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Sweepstakes Scams Telemarketing Fraud


FTC SETTLEMENT IN "PRIZE" SCHEME NETS $900,000 IN REDRESS, PERMANENTLY BARS THREE FROM SIMILAR PROMOTIONAL EFFORTS 4/20/94

One Las Vegas-based "prize" scheme which allegedly used deceptive claims to get consumers to purchase a variety of merchandise worked out a settlement with the FTC which involved paying $900,000 to be used for redress to consumers -- many of them elderly -- and to be bound by numerous restrictions and disclosure requirements on future telemarketing efforts.

Defendants in the case were Denny Ray Mason, Benedict Spano, and Anthony Della Iacono, who all agreed not to participate in any future promotional prize scheme.

Mason was listed as an officer or director of S.E.C. Enterprises, Inc., American Health Associates, Inc., New Image Way, Future World, Inc., and National Health Care Associates. Benedict Spano was named as an officer or director of New Image Way, American Health Associates, Inc. and AA Investments.

Anthony Della-Iacono, also known as Anthony Della, was president of National Health Care Associates; Fletcher McKamie, secretary/ treasurer of National Health Care Associates; Michael Minetti, president of American Health Associates, Inc; Patrick Brett, secretary/treasurer of New Image Way; Ricky Mason, manager of National Health Care Associates; Randy Mason, also manager of National Health Care Associates; and David Jordan, president of S.E.C. Enterprises Sales.

According to the complaint, they mailed out "Certificate of Award Guarantees" and made unsolicited telephone calls, falsely telling people they had won one of four or five valuable listed prizes (one of which was often a car) as part of a special promotion, then used a variety of misrepresentations to get them to purchase cosmetics, vitamins, "environmentally safe" cleaning products, water puri fiers or other products.

The ensuing sales pitch to entice consumers to purchase their promoted merchandise included a host of deceptive claims, including misrepresentations as to the value of the prizes -- which typically turned out to be of nominal value, such as inexpensive watches, jewelry or home electronics products, for which they had paid less than $60 each.

These techniques included seeking photographs and testimonials from "satisfied" or joyous consumers before they even received their prize or merchandise and placing repeated calls to elderly individuals who initially declined to purchase -- in some cases, several times an hour or on a daily or weekly basis for weeks -- and threatening legal action when they tried to cancel their orders.

People then ended up paying $399 or more, some spending tens of thousands when they were solicited to buy again -- or "reloaded" -- before they even had a chance to see the first prize they had won, based on promises that additional purchases would make them more likely to win even more valuable prizes.

One of these "advanced-level" prizes was a "big screen projection system," which turned out to be a large, clear sheet of plastic to be placed in front of a television set to simply and crudely magnify the picture.

Similar charges were alleged of Sierra Pacific Marketing, Inc., which also does business as American Premier Products; Legacy Unlimited, Inc., of Nevada and Legacy Unlimited, Inc., of Arizona; Steven Morris Rowe, president of both Sierra Pacific and Legacy-Nevada, and a co- owner of Legacy-Arizona; Gary D. Hosman, vice president of Sierra Pacific; and Robert Morris Rowe, a director of Legacy- Nevada and president of Legacy-Arizona (collectively, Sierra Pacific).

In addition to the Las Vegas operations, Sierra Pacific also operated telemarketing rooms in Fort Smith and Little Rock, Arkansas; Tulsa, Oklahoma; and, doing business as American Premier Products, in Atlanta, Georgia. In the past, it operated in Colorado Springs, Colorado; Tempe, Arizona; and Portland, Oregon.

The principal officers agreed to pay $500,000 each for redress to consumers, and neither the officers nor their companies could play a future role in any type of sweepstakes or prize-promotion scheme. Restrictions on other marketing efforts were also implemented.

FTC File Nos.: Denny Mason -- 922 3215 Sierra Pacific -- 922 3368
Civil Action Nos.: Denny Mason -- CV-S-93-135-PMP Sierra Pacific -- CV-S-93-134-PMP

NOTE: This consent judgment was for settlement purposes only and did not constitute an admission  of a law violation. Consent judgments have the force of law when signed by the judge.

The defendants in the Pioneer Enterprises, Inc. case recently agreed to halt their questionable practices and to pay $1.5 million in consumer redress as part of a settlement agreement.


 

 

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