One of the defendants in a fake prize scheme has agreed to settle Federal Trade Commission charges that he provided services for a direct mail scheme that tricked people into thinking they had won $1 million or more if they paid $25 to collect the fake prize. But those who paid received nothing. The operation targeted hundreds of thousands of mostly elderly consumers.
The settlement resolves the charges against Ian Gamberg, who printed and mailed the promotions and participated with other defendants in editing the language and layout of the mailers and envelopes. The promotions were mailed under the names Paulson Independent Distributors, International Procurement Center, Phelps Ingram Distributors, and Keller Sloan & Associates.
Under a stipulated final order, Gamberg is banned from misrepresenting any good or service, including the misrepresentations alleged in the FTC’s complaint. He also is prohibited from failing to clearly disclose that certain distributed promotions are meant to solicit a purchase; that the recipient has not won anything of value; and if a consumer has won anything, the value of the prize. The order also bars Gamberg from selling or otherwise benefitting from consumers’ personal information and failing to dispose of it properly.
The order imposes an $800,000 judgment that will be partially suspended when Gamberg has paid $1,400. The full judgment will become due immediately if he is found to have misrepresented his financial condition.
Litigation continues against the remaining defendants in the scheme, Millenium Direct Incorporated and its principal David Raff.
The case was filed as part of an international initiative against mass-mail fraud, which included actions taken involving law enforcement agencies from Belgium, Canada, the Netherlands, and the United Kingdom. The International Mass-Marketing Fraud Working Group – a network of civil and criminal law enforcement agencies from several countries, and co-chaired by the FTC and the Department of Justice – has identified mass-mail fraud as a major financial threat to consumers.
The Commission vote approving the stipulated final order was 3-0. The U.S. District Court for the Central District of California entered the order on February 13, 2017.
NOTE: Stipulated final orders have the force of law when approved and signed by the District Court judge.
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