Markets Wired

At the Federal Trade Commission’s request, a U.S. district court in Las Vegas, Nevada, has issued an injunction appointing a receiver and freezing the assets of a bogus prize-promotion scheme that was run by a repeat offender whom the agency first stopped from making deceptive telemarketing pitches 15 years ago. 

The March 5 court order addresses Glen E. Burke and his latest scam – a prize promotion pitch in which consumers were told they won a valuable prize, only to receive cheap costume jewelry or a lithograph print after paying money up-front.

Based on his role an earlier film investment scheme, in 1998 a federal district court entered an order permanently banning Burke from engaging in telemarketing and prohibiting him from making material misrepresentations about any product or service.  In addition to the order, the FTC had obtained a prior order in 1996 against Burke in connection with a business opportunity scam, and he has also been the subject of enforcement actions by other federal agencies.

Despite the 1998 order, the FTC alleges that since early 2011, Burke and his company, American Health Associates, LLC (AHA), have engaged in a deceptive telemarketing scheme through which they call consumers and tell them that they have won valuable prizes, supposedly worth thousands of dollars. 

Consumers are told that to claim the prizes they must first buy vitamins for between $300 and $500.  In some cases, the defendants then seek additional payments for even “more valuable” or “second level” prizes.  After consumers make these payments, however, either no prizes are delivered, or the prize they do “win,” such as costume jewelry or lithographs, is worth less than they initially paid for the vitamins.  Consumers who try to return the vitamins for a refund find the process difficult, if not impossible, to complete.

The court order announced last week freezes the assets of Burke and AHA and appoints a receiver over AHA.  The order grants this relief pending the outcome of the FTC’s civil contempt actions against the defendants for violating the 1998 order.  In its contempt actions, the FTC alleged that Burke violated the 1998 order both through his AHA telemarketing scheme and through an additional direct-mail sweepstakes scheme.  The direct-mail scheme promised consumers thousands or millions of dollars in winnings if they made a small payment, but after making the payment, no consumer received the promised winnings.  The FTC is seeking compensation for consumers harmed by the defendants’ order violations.

Information for Consumers

The FTC has a variety of information on prize promotion fraud and how to avoid it on its website.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.