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The Federal Trade Commission has stopped an operation that allegedly deceived consumers with misleading and unsubstantiated claims about bogus products and services, including one that supposedly would help them get free government grants. To resolve FTC charges, several defendants behind the “Grant Connect” program have agreed to a permanent bar from marketing products and services like those that they pitched to unwary consumers.

According to the FTC’s complaint, Juliette Kimoto, Johnnie Smith, and other defendants behind Grant Connect used pictures of President Obama, Vice President Biden, and the American flag to bolster claims that their bogus government grants service was affiliated with the U.S. government. They promoted their dietary supplement by falsely claiming that it was endorsed by Oprah Winfrey and supported by scientific research, and failed to adequately disclose that their credit offers were merely memberships to a costly shopping club.

The FTC’s complaint charges that the defendants failed to adequately disclose that consumers who bought their products or services would be enrolled in continuity plans with significant monthly fees, mainly for other unrelated products. It also alleges the defendants used fake testimonials to promote their products and debited consumers’ bank accounts on a recurring basis without consumers’ permission.

The settlements with Juliette Kimoto, Johnnie Smith, and four companies Kimoto owned permanently bar the defendants from marketing products and services similar to those that they allegedly used to deceive consumers. The settlements also impose a $29.9 million judgment against them, which will be suspended upon payment of specified amounts detailed below.

The first settlement order announced today bans defendant Johnnie Smith from marketing or selling grant-related products or services, credit-related products, work-at-home business opportunities, weight-loss related dietary supplements, and other products or services using a “negative-option” or continuity program in which consumers are billed automatically until they decide to cancel. Smith also is banned from assisting anyone else selling these programs or products and from taking customer payments using pre-approved electronic fund transfers. Finally, Smith is banned from using testimonials to sell products or services, and is subject to the monetary judgment, under which he will pay $45,000.

The second settlement order bans Juliette Kimoto and four companies she owned from: selling grant-related products or services, credit-related products, or work-at-home business opportunities; selling products or services with a continuity or negative-option program; taking consumer payments by preauthorized electronic funds transfer; assisting others engaged in these activities; and using testimonials.

The second settlement order also bans the four companies from marketing dietary supplements claimed to assist in weight loss or other specified outcomes, and prohibits Juliette Kimoto from making misleading health claims related to dietary supplements. The order also requires Juliette Kimoto to pay more than $90,000 and to turn over various personal assets, including jewelry, a piano, and a 1967 Chevy Camaro, along with all the cash and other assets held by the entities she owned. The total value of the cash and assets turned over by Juliette Kimoto and the companies she owned exceeds $220,000.

The Commission vote approving each proposed settlement order was 5-0. The orders were filed and approved by the U.S. District Court for the District of Nevada. They resolve the FTC’s charges against Johnnie Smith; Juliette M. Kimoto; and the corporate defendants Pink LP; Vantex Group, LLC; Vertek Group, LLC; and the Juliette M. Kimoto Asset Protection Trust.

Litigation continues against Kyle Kimoto, Michael Henriksen; Steven R. Henriksen; Tasha Jn Paul; Rachel A. Cook; James J. Gray; Randy D. O’Connell; Acai, Inc.; Allclear Communications, Inc.; Consolidated Merchant Solutions, LLC; Dragon Group, Inc.; Elite Benefits, Inc.; Global Fulfillment, Inc.; Global Gold, Inc.; Global Gold Limited; Grant Connect, LLC; Healthy Allure, Inc.; Horizon Holdings, LLC; MSC Online, Inc.; O’Connell Gray, LLC; OS Marketing Group, LLC; Paid To Process, Inc.; Premier Plus Member, Inc.; Total Health, Inc.; and Vcomm, Inc.

The FTC appreciates the assistance of United States Attorney’s Office for the District of Nevada, the Better Business Bureau of Northern Nevada, the Better Business Bureau of Southern Nevada, the Las Vegas Metropolitan Police Department, the Reno Police Department (Financial Crimes/Computer Crimes Department), the U.S. Department of State, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), and the New Zealand Department of Internal Affairs in this matter.

Information for consumers on how to avoid government grant scams can be found here.

NOTE: The consent orders are for settlement purposes only and do not constitute an admission by the defendants that the law has been violated. Consent orders have the force of law when approved and signed by the District Court judge.

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 Web site provides free information on a variety of consumer topics. Like the FTC on Facebook and follow us on Twitter.

(FTC File No. 092 3108; Civ. No. 09-CV-01349-RLH-RJJ)
(Grant Connect.final)