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Angeles County | Community News File / Santa Monica

2 Businesses Charged in Telemarketing Scheme

September 24, 1998

The U.S. Securities and Exchange Commission has filed a complaint in federal court against two Santa Monica businesses, charging proprietors with defrauding investors by operating a telemarketing Ponzi scheme.

Commercial Express LLC and Progressive Financial Inc. have raised $15 million from 500 investors nationwide for the avowed purpose of buying television air time for infomercials for consumer goods, said Bob Intartaglio, assistant regional director of the SEC's office in Denver, where charges were filed in district court Sept. 17.

Since their September, 1997 launch, owners of the companies promised quarterly returns ranging from 8% to 26%, Intartaglio said, but have not disclosed to investors that virtually all returns have been generated by money from new investors, not from product sales.

Investments range from $5,000 to $250,000, Intartaglio said.

The SEC also alleges that $4.5 million was transferred to three of the companies' principals--Joel A. Fein, Timothy M. Hazzard, and Mark D. McClafferty--and that only about $1.4 million of the money raised was spent on product development and acquisition of TV air time for infomercials.

Neither fact was disclosed to investors, Intartaglio said.

Another co-owner, Grace Na, and several other individuals and entities are named as defendants in the complaint.

Officials at Commercial Express and Progressive Financial could not be reached for comment Wednesday.

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