The Federal Trade Commission today announced a set of final judgments and orders settling charges against two Florida-based principals and the corporations they ran for misleading consumers into believing they could earn up to $3,000 per week stuffing envelopes at home.
While the consumers – many of whom had responded to misleading e-mail spam messages – were told they would be paid $10 for each enveloped they stuffed, they soon found out this was untrue and that they were, in fact, simply mailing out more of the defendants' fraudulent solicitations. Under the court judgments and orders announced today, the defendants are barred from making similar deceptive pitches in the future and from violating the CAN-SPAM Act by sending e-mails with misleading subject headers or other means.
The Commission's Complaint
Brought as part of the 2005 “Project Biz Opp Flop” law enforcement sweep targeting fraudulent work-at-home business opportunities, the Commission's complaint charged the defendants with using spam, Web sites, and direct mail circulars to promote false earnings claims about envelope-stuffing and mailing opportunities. According to the Web sites and spam, defendants claimed they would pay $10 plus postage cost for each envelope consumers stuffed and mailed, and promised substantial income, ranging from $550 to $3,000 per week.
Consumers paid a fee of $65 to $160 up-front for a package of supplies from the defendants after being promised “BIG PAYCHECKS Within TWO WEEKS . . . If you Act NOW!” While consumers did receive the envelope-stuffing materials, they soon discovered they were simply sending out more solicitations for the defendants' purported business opportunities. None made the money the defendants promised and none were reimbursed for postage either.
According to the complaint, the defendants violated Section 5 of the FTC Act by deceptively representing that: 1) consumers were likely to earn a substantial amount of money from the envelope-stuffing business; 2) the defendants would pay $10 for each envelope stuffed and mailed by consumers; and 3) the defendants would pay the cost of postage consumers spent to mail the envelopes they stuffed. In addition, the complaint charged the defendants with further violating the FTC Act by providing consumers with the means to entice others into this type of fraud – by mailing out solicitations for new customers – and violating the CAN-SPAM Act by sending commercial e-mails that contained deceptive subject headings.
After a temporary restraining order and asset freeze was entered against the defendants on February 11, 2005, two principals and the corporations stipulated to preliminary injunctions on March 1, 2005. A third principal was later dismissed from the action.
Terms of the Final Orders
The actions announced today resolve the Commission's charges against the following defendants: Sun Ray Trading, Inc., a Florida corporation; SR & Associates, Inc., a Florida corporation; Rolando Galvez-Garcia, aka Rolando Galvez, individually and as an officer of one or more of the corporations; Anneelises Flores Adino, aka Annielises Flores, Annielises H. Flores, Annie Flores, and Anny Florez, individually and as an officer of one or more of the corporations; and Kostadin Osvaldo Marte Tavarez, aka Kostadin Marte. Defendant Flores was dismissed from this matter.
Under the stipulated final orders, defendants Galvez and Marte are barred from making the specific types of misrepresentations that enabled their scam, as well as other misrepresentations in the sale of any goods or services. All of the defendants are barred from providing the means for customers to deceive other consumers, such as by having them mail out circulars containing deceptive earnings claims. The orders also bar the defendants from violating the CAN-SPAM Act in the future and prohibit the defendants from disclosing any of the information consumers provided to them in response to the spam they received.
The orders also contain monetary provisions, imposing a $2,058,027.41 judgment against the defendants, which represents the estimated amount of consumer injury caused by their scam. The judgment has been suspended, based on their inability to pay. Defendant Marte, however, will give up approximately $1,300 in frozen assets as part of the settlement. The judgments and orders also contain record-keeping and reporting provisions to ensure the defendants comply with their terms.
The Commission vote authorizing the staff to file the stipulated final judgments and orders, and the dismissal of Flores as a defendant, was 5-0. The judgments and orders were filed in the U.S. District Court for the Southern District of Florida, Miami Division, and entered by the court on June 8, 2006.