud survey showed that advance-fee loan scams were the most frequently reported type of consumer fraud,” said Deborah Platt Majoras, Chairman of the Federal Trade Commission. “Four-and-a-half million consumers – 2.1 percent of the U.S. adult population – paid advance-fees but did not receive the promised loan or card.”

Advance-fee scams are launched from “boiler rooms” in Canada that advertise loans in the classified ad sections of newspapers or use telemarketing to market major credit cards to consumers for an advance-fee. The sales pitches entice consumers with promises of “guaranteed” loans or credit cards regardless of a consumer’s credit history. When applying for these services, consumers often are asked to wire hundreds – or even thousands – of dollars to Canadian addresses.

“Consumer fraud is going global at a rapid pace; with our strategic law-enforcement partnerships, so are we,” Majoras said.

The Toronto Strategic Partnership works to identify and locate advance-fee scammers and shut down their operations. Today, the FTC and the Partnership issued a new consumer alert with tips to avoid advance-fee scams, and has sent letters to 28 state press associations urging them to let their members know that ads that guarantee loans, even to consumers with poor credit histories, may be fraudulent.

The FTC announced a law enforcement action against Prime One Benefits, a Canadian-based company that falsely claimed that consumers who paid a fee ranging from $159 to $236 would be guaranteed a low-interest rate, high-credit limit, and no-annual-fee MasterCard or Visa credit card.The FTC charged that since August 1999, Prime One Benefits has operated boiler rooms in Toronto, targeting U.S. consumers, often the elderly or university students. After paying the fee, consumers did not receive credit cards. Instead, they received packages containing coupons and discounts for travel, recreation, auto, medical plans, satellite service, and cellular telephones.

“The FTC’s Telemarketing Sales Rule (TSR) prohibits telemarketers from charging an advance-fee for credit or loan services,” Majoras said. “Legitimate lenders, banks, and credit card companies never charge consumers in advance.”

The FTC’s complaint names 120194 Canada Limited, doing business as Veritech Communications, Veritech Communication Services, Veritech, Prime One Benefits, Prime One Financial, Prime One, First National Credit Service, and U.S. National Credit, Prime One Financial Group, Inc., d/b/a Prime One Benefits, Prime One Financial, Prime One, First National Credit Service, and U.S. National Credit, Marketing Directives, Inc. The FTC complaint also alleges that this group of companies is owned and operated by individual defendants Paul Price and Elissa R. Price, also known as Lisa Price and Lisa Wells. The FTC received substantial assistance in this case from the U.S. Attorney’s Office for the Southern District of Illinois. The Commission vote authorizing staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division, on November 8, 2004.

The Toronto Strategic Partnership was created in 2000 as part of a broad initiative by the U.S. and Canadian government to enhance cooperation between the two countries in fighting fraud. The members include the FTC, the U.S. Postal Inspection Service, the Toronto Police Service, the Ontario Ministry of Consumer and Business Services, the Ontario Provincial Police, and the Canadian Competition Bureau.

FTC News Release

Court Order Shuts Door on Advance-Fee Credit Card Fraudsters

August 10, 2006

Under the terms of a U.S. district court judgment and order announced today, two defendants in an FTC cross-border telemarketing fraud case have been barred from engaging in deceptive marketing in the future and will pay $15,000 for consumer redress. The court action closes the case against Mishele Wells and her company, Simax Corporation, which allegedly targeted U.S. consumers with no credit or poor credit histories with promises of advance-fee credit cards that were never provided. The FTC brought the case in November 2004 as part of a major multi-jurisdictional cross-border fraud law enforcement initiative.

The FTC’s Complaint: Coordinated closely with U.S. and Canadian law enforcers, including members of the Toronto Strategic Partnership, the FTC’s complaint alleged that three individuals and their companies falsely claimed that consumers who paid a fee ranging from $159 to $236 would be guaranteed a low-interest rate, high-credit limit, and no-annual-fee MasterCard or Visa card. The Commission charged that since August 1999, the defendants had operated boiler rooms in Toronto, targeting U.S. consumers with no credit or poor credit histories. After paying for the promised cards, however, consumers did not receive them. Instead, they got packages containing coupons and discounts for travel, recreation, automobile services, medical plans, satellite service, and cellular telephones.

The FTC’s original complaint, filed on November 8, 2004, named 120194 Canada Limited, d/b/a Veritech Communications, Veritech Communication Services, Veritech, Prime One Benefits, Prime One Financial, Prime One, First National Credit Service, and U.S. National Credit; Prime One Financial Group, Inc., d/b/a Prime One Benefits, Prime One Financial, Prime One, First National Credit Service, and U.S. National Credit, Marketing Directives, Inc.

The complaint also alleged that the group of companies was owned and operated by individual defendants Paul Price and Elissa R. Price, a/k/a Lisa Price and Lisa Wells. The U.S. District Court in Chicago entered a temporary restraining order against the defendants on November 8, 2004, and a stipulated preliminary injunction against them on December 10, 2004, halting their cross-border telemarketing activities.

In September 2005, the Commission filed an amended complaint adding four defendants to the case: 1284383 Ontario Inc., d/b/a First National Credit Services and Direct Service Management; 1309529 Ontario Inc., d/b/a U.S. National Credit; Simax Corp., d/b/a America’s Gift House; as well as Mishele Wells, Elissa Price’s sister. Today’s action settles the FTC’s charges against Mishele Wells and her company, Simax. Litigation against Paul and Elissa Price continues. Orders of default have been entered against all remaining corporate defendants.

The Stipulated Final Judgment: The stipulated final judgment and order, which have now been signed by the judge, prohibits Mishele Wells and Simax – both of whom were active participants in the telemarketing scheme – from making misrepresentations about the provision of credit cards, as well as about any product, program, or service offered to consumers. They also must pay $15,000 in consumer redress, and are subject to a $400,000 “avalanche clause,” which will become due if they are found to have misrepresented their finances to the Commission. The order also contains standard monitoring and compliance terms, and requires the defendants to cooperate with the FTC in the case against Paul and Elissa Price.

The Toronto Strategic Partnership: The Toronto Strategic Partnership was created in 2000 as part of a broad initiative by the U.S. and Canadian government to enhance cooperation between the two countries in fighting fraud. The members include the FTC, the U.S. Postal Inspection Service, the Toronto Police Service – Fraud Squad, the Ontario Ministry of Government Services, the Ontario Provincial Police – Anti-Rackets, Competition Bureau Canada, the Royal Canadian Mounted Police and the United Kingdom’s Office of Fair Trading.

FTC News Release

Other Shoe Drops on Canadian Advance-Fee Credit Card Fraudsters

March 20, 2007

Final Court Judgments Close Case Against Remaining ‘Prime One’ Defendants

At the request of the Federal Trade Commission, a federal district court in Illinois has entered an order for permanent injunction, final judgment, and final default judgment against several Canadian cross-border fraudsters, permanently banning their deceptive telemarketing pitches and requiring them to pay $8.1 million, the total amount gained from their sale of non-existent advance-fee Visa and MasterCard credit cards to U.S. consumers.

The FTC brought the case in November 2004 as part of a major multi-jurisdictional cross-border fraud law enforcement initiative. Two defendants, Mishele Wells and her company Simax Corp., settled the Commission’s charges in April 2006. The action announced today ends the FTC’s litigation against the remaining defendants: Paul Price and Elissa R. Price, individually, and corporate entities 120194 Canada, Ltd.; Prime One Financial Group, Inc.; Marketing Directives, Inc.; 1284383 Ontario Inc.; and 1309529 Ontario Inc.

The FTC’s Complaint: Coordinated closely with U.S. and Canadian law enforcers, including members of the Toronto Strategic Partnership, the FTC’s complaint alleged that three individuals and their companies falsely claimed that consumers who paid a fee ranging from $159 to $236 would be guaranteed a low-interest rate, high-credit limit, and no-annual-fee MasterCard or Visa card. The Commission charged that since August 1999, the defendants had operated boiler rooms in Toronto, targeting U.S. consumers with no credit or poor credit histories. After paying for the promised cards, however, consumers did not receive them. Instead, they got packages containing coupons and discounts for travel, recreation, automobile services, medical plans, satellite service, and cellular telephones.

The FTC’s original complaint, filed on November 8, 2004, named 120194 Canada Limited, d/b/a Veritech Communications, Veritech Communication Services, Veritech, Prime One Benefits, Prime One Financial, Prime One, First National Credit Service, and U.S. National Credit; Prime One Financial Group, Inc., d/b/a Prime One Benefits, Prime One Financial, Prime One, First National Credit Service, and U.S. National Credit, Marketing Directives, Inc.

The complaint also alleged that the group of companies was owned and operated by individual defendants Paul Price and Elissa R. Price, a/k/a Lisa Price and Lisa Wells. The U.S. District Court in Chicago entered a temporary restraining order against the defendants on November 8, 2004, and a stipulated preliminary injunction against them on December 10, 2004, halting their cross-border telemarketing activities.

In September 2005, the Commission filed an amended complaint adding four defendants to the case: 1284383 Ontario Inc., d/b/a First National Credit Services and Direct Service Management; 1309529 Ontario Inc., d/b/a U.S. National Credit; Simax Corp., d/b/a America’s Gift House; as well as Mishele Wells, Elissa Price’s sister. On April 10, 2006, the FTC announced the entry of a stipulated final judgment and order, prohibiting Mishele Wells and her company Simax – both of whom allegedly were active participants in the telemarketing scheme – from making misrepresentations about the provision of credit cards, as well as about any product, program, or service offered to consumers. They also had to pay $15,000 in consumer redress. Litigation against Paul and Elissa Price continued, with the FTC subsequently filing a motion for summary judgment against them. That motion was granted, leading to the order for permanent injunction and final judgment announced today. Default judgments also were entered against the remaining corporate defendants.

The New Final Judgment and Default Order: The final judgment and default order announced today against the remaining individual and corporate defendants requires them to pay $8.1 million, the amount of their total net sales through the fraudulent scheme. It also permanently bans them from: 1) telemarketing any products, programs, or services to consumers in the United States; 2) selling credit-related products, programs, or services to consumers in the United States; and 3) making or assisting anyone else in making misrepresentations material to a customer’s decision to buy any good or service, concerning the performance, efficacy, or nature of a product or service, or the material terms, conditions, or limitations of any transaction regarding a product or service. Finally, it continues the freeze in place on the defendants’ assets, except for funds required to pay the $8.1 million to the FTC, prohibits them from disclosing information about their customers, and contains monitoring and record keeping terms to ensure their compliance.

The Toronto Strategic Partnership: The FTC investigated this case with the assistance of members of the Toronto Strategic Partnership, which, in addition to the FTC, includes: the Toronto Police Service Fraud Squad, Telemarketing Section; the Ontario Provincial Police, Anti-Rackets Section; the Ontario Ministry of Government Services; Canada’s Competition Bureau; the Royal Canadian Mounted Police; the United States Postal Inspection Service; and the United Kingdom’s Office of Fair Trading.

FTC News Release

Complaint
Temporary Restraining Order
Amended Complaint
Stipulated Order
Order for Prejudgement Injunction and Final Judgement

Cross-Border Cops Crack Down on Bogus Advance-Fee Loans, Advance-Fee Credit Card Schemes by

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