Paybacks: Telescammers to fork over $50 million in restitution

The Federal Trade Commission today said a group of telescammers will pay out nearly $50 million to settle charges they deceived over one million people in a bank information fraud scheme.

As is unfortunately the situation in many of these case, the $50 million restitution is substantial, but it pales in comparison to the almost $172 million the FTC says Suntasia Marketing bilked out of its victims.

The FTC said 14 defendants from Suntasia, which used at least fifteen different business names to defraud consumers,  will pay $16 million to victims on top of the $33 million already settled upon between the Office of the Comptroller of the Currency and Wachovia Bank, which allegedly processed thousands of unauthorized demand drafts on Suntasia's behalf. The FTC said eight interrelated companies employing more than 1,000 people ran the scheme.

According to the FTC, between 1999 and July 2007, Suntasia deceptively marketed a series of negative option programs, including memberships in discount buyer's and travel clubs, to nearly one million consumers nationwide. With a negative option program, a company takes consumers' silence or failure to cancel the program as acceptance of the offer and permission to debit funds from their accounts, the FTC stated. The FTC alleged that when Suntasia called consumers to offer supposedly "free" trial memberships in its programs, the company deceived consumers into divulging their bank account information and later charged consumers without authorization for a series of negative option programs.

The FTC collected more than 5,000 formal complaints that consumers submitted to various law enforcement agencies and the Better Business Bureau. The FTC also found in Suntasia's possession thousands of additional complaint letters and refund requests that consumers submitted to the company directly.

The more than $16 million in consumer redress required under the four settlements is comprised of the following:

• Defendants FTN Promotions; Guardian Marketing Services; Strategia Marketing; Co-Compliance; Bay Pines Travel; Suntasia Properties; Bryon Wolf; and Roy Eliasson must pay over $11.25 million in consumer redress;
• Those defendants also must turn over real and personal property worth approximately $3.1 million, including the Largo facility where they operated their business;
• Defendants JPW Consultants; Jeffrey Wolf; and Alfred Wolf must liquidate and turn over to the FTC the proceeds of two securities accounts valued in July 2007 at $2 million;
• Defendants Travel Agents Defendants Travel Agents Direct and John Louis Smith II must jointly pay $25,000 in consumer redress;
• Defendant Donald Booth must pay $35,000 in consumer redress; and
• Bryon Wolf and Roy Eliasson also are required to turn over to the FTC any tax refunds they may derive as a result of making the above redress payments, which may later add as much as $2 million to the consumer redress pool.
• In the course of the litigation, the court-appointed receiver also sold Suntasia's 80-foot corporate yacht and a second telemarketing facility the defendants were building in St. Petersburg, Fla.

The court's orders include a $171.9 million suspended judgment against defendants FTN Promotions; Guardian Marketing Services; Strategia Marketing; Co-Compliance; Bay Pines Travel; Suntasia Properties; Bryon Wolf; and Roy Eliasson, provided the other restitution money is paid out. Suspended judgments also were entered against JPW Consultants, and JeffreyWolf for $60 million, and against Alfred H. Wolf for $115 million.

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• General discussions
• Security
• cyber crime
• FTC
• Suntasia
• telemarketing