A group of affiliate marketers who lured consumers into a business coaching and investment scheme known as My Online Business Education (MOBE) will surrender millions of dollars in assets to settle Federal Trade Commission charges.
According to complaints filed by the FTC, the defendants made millions of dollars in commissions by enticing thousands of consumers to pay as much as $60,000 for MOBE “mentoring” services, using false claims and misleading testimonials about how much money they could make. The defendants advertised on social media, YouTube, online news sites, and at live events, specifically targeting teenagers, students, and older consumers.
“These so-called ‘affiliates’ helped MOBE swindle consumers out of millions of dollars by making outlandish and false earnings claims,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “Affiliates should take note that the FTC will hold you personally and financially accountable for false or unsubstantiated marketing claims.”
The named defendants in the FTC’s case against the affiliate marketers are Michael Giannulis and Michael Williams, along with several corporate entities they control, as well as Steven Bransfield, Gar Leong Chow, and Scott Zuckman and their companies.
Ultimately, most people who bought into the MOBE program were unable to recoup their costs, and many experienced crippling losses or mounting debts, according to the FTC. The FTC sued MOBE and its main operators in 2018, and its founder, Matthew Lloyd McPhee, recently settled the FTC charges against him.
The defendants, as part of their efforts to recruit people to MOBE, created their own branded “programs” and “systems” with names like Dot-Com Lifestyle, Entrepreneurs Club, and Rookie Profit System.
The FTC further alleges that one set of defendants, led by Giannulis and Williams, started another deceptive coaching scheme, called “My Ecom Club,” after MOBE was shut down. According to the complaint, Giannulis and Williams also solicited friends and family members to stand as straw owners and signers for shell companies they used to open merchant accounts, a practice known as credit card laundering.
The settlement orders permanently ban each of the defendants from selling or marketing any business coaching program or money-making method, as defined in the orders.
The order against Chow requires the judgment amount of $3,350,000 to be paid in full to the FTC for potential consumer redress.
The order against Giannulis, Williams, and their companies imposes a monetary judgment of $31.6 million, which will be suspended once defendants pay $760,000 and turn over personal items obtained from their participation in MOBE.
The order against Bransfield and his companies imposes a $4.7 million judgment that is suspended due to inability to pay. Bransfield filed for Chapter 11 bankruptcy in August 2019.
The order against Zuckman includes a judgment of $1.8 million and requires Zuckman to pay $406,150 to the FTC, after which the remainder of the judgment will be suspended due to inability to pay.
In the case of each judgment that is suspended, the full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.
The Commission vote authorizing the staff to file the complaints and stipulated final orders was 5-0. The FTC filed the complaints and stipulated final orders in the U.S. District Court for the Middle District of Florida, where the FTC’s lawsuit against MOBE was also filed.
NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Stipulated final orders have the force of law when approved and signed by the District Court judge.
The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357). Like the FTC on Facebook, follow us on Twitter, read our blogs, and subscribe to press releases for the latest FTC news and resources.