For Release: July
13, 2000 FTC and Other Law Enforcers Knock Out
Fraudulent Prize Promoters
The Federal Trade Commission and other law enforcement officials have put the gloves
back on to knock out the latest round of prize promotion fraud. In a recent law
enforcement effort - "Project Prize Fighter" - the FTC, the U.S. Postal
Inspection Service, State Attorneys General and others have joined forces to combat these
scams. "Project Prize Fighter" has resulted in 24 law enforcement actions
against more than 40 defendants in 9 states. The FTC cases announced today have a slightly
different twist to the classic "You Have Won" sales pitch. The bogus prize
promoters target consumers who have previously entered sweepstakes and tell them that they
have won but must first pay a fee in order to receive their prize.
Prize promotion fraud continues to be a significant problem for consumers and remains
one of the top five categories of complaints reported in the FTC's Consumer Sentinel - a
multi-agency law enforcement investigative cyber tool. As part of "Project Prize
Fighter," the FTC filed 3 actions, the U.S. Postal Service brought 10 actions,
Attorneys General from Ohio, North Carolina, Florida, Missouri and Utah took 9 actions,
and 2 additional actions were taken by the County of Orange Boiler Room Apprehension
(COBRA) Task Force and the Los Angeles County Sheriff's Department. (See attached list.)
"Project Prize Fighter" targeted bogus prize promoters who used telemarketers
and the U.S. mail to tell consumers they had won a significant cash prize, ask for and
pocket consumers' money in advance of delivering the prize, and deliver nothing.
"These scam artists lied," said Jodie Bernstein, Director of the FTC's Bureau
of Consumer Protection. "They lured consumers into their schemes with the promise of
a prize, then asked them to pay for it. These fraudsters added illegality to insult and
injury by failing to deliver the prize. That's when law enforcement got into the ring and
stopped the action."
"These criminals victimize consumers hoping to strike it rich by winning a
valuable prize," Chief Postal Inspector Ken Weaver said. "If someone says YOU
must pay money in order to receive a prize you supposedly have won, then you really
haven't won. Consumers across the country lose millions of dollars every year to
fraudulent prize promotions. To be a real winner, protect yourself from get rich quick
claims. Remember, a prize is won, not bought."
In each of the FTC's cases announced today, the defendants were charged with violating
the FTC Act by falsely representing that consumers would receive a prize. In fact, none of
the consumers received the "prize" that the defendants promised. In two of the
cases, the defendants also were charged with violating the Telemarketing Sales Rule
("TSR") by misrepresenting that consumers had won a prize and that consumers
would receive their prize if they made a payment to the defendants. In addition, in
numerous instances, the defendants falsely represented that consumers' bank accounts would
not be debited until after they received their prizes. In fact, defendants immediately
debited the accounts of consumers and never forwarded any prizes.
The FTC filed complaints against: Cecilia M. Castillo, Ian Anthony Suite, Global
Network Enterprises, Inc., Republic Enterprises, Inc.; Cory Banks, doing business as
National Network Services, New World Services, Inc., d/b/a Services for the New World; and
Jeffrey L. Landers d/b/a Adpro, Inc. Two of the complaints were filed under seal and the
seals have now been lifted.
Global Network Enterprises
Global Network, headquartered in Costa Mesa, California, using the assumed name TCM,
contacts consumers nationwide by telephone, and tells them that they have won $5,000 or
more in sweepstakes money. Consumers are told that in order to receive the monetary prize,
they must pay $289 in state sales or gift taxes. Consumers are then asked for their
checking, savings or other bank account information, and in some cases, even their social
security numbers. In many cases consumers are assured that no money will be withdrawn from
their account until they actually receive the prize money. However, the complaint alleges,
within a few days of the initial call, all of the consumers' accounts are debited. None of
the consumers contacted by the FTC received the promised prize winnings.
New World Services
New World Services, located in Long Beach, California, contacts consumers nationwide by
telephone, informing them that they have won either $5,000 or $10,000 from a sweepstakes
they recently entered. In order to receive the prize, the consumers are told, they must
pay a "fee" for income taxes, state taxes or shipping and handling owed on the
prize. The fees vary from $250 to $270. The defendants tell consumers that they will have
to pay the fees only after their prizes are received, and then ask the consumers for their
checking account numbers--either to facilitate payment by direct debiting or to
"verify" that the consumer has a valid checking account. The defendants then
immediately use the checking account information to debit consumers' accounts. None of the
consumers receive the promised prize winnings. According to the FTC, most of the consumers
who receive these calls have participated in sweepstakes contests before and are easily
led to believe that the company's representatives are calling from sweepstakes they had
actually entered.
Jeffrey Landers, d/b/a Adpro, Inc.
Jeffrey Landers resides in Marietta, Georgia, and uses a P.O. Box in Birmingham,
Alabama for Adpro Inc. Consumers are sent a certified letter postmarked by a mailing
processing facility in Dallas, Texas, stating that the defendant is holding prize winnings
for the consumer. In order for the consumer to obtain the winnings, they are told that
they must pay a $89 assessed fee for research, reporting, confirmation and document
delivery. Consumers who send in their money receive nothing. When consumers tried to
recover their money, they were unable to do so because Adpro provided no telephone number
or customer service address for consumers to contact.
The FTC has sought and obtained temporary restraining orders and asset freezes against
the corporate and individual defendants in each of these cases. The FTC has obtained a
preliminary injunction from the federal district court in the Global Network Enterprises
case and is also seeking permanent injunctions and redress for consumers. Consumer
investigators from Ohio Attorney General Betty D. Montgomery's office assisted the Long
Beach Police Department in executing a search warrant on New World Services.
Consumer Education Campaign
The FTC offers the following tips for consumers to keep in mind before responding to an
"It's Your Lucky Day" call or letter:
- Legitimate sweepstakes don't require you to pay or buy something to enter or improve
your chances of winning, or to pay "taxes" or "shipping and handling
charges" in advance to get your prize.
- Sponsors of legitimate contests identify themselves prominently; fraudulent promoters
are more likely to downplay their identities. Legitimate promoters also provide you with
an address or toll-free phone numbers so you can ask that your name be removed from their
mailing or calling list.
- It's highly unlikely that you've won a "big" prize if your notification was
mailed by bulk rate. Check the postmark on the envelope or postcard. Also be suspicious of
telemarketers who say you've won a contest you can't remember entering.
The FTC brochure, "Prize Offers: You Don't Have to Pay to Play," is available
on the FTC's Website at: http://www.ftc.gov/bcp/conline/pubs
The FTC would like to acknowledge the assistance provided by the following entities in
the preparation of its cases: U.S. Postal Inspection Service; County of Orange Boiler Room
Apprehension (COBRA) Task Force in Santa Ana, California; the Attorneys General in the
States of North Carolina and Ohio; the Long Beach Police Department; the Los Angeles
District Attorney's office; and various Better Business Bureaus.
The Commission votes authorizing staff to file the three complaints in the appropriate
federal district courts were 5-0. Jeffrey Landers was filed in the U.S. District Court,
Northern District of Geogia, Atlanta Division, on June 22, 2000. Global Network was filed
in the U.S. District Court, Central District of California, Southern Division, in Santa
Ana, on June 26, 2000. New World Services was filed in the U.S. District Court, Central
District of California, Western Division, in Los Angeles, on July 5, 2000. The FTC's
Southwest Regional Office coordinated the project for the FTC.
NOTE: The Commission files a complaint when it has "reason
to believe" that the law has been or is being violated, and it appears to the
Commission that a proceeding is in the public interest. The complaint is not a
finding or ruling that the defendants have actually violated the law. The case will be
decided by the court.
Copies of the complaints against
Cecilia M. Castillo, Global Network Enterprises, Inc., Republic Enterprises, Inc.; Cory
Banks doing business as National Network Services, New World Services, Inc., d/b/a
Services for the New World; Jeffrey L. Landers d/b/a Adpro, Inc. will be available shortly
from the FTC's web site at http://www.ftc.gov
and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W.,
Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired
1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone
recording at 202-326-2710.
- MEDIA CONTACT:
- Brenda Mack
- Office of Public Affairs
- 202-326-2182
- STAFF CONTACT:
- Tom Carter
- Southwest Region - Dallas
- 214-979-9372
- (Coordinator for Project Prize Fighter)
- W. David Griggs
- Southwest Region
- 214-979-9378
- (Global Network Enterprises)
- Kenneth Abbe and John Jacobs
- Western Region - LA
- 310-824-4343
- (New World Services)
- Harold Kirtz
- Southeast Region - Atlanta
- 404-656-1357
(Jeffrey Landers d/b/a Adpro)
(File No. 0023185 - Global Network Enterprises; Civil Action No. 00-625 (GLT) (ANX)
(File No. 0023183 - New World Services; Civil Action No. CV-00-07225-GHK)
(File No. 0023156 - Adpro, Inc.; Civil Action No. 1:00-CV-1582-RDS) |
Related Documents: FTC v. Jeffrey L. Landers (Northern District
of Georgia, Atlanta Division)
- Complaint
for Injunctive and Other Equitable Relief [PDF 288KB]
FTC v. New World Bank Services, Inc. and
Cory Banks (Central District of California, Western Division)
- Complaint
for Injunctive and Other Equitable Relief
FTC v. Global Network Enterprises, Inc.,
Republic Enterprises, Inc., Cecilia M. Castillo, and Ian Anthony Suite. (Central
District of California, Southern Division)
"Prize Offers: You Don't Have to Pay to
Play" |