Markets Wired

The Federal Trade Commission has stopped a father, his two sons, and their network of companies from deceptively selling a healthcare business opportunity with false promises of earning up to a million dollars in profits. In addition, the FTC has halted their sale of an herbal tea product, marketed with claims that it could prevent, treat, or cure a number of diseases, including AIDS, diabetes, cancer, arthritis, strokes, and heart disease. The defendants will turn over all of their frozen assets to settle the FTC’s charges.

According to the FTC, the family and their companies operated a traveling road show, where the father, Jeffrey Wayne (J.W.) McLain held “healthcare conferences” at large hotels and convention centers. At those conferences, J.W. McLain conned consumers into purchasing bogus healthcare business ventures for $2,495. The defendants offered to share their supposedly lucrative business model, promising consumers start-up assistance and claiming that they could earn $1 million a year.

Upon further investigation of defendants, the FTC discovered that the father, one son, Alexander McLain, and the companies were engaged in a second healthcare fraud, selling an herbal tea that purportedly prevented, treated, or cured a number of serious diseases. The FTC charged that claims about the healing powers of the tea, marketed under the names “Prophet 3H,” “Ezekiel Cleansing Tea,” and “Ezekiel Healing Tea,” were false and unsubstantiated.

Under the orders settling the charges, all of the defendants are prohibited from making false claims about any business venture or violating the Franchise Rule or the Business Opportunity Rule. In addition to J.W. McLain and Alexander McLain, the other defendants include the other son, Victor McLain, and the companies: Prophet 3H, Inc.; Prophet 3H, LLC; Georgia Home Health Care License and Certification Institute, Inc.; Healthcare State License and Certification Institute, Inc.; and M7 Holdings, LLC.

With the exception of Victor McLain, the orders also prohibit the other defendants from making any false or unsubstantiated representations about the health benefits or efficacy of any food, drug, or dietary supplement.

The order against the father and the companies enters a judgment of $26,645,479. The order against Alexander enters a $4,974,449 judgment, and the order against Victor enters a $125,900 judgment. All of the judgments are suspended based on sworn financial disclosures from the defendants. However, they will forfeit all frozen assets and proceeds of their business opportunity sales. If the defendants misrepresented their financial status, then the full judgment amounts will be due.

The FTC received assistance in the case from the United States Postal Inspection Service in Atlanta and investigators from several different offices of the attorneys general from Maryland, Florida, Mississippi, Georgia, Pennsylvania, Tennessee, and Virginia, including their Medicaid fraud control units.

The Commission vote to authorize staff to file the stipulated final orders was 5-0. The stipulated final orders for permanent injunction were filed in the U.S. District Court for the Northern District of Georgia.

NOTE: These stipulated final orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

The FTC works for the consumer 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, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.