Ivy Capital Allegedly Took Millions from Consumers Trying to Run Their Own Online Businesses
Most of the defendants in a massive business “coaching” scheme that allegedly took more than $100 million from consumers have agreed to settle Federal Trade Commission charges that they misrepresented the earning potential of the coaching program they sold, misrepresented their goods and services, and failed to fully disclose and honor their refund policy, in violation of federal law. The settlements, which ban the defendants from marketing and selling business coaching programs and require them to give up assets including two homes and eight cars, are part of the FTC’s continuing efforts to stop scams that target financially strapped consumers.
According to an FTC complaint filed in February 2011 against 40 defendants, including 22 interrelated companies, Ivy Capital Inc. and its co-defendants claimed their program would help consumers develop their own Internet businesses. Most consumers paid between $2,000 and $20,000 for the program and related products and services but got very little in return and found it difficult to get their money back if they canceled. The court halted the defendants’ businesses and froze their assets pending trial.
In addition to banning the defendants from selling business coaching programs, the settlement orders announced today permanently prohibit the defendants from misrepresenting material facts about products and services and misrepresenting or failing to fully disclose any refund policy. The settlement orders also prohibit them from requiring consumers to keep refunds confidential and from requiring that consumers not publicly disparage the defendants in order to obtain refunds. The defendants also are barred from violating the Telemarketing Sales Rule and from selling or otherwise benefitting from customers’ personal information.
The settlement orders impose a $130 million judgment against corporate defendants Ivy Capital, Inc., Ivy Capital LLC, Fortune Learning System LLC, Vianet Inc., 3 Day MBA LLC, Global Finance Group LLC, Virtual Profit LLC, ICI Development Inc., Logic Solutions LLC, Oxford Debt Holdings LLC, Revsynergy LLC, Sell It Vizions LLC, Zyzac Commerce Solutions, Inc., Fortune Learning, LLC, and The Shipper, LLC, doing business as Wholesalematch.com. The judgment will be suspended when these defendants have surrendered all of their assets. The full judgment will become due immediately if they are found to have misrepresented their financial condition.
The settlement orders against individual defendants Kyle G. Kirschbaum, John H. Harrison, Steven E. Lyman, Christopher M. Zelig, Steven J. Sonnenberg, and James G. Hanchett also impose a $130 million judgment. The judgment will be suspended when these defendants surrender certain assets. The full judgment will become due immediately if they are found to have misrepresented their financial condition.
The settlement order against Joshua F. Wickman and Enrich Wealth Group LLC (EWG) imposes a $46 million judgment that will be suspended when they have surrendered $68,884 from Wickman’s bank account and EWG’s assets. The full judgments will become due immediately if they are found to have misrepresented their financial condition.
The settlement orders also impose judgments against relief defendants who profited from the scheme but did not participate in it: Cherrytree Holdings, LLC (more than $674,000), S&T Time, LLC (more than $801,000), Virtucon, LLC (more than $113,000), Curva, LLC (more than $679,000), Kierston Kirschbaum (more than $681,000), Melyna Harrison (more than $812,000), and Tracy Lyman (more than $572,000). The judgments will be suspended when they surrender certain assets. The full judgments will become due immediately if the relief defendants are found to have misrepresented their financial condition.
Under the settlement orders, Kyle and Kierston Kirschbaum and their personal LLC, Cherrytree Holdings, will surrender to the FTC personal bank accounts with a total value of exceeding $213,000, a residential property with equity of approximately $100,000, a 2006 BMW 750Li sedan, and a 2007 Cadillac Escalade. Steve and Tracy Lyman and their personal LLC, S&T Time, will surrender personal bank accounts with a total value of more than $143,000, a residential property with equity of about $174,000, a 2009 Mercedes CIS sedan, and a 2009 Cadillac Escalade. John and Melyna Harrison and their personal LLC, Virtucon, will surrender personal bank accounts with a total value exceeding $24,000, a 2007 Infiniti G35, a 2007 Land Rover Range Rover Sport, and a 2008 Chevrolet van. Hanchett will surrender a 2007 Cadillac Escalade.
Litigation continues against the two remaining defendants, Benjamin Hoskins and Dream Financial, and three relief defendants, Leanne Hoskins, Oxford Financial LLC, and Mowab, Inc. Five other defendants defaulted.