In the case against the cross-border advance-fee telemarketing scheme known as Centurion Financial Benefits, a federal district court – acting at the request of the Federal Trade Commission – has entered several additional orders against participants in the scam. The FTC today announced the court has entered final orders requiring the corporate defendants and Robert Houttuin to halt their illegal cross-border telemarketing and barring them from violating the Commission’s Telemarketing Sales Rule (TSR). These orders contain monetary judgments of nearly $10 million.
The FTC also announced today that the court has held individual defendant Frank Bellissimo and non-party Ira Rubin in contempt of court for their operation of another telemarketing scam in violation of a preliminary injunction entered earlier in this matter.
The FTC’s Complaint
According to the FTC’s complaint, filed in September 2005, since at least 2004, the defendants used outbound telemarketing to contact consumers in the United States, falsely offering major credit cards, such as MasterCard and Visa, to people who agreed to have the defendants electronically debit their bank accounts for an advance fee of $249. The defendants typically claimed that the credit cards would have a $2,000 credit limit, zero percent interest, and no annual fees, and often targeted their offers at consumers with poor credit histories. Consumers who provided their bank account information did not receive a major credit card, but instead were sent an application for either a “stored value card” or “cash card” that had no line of credit associated with it and could be used only if the consumer first transferred funds onto the card.
The complaint named the following entities as defendants, both individually and as corporate officers: Sean Somma aka Sean Soma, individually and as an officer of corporate defendants Centurion Financial Benefits LLC and 1629936 Ontario Ltd, also d/b/a Spectra Financial Benefits; Antonio Marchese aka Tony Marchese, individually and as an officer of corporate defendant 1644738 Ontario Ltd., also d/b/a Sureway Beneficial, Simple Choice Benefits, and Oxford Financial Benefits; Tony Andreopoulos, individually and as an officer of corporate defendants American Getaway Vacations Inc., Credence Travel Processing Inc., and Topstar Media Inc., also d/b/a Integra Financial Benefits; and Dennis Andreopoulos, individually and as an officer of corporate defendants American Getaway Vacations Inc. and Topstar Media Inc., also d/b/a Integra Financial Benefits.
The complaint also charged Centurion Financial Benefits LLC; 1629936 Ontario Ltd., also d/b/a Centurion Financial Benefits; 1644738 Ontario Ltd, d/b/a Integra Financial Benefits; American Getaway Vacations Inc., also d/b/a Integra Financial Benefits; Credence Travel Processing Inc., d/b/a Integra Financial Benefits; and Topstar Media Inc., also d/b/a Integra Financial Benefits. The FTC filed an amended complaint in December 2006, adding the following corporate and individual defendants to the case: 1648534 Ontario Ltd., d/b/a Sureway Beneficial; 1652242 Ontario Ltd., d/b/a Oxford Financial Alliance and Oxford Financial Benefits; 1656324 Ontario Ltd., d/b/a Simple Choice Financial Benefits; 1466827 Ontario Ltd., d/b/a ESI Employment Solutions, Inc.; 6347738 Canada Inc., d/b/a ESI Contact Inc.; 1571816 Ontario Ltd, d/b/a RNR Holdings and Vu Com Communications; Frank Bellissimo; Robert J. Houttuin; Catreena Alexandra Marchewka; and Sylvain Cholette.
Dennis Andreopoulos later was voluntarily dismissed as a defendant, and on May 9, 2007, the Commission announced a settlement with three defendants – Soma, Marchese, and Cholette. Litigation continues against defendants Tony Andreopoulos and Catreena Marchewka.
The Final Orders
The final orders announced today concern all thirteen of the corporate defendants as well as individual defendant Robert Houttuin. These orders bar Houttuin and the corporate defendants from: 1) making, or assisting anyone else in making, any false or misleading statements concerning any fact material to a consumer’s decision to buy any program, product, or service; and 2) violating, or helping anyone else to violate the TSR. The orders also hold Houttuin and the corporate defendants jointly and severally liable for $9.89 million (the total amount of consumer injury associated with their scam), freeze their assets until they have satisfied this judgment, and bar them from selling their customer lists. Finally, the orders contain provisions designed to ensure future compliance with the FTC Act and the orders themselves.
The Contempt Order
In an order entered May 23, 2007, the court held individual defendant Frank Bellissimo and non-party Ira Rubin in contempt of court. The court entered a preliminary injunction in January 2006, shortly after the FTC filed its initial case. Among other things, the preliminary injunction freezes the defendants’ assets and prohibits them from engaging in deceptive conduct. The injunction also prohibits third parties like Rubin who receive notice of the order from assisting the defendants in violating it. Rubin was notified of this order, and was therefore bound by it.
In papers submitted to the court, the FTC demonstrated that just a few months after entry of the preliminary injunction, Bellissimo began a new telemarketing venture that falsely promised consumers they would receive at least $5,000 in government grants in exchange for an application fee of several hundred dollars. Rubin withdrew these fees from consumers’ bank accounts. In total, Rubin took approximately $657,648 from consumers on behalf of Bellissimo’s grants scam, transferred over $550,000 of these funds to Bellissimo, and kept the rest in fees for himself. Rubin and his employees also provided “customer service” for the grants scam and even edited sales scripts used by Bellissimo’s telemarketers. Consumers received nothing of value — much less a $5,000 “grant” — in exchange for the fees that Rubin deducted from their bank accounts and passed along to Bellissimo. The court found that this conduct violated the preliminary injunction.
The court ordered Bellissimo and Rubin to return the $657,648 that they took from U.S. consumers victimized by their grants scam, and it imposed a fine of $5,000 per day for each day the amount remains unpaid. Finally, the court has barred Bellissimo from engaging in the sale or promotion of any product or service to consumers in the United States.
Law Enforcement Assistance
The FTC appreciates the considerable assistance of several U.S. and Canadian law enforcement partners, including the Toronto Strategic Partnership, in conducting this investigation. In addition to the FTC, the Toronto Partnership is composed of the U.S. Postal Inspection Service, Canada’s Competition Bureau, the Toronto Police Service Fraud Squad’s Telemarketing Section, the Ontario Provincial Police Anti-Rackets Section, the Ontario Ministry of Government Services, the Royal Canadian Mounted Police, and the United Kingdom’s Office of Fair Trading.
Assistance also was provided by the Alberta Partnership Against Cross-Border Fraud. The Alberta Partnership consists of the FTC, Alberta Government Services, the Calgary Police Service, Canada’s Competition Bureau, the Edmonton Police Service, the Royal Canadian Mounted Police, and the U.S. Postal Inspection Service. The FTC alleged that part of the Centurion telemarketing took place in Calgary, Alberta.
Shortly after the Commission filed its complaint in September 2005, Canadian authorities executed search warrants on the telemarketing boiler rooms in Toronto and Calgary used to perpetrate the scam and brought criminal charges against the scam’s principals. See
http://www.gov.calgary.ab.ca/citybeat/public/2005/09/release.20050927_141328_9398_0. On June 18, 2007, Robert Houttuin and Frank Bellissimo pleaded guilty to criminal charges in Canada. They will be sentenced in November 2007.
Copies of the final orders are available 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, DC 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.