Court Order Shuts Door on Advance-Fee Credit Card Fraudsters

For Release: August 10, 2006

Court Order Shuts Door on Advance-Fee Credit Card Fraudsters

Under the terms of a U.S. district court judgment and order announced today, two defendants in an FTC cross-border telemarketing fraud case have been barred from engaging in deceptive marketing in the future and will pay $15,000 for consumer redress. The court action closes the case against Mishele Wells and her company, Simax Corporation, which allegedly targeted U.S. consumers with no credit or poor credit histories with promises of advance-fee credit cards that were never provided. The FTC brought the case in November 2004 as part of a major multi-jurisdictional cross-border fraud law enforcement initiative.

The FTC's Complaint: Coordinated closely with U.S. and Canadian law enforcers, including members of the Toronto Strategic Partnership, the FTC's complaint alleged that three individuals and their companies falsely claimed that consumers who paid a fee ranging from $159 to $236 would be guaranteed a low-interest rate, high-credit limit, and no-annual-fee MasterCard or Visa card. The Commission charged that since August 1999, the defendants had operated boiler rooms in Toronto, targeting U.S. consumers with no credit or poor credit histories. After paying for the promised cards, however, consumers did not receive them. Instead, they got packages containing coupons and discounts for travel, recreation, automobile services, medical plans, satellite service, and cellular telephones.

The FTC's original complaint, filed on November 8, 2004, named 120194 Canada Limited, d/b/a Veritech Communications, Veritech Communication Services, Veritech, Prime One Benefits, Prime One Financial, Prime One, First National Credit Service, and U.S. National Credit; Prime One Financial Group, Inc., d/b/a Prime One Benefits, Prime One Financial, Prime One, First National Credit Service, and U.S. National Credit, Marketing Directives, Inc.

The complaint also alleged that the group of companies was owned and operated by individual defendants Paul Price and Elissa R. Price, a/k/a Lisa Price and Lisa Wells. The U.S. District Court in Chicago entered a temporary restraining order against the defendants on November 8, 2004, and a stipulated preliminary injunction against them on December 10, 2004, halting their cross-border telemarketing activities.

In September 2005, the Commission filed an amended complaint adding four defendants to the case: 1284383 Ontario Inc., d/b/a First National Credit Services and Direct Service Management; 1309529 Ontario Inc., d/b/a U.S. National Credit; Simax Corp., d/b/a America's Gift House; as well as Mishele Wells, Elissa Price's sister. Today's action settles the FTC's charges against Mishele Wells and her company, Simax. Litigation against Paul and Elissa Price continues. Orders of default have been entered against all remaining corporate defendants.

The Stipulated Final Judgment: The stipulated final judgment and order, which have now been signed by the judge, prohibits Mishele Wells and Simax – both of whom were active participants in the telemarketing scheme – from making misrepresentations about the provision of credit cards, as well as about any product, program, or service offered to consumers. They also must pay $15,000 in consumer redress, and are subject to a $400,000 “avalanche clause,” which will become due if they are found to have misrepresented their finances to the Commission. The order also contains standard monitoring and compliance terms, and requires the defendants to cooperate with the FTC in the case against Paul and Elissa Price.

The Toronto Strategic Partnership: The Toronto Strategic Partnership was created in 2000 as part of a broad initiative by the U.S. and Canadian government to enhance cooperation between the two countries in fighting fraud. The members include the FTC, the U.S. Postal Inspection Service, the Toronto Police Service - Fraud Squad, the Ontario Ministry of Government Services, the Ontario Provincial Police - Anti-Rackets, Competition Bureau Canada, the Royal Canadian Mounted Police and the United Kingdom's Office of Fair Trading.

The Commission vote approving the stipulated order for permanent injunction and final judgment announced today was 5-0. The document was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division, on July 31, 2006, and entered by the court on August 1, 2006.

The FTC received substantial assistance in this matter from the U.S. Attorney's Office for the Southern District of Illinois.