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TBO.comTelemarketer May Get To Reopen
By JEROME R. STOCKFISCH, The Tampa Tribune
Published: December 28, 2007
TAMPA - A U.S. magistrate is recommending that a Largo-based telemarketing company that was raided and shut down by federal officials in July be allowed to resume operations, albeit in slimmed-down form and under a strict court-ordered receivership.
FTN Promotions Inc. and affiliated companies named as defendants, including Strategia Marketing, Suntasia Properties and six other companies, along with six company officers, were accused in a civil suit by the Federal Trade Commission of bilking thousands of customers nationwide out of "tens, if not hundreds, of millions of dollars."
The FTC raided the companies' headquarters and call center floors at 8751 Ulmerton Road in Largo on July 25. A court-appointed receiver, Los Angeles-based Robb Evans & Associates LLC, quickly moved to shut down operations including additional call centers in Clearwater, St. Petersburg and India. Company assets were frozen.
The defendants were accused of violating provisions of the Federal Trade Commission Act and the Telemarketing Sales Rule.
A former general counsel to several of the companies who is also a named defendant said resolution of the case was near. An FTC lawyer called the case "a very large fraud" but declined to comment on its strategy going forward.
The companies offered memberships to discount buyers and travel clubs as well as telecommunications services. Federal officials, however, allege the telemarketers deceptively obtained customers' checking account numbers by leading them to think they were affiliated with customers' banks. The callers then would enroll them for products or services the victims were unaware they were signing up for, the FTC charges.
The FTC said it had sifted through more than 5,000 complaints about the companies to Better Business Bureaus nationwide and other consumer offices. The court-ordered receiver said in a court filing that the companies netted $199 million on estimated gross sales of $449 million between May 1999 and July 23.
Among the assets held by one of the companies is an 80-foot Lazzara Sky Lounge yacht purchased for $3 million in March.
No criminal charges have been filed.
The individual defendants in the FTC case are Bryon W. Wolf and Roy A. Eliasson, owners of FTN Promotions Inc., Guardian Marketing Services Corp., Strategia Marketing LLC, Co-Compliance LLC, Bay Pines Travel Inc. and Suntasia Properties Inc.; Alfred H. Wolf, Bryon Wolf's father and an officer or owner of FTN, Strategia, Bay Pines and Suntasia; Donald L. Booth, former general counsel for several of the companies; Jeffrey P. Wolf, Bryon Wolf's brother and sole officer of JPW Consultants Inc.; and John Louis Smith II, owner of Travel Agents Direct LLC.
A ninth company, Agents' Travel Network Inc., is named in the suit.
The state attorney general's office said it is investigating Strategia Marketing.
In a ruling dated Dec. 21, U.S. Magistrate Thomas G. Wilson recommended that U.S. District Judge James S. Moody enter a preliminary injunction to continue the court-ordered receivership of the company and the asset freeze. The recommendation, however, also would allow the company to incorporate a plan of operations that has been agreed to by the defendants and the receiver.
That operating plan provides for continued oversight and decision-making authority by the receiver, Los Angeles-based Robb Evans and Associates LLC, covering all aspects of the companies' operations. That authority would include matters such as the scope of telemarketing activities; scripts used by telemarketers; other marketing materials and compliance procedures; and whether to reduce or terminate business activities if they are no longer economically viable.
It calls for increased training, stricter monitoring of sales agents, and gives the receiver and the FTC access to live calls and sales recordings.
Todd Kossow, an FTC lawyer in Chicago, said staff in the Midwest office was reviewing the recommendation and could not yet comment on how the commission would respond.
"We think it's a very large fraud," Kossow said Thursday.
The FTC's earlier position is clear, as quoted in Wilson's report: "The defendants should not be permitted to engage in any further telemarketing operations."
Nonetheless, Wilson wrote, "Telemarketing is not an illegal enterprise, and in this case it provides employment for a significant number of people. In addition, although the benefits of the defendants' programs have been questioned, there are evidently satisfied customers who have been using the defendants' products for some time."
Donald Booth, a Safety Harbor-based lawyer who is no longer serving as general counsel to any of the companies but remains an individually named defendant, said he felt there was "a pretty good chance" Moody would accept the magistrate's recommendation.
"I think there's excellent potential to get the case wrapped up," he said Thursday. "From what I've heard informally, his co-defendants' attitude is positive that they can go ahead and get this thing cleaned up and get the company back into position."
Reporter Jerome R. Stockfisch can be reached at jstockfisch@tampatrib.com or (813) 259-8402.
According to Steve Baker, Director of the FTC’s Midwest Region, this is probably one of THE largest telemarketing scams in recent history. They estimated Suntasia aka Strategia made over $100 million dollars, operated in 18 different locations around Pinellas County, Florida and employed 800 employees.