In an unprecedented step, the Federal Trade Commission will ask a federal judge Friday to permanently shut down a Los Angeles-based overseas employment agency on grounds that it bilked 70,000 or more clients out of at least $25 million.
The firm, Overseas Unlimited Agency, and its owner, convicted swindler Michael B. Marks of Canyon Country, have been the subjects of state or federal investigation since a few months after Marks acquired the employment agency in mid-1984.
The FTC, in a complaint filed in U.S. District Court in Los Angeles, charges that few of Overseas Unlimited's clients obtained jobs abroad, despite paying the company fees of $395 to $550. Though the firm promised to maintain an extensive database of job openings and a close working relationship with overseas employers, neither existed, the federal agency alleges.
State investigators say no more than 50 clients have landed jobs overseas in the four years that Marks, 47, has owned the agency.
While acknowledging isolated acts of misrepresentation, the firm has denied in court filings that it engaged in fraud. Rather, attorneys for Marks and Overseas Unlimited--which has refunded more than $300,000 to disgruntled clients in the past year--say the firm gathered data on thousands of job openings overseas, matched thousands of job seekers with potential employers and placed numerous clients in jobs.
Joel Levine, a Los Angeles attorney representing Marks, said the 480 clients of the agency who complained to state or federal agencies represented a tiny percentage of Overseas Unlimited's clients.
"I would be willing to guess General Motors has an equal percentage of people dissatisfied with their automobiles," Levine said Wednesday. Few customers have complained since the company tightened its business practices two years ago, he added.
The company--which claims to have 50,000 clients currently--advertised in local newspapers across the country, including the Los Angeles Times, and in national periodicals. Until a few days ago, one Los Angeles television station was continuing to broadcast a commercial in which Marks personally promoted the agency.
String of Proceedings
At the FTC's request, U.S. District Judge William J. Rea put a receiver temporarily in charge of the company's operations last week and froze the assets of the firm, Marks, and his wife, Susan Roy Marks, who also is named as a defendant in the civil complaint. The receiver immediately closed the agency's Wilshire Boulevard office.
On Friday, Rea will conduct a hearing on the FTC's request that he issue an injunction shutting down the firm permanently. Defense lawyers want the company to be allowed to resume business.
The FTC action--the first time federal regulators have sought to close down an overseas employment agency--is the latest in a string of civil and criminal proceedings involving Marks.
The state Bureau of Personnel Services, which regulates California employment agencies, began investigating Overseas Unlimited in November, 1984, and filed charges seeking to revoke the firm's license in July, 1986.
"What you think you're going to get is matched with at least three jobs that fit your qualifications and that the company will send your resume (to overseas employers), and supposedly the jobs are ones that are available and really exist and that you're qualified for," explained Deputy Atty. Gen. Sande Buhai Pond, who is prosecuting the state's license revocation case.
"Unfortunately, a breakdown on any one of those things means you got nothing for your money," Pond said Wednesday. "There was often a breakdown not just in one of those areas but in all those areas."
Levine contends that the federal allegations filed by the FTC last week are part of a state and federal strategy to put the employment agency out of business before it can defend itself in the oft-postponed state proceedings.
He noted that the state attorney general's office once had agreed to settle the charges without shutting down the agency, only to be overruled by the Bureau of Personnel Services. Also, Levine said Marks recently had offered to set up a trust fund, managed by an independent third party, to pay refunds to unhappy clients.
A hearing is scheduled in July on the state's move to rescind the company's employment agency license.
Beyond the state and federal civil charges, Marks and the firm have been the subject since 1986 of a continuing criminal investigation by the U.S. attorney's office in Los Angeles, according to court documents.
Also, Marks pleaded guilty in January, 1987, to an unrelated felony count of mail fraud in connection with charges that he worked for his brother, H. L. Marks, in a $3-million fraudulent scheme to sell photocopier supplies by phone. In that case, Michael Marks was sentenced to 21 days in custody and placed on probation for five years.