The Federal Trade Commission recently announced that it has reached settlements with four defendants charged with helping to launder millions of dollars in credit card charges through fraudulent merchant accounts.
The settlement orders permanently ban an individual settling defendant, and two corporate defendants from payment processing and telemarketing. A previously-entered stipulated order against an individual defendant bans him from payment processing or acting as an independent sales organization or sales agent in the payment processing industry.
According to FTC lawyers, the defendants assisted a deceptive business opportunity scheme to obtain and maintain merchant accounts that allowed the operation to process almost $6 million through the credit card networks.
The FTC charged the defendants with violating the Federal Trade Commission Act and the Telemarketing Sales Rule.
In 2013, the FTC sued a corporate defendant for telemarketing allegedly worthless business opportunities to consumers and falsely promising thousands of dollars in income. According to the agency, the defendants tried to avoid detection by law enforcement by changing product names, office locations and merchant identities. Allegedly, they falsely claimed consumers would earn up to $3,000 per month by referring small businesses to the defendants to obtain loans. After consumers paid up to $499 to buy the business opportunity, FTC attorneys allege, defendants told them that, to succeed, they had to buy sales leads that cost tens of thousands of dollars but turned out to be worthless.
In 2015, the court entered summary judgment and default judgments against certain defendants, finding that the business opportunities were a complete fraud and that consumers who bought these opportunities lost thousands of dollars each, resulting in more than $7.3 million in harm to consumers.
Monetary judgments of $462,925 against an individual defendant, $4.6 million against corporate defendants, and $5.7 million against another individual defendant, have been suspended due to the defendants’ inability to pay.
If the court finds that any defendant misstated or omitted the value of any material asset, the judgment will immediately become due.
The FTC continues to litigate against four other defendants that allegedly played a role in credit card laundering.
Informational purposes only. Not legal advice. May be considered attorney advertising.