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900-Services Sale Pitch Jilts Some Investors

COLUMN ONE

Government probes suggest a few suspected scam artists are using celebrities in their advertisements. In many cases, profits never materialize.

March 09, 1996|DENISE GELLENE | TIMES STAFF WRITER

In their pitches, suspected scam artists made use of the celebrity connection. According to authorities, copies of the Eubanks infomercial were shipped to some investors as a marketing tool. In the 30-minute infomercial, Eubanks sits in a chair and chats with beaming couples who presumably met through the Matchmaker Network. When a newlywed displays her ring, Eubanks cracks: "When is the baby due?" To a curvaceous woman who complains that a man she dated had been too short, Eubanks remarks: "I guess he thought you had big eyes."

As the infomercial ends, Eubanks proclaims: "I think we've discovered something revolutionary here." That's just before a disclaimer appears stating that the happy couples are actors and "not actual consumers of the Matchmaker Network."

Similarly, some investors in the company marketing "Jackson Family Secrets" received copies of the TV commercials for it, along with a call for more funds to get it on the air.

One bulletin sent to investors enthused about the prospects for the "no holds barred . . . exclusive" Jackson line, touting it as a "worldwide venture." It continued: "May the future bring champagne wishes and 900 dreams."

Although most top performers are highly protective of their images and closely review endorsement deals, other celebrities aren't always as picky.

Eubanks said a Century City agency called R&R Advertising approached him about doing the infomercial, which he viewed as a routine endorsement deal. He said he approved the script, deeming it "classy enough," and received assurances that the dating service was "completely private."

Eubanks said he did not inquire about the promoters of the Matchmaker Network because he had no stake in the venture, and he was unaware that the infomercial would be used to lure investors.

"I picked up my check. It didn't bounce. I walked away," Eubanks said.

Jackson's husband and manager, Jack Gordon, said in a telephone interview from Spain that he was unaware of any probe into American Fortune 900. He declined further comment. Jackson was to receive 25 cents of the $2.99 a minute charged on the Jackson line.

Michael Shain, a columnist at New York Newsday until it was closed, could not be reached for comment on the Hollywood gossip line. He is not named in the investigation.

At least one celebrity is beginning to feel as jilted as investors. Shaya's husband, New York police Sgt. Charles Castro, said she has yet to receive money from calls to the "True Blue" hot line. She was to receive 15 cents a minute. "They keep saying it is on the way, but we haven't gotten it," he said.

He said his wife's deal was with a Manhattan company named Magical Promotions, which, according to court documents, signed talent on behalf of American Fortune 900. Castro said he did not know anything about American Fortune 900 or the government investigation. Magical has not been named in the FTC probe.

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Behind the famous names, authorities say, are veterans of unregulated telemarketing operations that range from precious metals to ostrich breeding. The FTC said Rory Cypers, the 25-year-old president of American Fortune 900, previously sold precious metals investments for Western Trading Group, an outfit the FTC shut down after an investigation in 1992.

In its court filings, the FTC said American Fortune 900 promised investors unrealistic gains, such as a sixfold return in two years. The agency said Cypers told some investors their money was protected against losses by a U.S. Treasury bond worth $4 million, and sent them worthless photocopies of the security to back up his claim.

When hype didn't work, Cypers allegedly used threats.

A 78-year-old widow from Madera said in court documents that she invested $10,000 after Cypers threatened to sue her if she did not come up with the money. Months later, she invested another $5,600 when Cypers told her she was required to meet a capital call.

"He had me scared, so I did it," the woman said in an interview.

The FTC has alleged that Cypers and American Fortune 900 engaged in deceptive promotional practices, and is seeking a court order requiring that investors' funds be returned. American Fortune 900 has been barred from selling securities in four Midwest states.

Cypers dismissed the allegations against him and the company as "lies," and said he did not profit from American Fortune 900.

State Department of Corporations investigators believe that a key figure behind the Matchmaker Network was Jonathan Shoucair, a veteran of telemarketing companies that sold unregulated investments in wireless cable and ostrich breeding. The agency has obtained an administrative order against Shoucair barring him from selling unregistered securities. He refused comment through his attorney, Irving Einhorn, the former Securities and Exchange Commission chief in Los Angeles.

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