Repeat Offender Permanently Banned from Telemarketing, Selling Business Programs
On May 8, the FTC banned a scammer from telemarketing and from selling any type of business program in the future. Richard C. Neiswonger, who boasted that consumers could earn a six-figure income if they purchased and used his $10,000 asset protection service business program, had previously been previously charged with falsely claiming that consumers would make a substantial income. Neiswonger had failed to disclose that his company’s references were paid for favorable reviews. An FTC order entered in 1997 barred those deceptive practices, but the scammer has violated the order by using the same deceptive business practices in his most recent scheme. In addition, he failed to disclose significant facts to consumers, especially his time spent in federal prison for money laundering and wire fraud – a violation of the FTC order.
Richard C. Neiswonger, based in Las Vegas, Nevada, his business partner, William S. Reed, and their firm, Asset Protection Group, Inc., sold consumers their “APG Program” for $9,800, promising that it would result in a six-figure income. The company provided references that consumers could call who would back up their claims. Consumers also received training materials, a one-day training session, and a business affiliation with APG, which defendants claimed would provide consumers with prospective clients. Consumers were supposed to make money by selling APG’s asset protection services to clients who wanted financial privacy and wanted to make their assets less obvious to potential litigants or creditors. These services involved guidance on forming Nevada corporations and creating offshore corporations.
Consumers paid thousands of dollars for cold call lists, rather than pre-screened clients. Approximately 94 percent of the consultants failed to earn back their initial purchase fee for the program and only one person ever earned a six-figure income. The company’s references were, in fact, paid to deliver positive reviews of their experience. In addition, the 1997 order required that Neiswonger provide written proof to the FTC of a $100,000 performance bond to the FTC before marketing any program, which he failed to do while continuing to market his business opportunity program.
The court ruled that Neiswonger’s new deceptive business practices violated the previous order entered against him. The court also ruled that William S. Reed and APG were bound by the order, along with Neiswonger, because they were aware of the order and acted in concert with him and his deceptive business practices.
Specifically, the 1997 order:
• prohibited promoting any program with misrepresentations of material fact;
• prohibited promoting any program without disclosing to consumers all material facts, including the amount of payment to any references whose names are provided to them; and
• required written proof of a $100,000 performance bond to the Commission before marketing any program, and to promptly report any new business affiliations with programs to the Commission.
Senior United States District Court Judge Stephen N. Limbaugh found the defendants in civil contempt of the previous order. The judge entered a second permanent injunction against Neiswonger, which permanently bans him from advertising, marketing, promoting, offering for sale, selling, or otherwise inducing participation in any program and bans him from telemarketing. The judge also scheduled a hearing on June 25, 2007, for Reed and APG to defend why they should not be subject to a similar injunction. The civil contempt order was entered in United States District Court for the Eastern District of Missouri on April 23, 2007.
Camelia Mazard
(202) 589-1834
cmazard@dbmlawgroup.com
