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FTC targets firms promising lucrative businesses, jobs

The agency aims to protect people who are pledged high pay but end up paying.

March 03, 2011|Julie Mianecki

WASHINGTON — Tom Bernard of Beverly Hills had been recently laid off from his engineering job when he received an e-mail in 2009 offering seminars to help him start a Web-based business.

He had some misgivings, but the need to find a new job trumped them, and Bernard signed up. Several weeks later, the business was not turning a profit, but his credit card had sprouted a $12,000 charge from Ivy Capital Inc., which offered the seminars.

On Wednesday, the Federal Trade Commission said it had filed suit against Ivy Capital in Las Vegas, National Sales Group in Santa Barbara, Business Recovery Services in Mesa, Ariz., and their executives and related operations, accusing them of ripping off customers like Bernard.

The three firms bring to 90 the number of companies being pursued by the FTC, accused of offering fraudulent job opportunities and at-home moneymaking schemes.

The offers usually promise significant earnings in a short period of time with little work involved, and consumers rarely receive the promised profits, said David Vladeck, director of the FTC's Bureau of Consumer Protection.

Ivy Capital earned more than $40 million by charging customers up to $20,000 each for business coaching services that would allow them to make up to $10,000 a month by working minimal hours, the FTC alleged.

"The victims of these frauds are our neighbors -- people who are trying to make an honest living," Vladeck said, but they "ended up with high levels of frustration and even higher levels of debt."

The FTC's principal goal is getting money back for victims of scams, but Vladeck said the companies typically have spent the money already.

In Bernard's case, when the jobless engineer asked Ivy Capital for a refund, the company refused. After a long argument, Bernard was told he could get a "full refund," which amounted to $400.

"It's made me a lot more cynical," said Bernard, who is still unemployed and has accumulated an additional $4,000 in interest charges.

"When I get an e-mail, if I don't recognize the name, I don't open it. I might be missing things that way, but I'm so worried now," he said.

In 2009, the FTC received 22,896 complaints about business opportunities, employment agencies and work-at-home plans, an increase of almost 13% from 2008.

Vladeck said the following companies had been shut down: Darling Angel Pin Creations Inc. in Tampa, Fla.; Global U.S. Resources in New Haven, Conn.; U.S. Work Alliance Inc. in Norcross, Ga.; Preferred Platinum Services Network in Bayville, N.J.; Abili-Staff Ltd. in San Antonio; Entertainment Work Inc. in Palm Beach Gardens, Fla.; and La Asociacion Nacional de Trabajo, an online market for Spanish speakers.

Contact information was not available for any of the companies.

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