April 13, 1994
FTC prevails in fraudulent display-rack distributorship case; judge orders permanent receivership for company, orders over $9.1 million in redress
The United States District Court for the Southern District of Florida has ordered Jordan Ashley, Inc., Gold Coast Developers, Inc., National Vending Systems LTD., Inc., Thomas P. Norton, Christine M. Heller and Kelli J. Blasi to pay more than $9.1 million in redress to consumers. In November 1993, the FTC charged these defendants engaged in a variety of deceptive practices as part of a nationwide scheme to sell greeting card display-rack business opportunities. On April 5, 1994, following a two-day trial, the Court ruled in favor of the FTC, stating that the defendants misrepresented: 1) the earnings potential of the business opportunity; 2) the sales volume likely to be achieved; 3) the authenticity of references; 4) the exclusivity of, or amount of competition with, a purchaser's geographic territory; 5) the ease with which affiliated locating companies could find sales locations; 6) the suitability of those locations; and 7) the terms and conditions for replacing unprofitable locations. In addition, the Court found that the defendants violated the FTC's Franchise Rule by, among other things, failing to provide certain pre-purchase information required by the rule, including the factual basis for the level of earnings promised. In addition to ordering the defendants to pay restitution to consumers, the Court permanently barred defendant Thomas P. Norton from participating in the marketing or selling of any franchise or business opportunity, and has required him to post a performance bond in the amount of five million dollars before engaging in any telemarketing activities. The Court's order also enjoins Defendants Christine M. Heller and Kelli J. Blasi from making misrepresentations to any potential investor in a franchise or business venture and prohibits them from violating any provision of the FTC's Franchise Rule in the future. The judge has ordered a permanent receiver to take control and liquidate the assets of the corporate defendants and has ordered the receiver formulate a plan to distribute consumer redress. It has not yet been determined how much money will actually be available for consumer redress.
FTC prevails in fraudulent display-rack distributorship case; judge orders permanent receivership for company, orders over $9.1 million in redress
The United States District Court for the Southern District of Florida has ordered Jordan Ashley, Inc., Gold Coast Developers, Inc., National Vending Systems LTD., Inc., Thomas P. Norton, Christine M. Heller and Kelli J. Blasi to pay more than $9.1 million in redress to consumers. In November 1993, the FTC charged these defendants engaged in a variety of deceptive practices as part of a nationwide scheme to sell greeting card display-rack business opportunities. On April 5, 1994, following a two-day trial, the Court ruled in favor of the FTC, stating that the defendants misrepresented: 1) the earnings potential of the business opportunity; 2) the sales volume likely to be achieved; 3) the authenticity of references; 4) the exclusivity of, or amount of competition with, a purchaser's geographic territory; 5) the ease with which affiliated locating companies could find sales locations; 6) the suitability of those locations; and 7) the terms and conditions for replacing unprofitable locations. In addition, the Court found that the defendants violated the FTC's Franchise Rule by, among other things, failing to provide certain pre-purchase information required by the rule, including the factual basis for the level of earnings promised. In addition to ordering the defendants to pay restitution to consumers, the Court permanently barred defendant Thomas P. Norton from participating in the marketing or selling of any franchise or business opportunity, and has required him to post a performance bond in the amount of five million dollars before engaging in any telemarketing activities. The Court's order also enjoins Defendants Christine M. Heller and Kelli J. Blasi from making misrepresentations to any potential investor in a franchise or business venture and prohibits them from violating any provision of the FTC's Franchise Rule in the future. The judge has ordered a permanent receiver to take control and liquidate the assets of the corporate defendants and has ordered the receiver formulate a plan to distribute consumer redress. It has not yet been determined how much money will actually be available for consumer redress.
