Two California-based currency speculation opportunity marketers have settled a Federal Trade Commission complaint brought against them. The court order prevents the marketers from making claims that had been part of their telemarketing and written promotional pitches.
The FTC charged the defendants misled consumers regarding how they could access their money, and that the defendants falsely claimed that they would not make money unless the investors did. In fact, the marketers netted $1.4 million in commissions, while customers lost more than $1.46 million as a result of not knowing what they were doing, according to the FTC.
Michael Zelener, of Amgine Corp., a Nevada corporation doing business as British Capital Group (BCG); and Markham & Co., a Nevada corporation doing business as British Capital Group Ltd. were named in the complaint.
Both the corporations were closed as a result of a lawsuit filed by the Commodities Futures Trading Commission (CFTC) in June 2003, according to the FTC.
The FTC claimed that BCG used cold calls to solicit investors, who were invited to open trading accounts at AlaronFX (AFX), a subsidiary of a large currency trading company in Chicago that is not named in the Commission action. BCG’s telemarketers told consumers that they could make money by speculating on the movement of foreign currency prices. However, the FTC claimed that most of the customers BCG’s telemarketers called were unsophisticated investors who were not familiar with these types of transactions.
The Commission also claimed that once the telemarketers identified consumers who were interested in BCG’s solicitations, Zelener sent them packages that contained further misinformation, such as: “[Accounts] professionally managed 24 hours a day” and “traders and analysts professionally supervise the ... account program on a 24 hour basis.” The promotional materials also falsely stated that investors would receive monthly statements showing profits and losses, and that accounts “have a high degree of liquidity,” with funds “available to the client on 48 hours’ notice,” according to the FTC.
Finally, while the FTC alleged that while BCG told investors it would make no money unless they did, the company was paid by AFX for every trade it solicited.
The Commission’s complaint contained two counts. The first said that the defendants made seven misrepresentations, each of which violated the FTC Act. The second claimed that five of these misrepresentations also violated the FTC’s Telemarketing Sales Rule.
The seven alleged misrepresentations include the following: 1) that investors would make at least 10% profit per month; 2) that only 20% of the investor’s equity would be used for trading; 3) that investors would be notified if their accounts fell below a certain percentage equity; 4) that investors would have 24-hour access to their accounts; 5) that investors would receive monthly statements; 6) that investors could recover their balances quickly; and 7) that the defendants would not make money unless the investors made money.
The consent order bars the defendants from making any of the misrepresentations in the FTC’s complaint, and from violating the FTC Act or the TSR in the future. The Commission vote to approve the complaint and consent order was 5-0. The FTC filed the complaint and consent in the U.S. District Court for the Northern District of Illinois, Eastern Division.
