Telemarketers Offering Guaranteed Profits Deceived Investors: FTC

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TELEMARKETERS OFFERING "GUARANTEED" PROFITS DECEIVED INVESTORS: FTC

A federal district court in Nevada has temporarily halted what FTC alleges to be a deceptive Ponzi scheme that bilked consumers out of millions of dollars. According to FTC, telemarketers for Affordable Media, LLC, doing business as Sterling Group Media and The Sterling Group, LLC, and its affiliates, promised prospective investors at least a 25% profit, as well as the return of their principal, within 90 days, if they invested in the defendants' "Media Units"--blocks of TV commercials that promoted various products with purportedly proven consumer appeal. The "Media Units" sold for $5,000 or $10,000 each.

FTC charged that such representations violate the FTC Act and the Telemarketing Sales Rule.

In fact, FTC alleged, contrary to what the defendants' telemarketers told consumers, many investors who bought the Media Units haven't received any profits or return of their principal, more than 90 days later. To the extent that some investors did receive profits, they apparently came from money invested by other investors, not from the sale of the products advertised on TV.

The defendants collected at least $18 million from their sale of investments to the public, he FTC alleges. In addition to the temporary restraining order, the court has ordered an asset freeze to preserve funds for consumer redress.

The Commission's complaint was filed under seal in the U.S. District Court, District of Nevada, in Las Vegas, on April 23, 1998. The seal was lifted on April 27, 1998.

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 defendant has actually violated the law. The case will be decided by the court.

(Affordable Media, LLC, dba Sterling Group Media and The Sterling Group, LLC, FTC File No. 982-3115, Civil Action No. CV-S-98-00669-LDG, April 28, 1998; materials relating to this FTC matter are available on the Internet at FTC's World Wide Web site at: http://www.ftc.gov.)

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