WASHINGTON—Federal authorities said Tuesday that they were cracking down on home employment get-rich-quick swindles that promise, but don't deliver, high pay and commissions.
The scam businesses come in many forms. Some offer high pay for stuffing envelopes, designing Web sites or medical billing at home. Others promise that their vending machines or ATMs will make franchisees rich. Some say they'll give investors everything they need and don't. Others require a buy-in fee and costly training for businesses that can't work.
"These so-called opportunities appeal to the entrepreneur in all of us," said Federal Trade Commission Chairwoman Deborah Platt Majoras.
But they also share another similarity: unsubstantiated or deceptive earnings claims.
Bogus moneymaking schemes ripped off $100 million from 950,000 people in 2004, officials said.
The scams are centered mainly in South Florida, "one of the consumer-fraud capitals of the country, if not the world," according to Marcos D. Jimenez, the U.S. attorney for the southern district of Florida.
The key to this ignominy, he said, is South Florida's large number of immigrants, college students and the elderly—populations likely to be desperate for money and credulous when pitched with the schemes. California and Arizona are also fertile locations for business-opportunity scams.
The FTC claims 200 arrests and other enforcement actions nationwide against such scammers in 2004. It's now combining with the Justice Department, the Postal Inspection Service and law enforcement agencies from 14 states in a crackdown called "Project Biz Opp Flop."
For the victims, the American dream of a self-owned business turned into a costly nightmare.
Although the FTC has pending actions against 31 corporations and 33 individuals, few of the victims will ever get their money back. The businesses and their operatives often are as quick to disappear as the money collected from victims.
The crackdown focuses on criminal prosecutions, civil enforcement actions by the FTC, state enforcement actions and civil penalty actions by the Justice Department.
Among recent cases that the task force noted:
_Jeffrey Salley and Terri Salley of West Palm Beach, Fla. suckered nine people into investing $25,000 each in espresso coffee-vending machines that never arrived. Last month, Jeffrey Salley drew a sentence of nearly six years. Terri Salley got four years' probation.
_American Entertainment Distributors of Hollywood, Fla., claimed that DVD movie-rental vending machines could yield $60,000 or more a year and promised that it would help buyers place them in money-making locations. The FTC alleges that the company gave franchisees far less help than promised.
_A Mainesburg, Pa., company known as National Home Assemblers signed up an estimated 30,000 people to make cat refrigerator magnets. First, however, they needed to pay $38 for registration and a $12 inspection fee. They were promised up to $800 weekly, but their work never met the company's "quality" standards, task force officials said.
Officials of the Mainesburg and Hollywood companies couldn't be reached for comment.
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(c) 2005, Knight Ridder/Tribune Information Services.
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