A Mobile, Alabama company that operated a vending machine scam through several corporate identities has agreed to settle federal charges. In June 2002, as part of "Project Busted Opportunity," the Federal Trade Commission, and the State of Maryland as co-plaintiff, filed a complaint against Accent Marketing, Inc., Monarch Vending, Inc., Vend 1 One, Inc., and their principals, John Nolan White and John Byron White, alleging that they violated the FTC Act when selling bulk-candy vending machine business opportunities and a business opportunity involving a coin-operated game known as the "Brain Teaser." The proposed settlement bans the defendants from advertising, promoting, or selling any business ventures, and prohibits them from owning or working for any entity that engages in those activities. The settlement also requires the defendants to pay a monetary judgment to the FTC.

"Project Busted Opportunity" was a law enforcement sweep launched by the FTC, the Department of Justice, and 17 state law enforcement agencies, targeting fraudulent work-at-home and business opportunities. In its complaint, the FTC alleged that the defendants placed ads in newspapers throughout the country promising a "RISK FREE ROUTE" with "proven" income of $3,250 per month. According to the FTC, consumers who responded to the advertisements reached a telemarketer who falsely promised potential investors a profitable business opportunity and stated that they would recover their initial investment within three or four months. The vending machine business opportunities ranged between $9,000 to $35,000. The FTC alleges that the defendants also falsely promised to provide profitable locations for the vending machines and referred the potential investor to phony references paid to lie about their success. The court granted the FTC a temporary restraining order and froze the defendants' assets.

In addition to the ban, the settlement announced today prohibits the defendants from making false and misleading representations in connection with the sale of any goods or services, or assisting others in making false representations related to the advertising, marketing, or sale of any business opportunity. The settlement also prohibits them from misrepresenting any fact material to a consumer's decision to purchase any goods or services, and are prohibits the defendants from selling their customer lists.

In addition, the settlement contains an $18 million judgment against the corporate defendants, and a $2 million judgment against the individual defendants. The order provides that the individual defendants will partially satisfy the judgment by transferring substantially all of their assets to the court-appointed receiver. The court will suspend the balance of the judgment. The settlement contains an avalanche clause making the defendants liable for $18 million in the event they misrepresented their financial condition. Finally, the settlement contains various recordkeeping provisions to assist the FTC in monitoring the defendants' compliance.

The Commission vote to authorize the staff to file the proposed stipulated final judgment and order was 5-0. The settlement was approved by the U.S. District Court for the Southern District of Alabama on April 2, 2003.
 
NOTE: This stipulated final judgment is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Stipulated final judgments have the force of law when signed by the judge.

 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. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Source:FTC.gov