Government Enforcement Actions

March 18, 2016

Illinois announced that a former Illinois Department of Human Services (IDHS) caseworker was arraigned on charges of theft, aggravated ID theft and official misconduct for allegedly stealing a reissued LINK card from a DHS client. Gwendolyn Ross, 63, of Rockford, surrendered herself to the Winnebago County Sheriff’s Office on March 11. Illinois Attorney General Lisa Madigan alleged that Ross, a former IDHS caseworker at the Winnebago County Family Community Resource Centre (FCRC), stole a reissued LINK card from a DHS client while it was being processed by the Rockford DHS office. Within hours of obtaining the card, she was observed on store security footage using the card to make purchases. IL

March 18, 2016

The FTC is mailing 2,172 partial refund checks totaling nearly $210,000 to consumers who bought Nano-UV “disinfectant” devices from a company called Zadro Health Solutions, Inc. The refunds stem from an FTC settlement with over allegations that Zardo’s ads falsely claimed that their devices “safely kill 99.99% of targeted bacteria – E. Coli, Salmonella and the H1N1 (swine flu) virus in 10 seconds.” FTC

March 16, 2016

A Thurston County judge ordered a California company that scammed new Washington property owners into buying overpriced deeds to pay more than $3.6 million, after granting summary judgment in a lawsuit brought by Attorney General’s office. The court found the Bellflower, Calif.-based LA Investors, LLC, which conducts business as “Local Records Office.” violated the state Consumer Protection Act at least 256,998 times by sending deceptive mailers. The company sent official-looking notices implying that consumers must buy a dramatically overpriced $89 copy of their deeds. Deeds typically cost only a few dollars from a local county office, and many property owners can obtain a copy of their deed for free online. WA

March 16, 2016

New Jersey announced that four individuals have been charged in connection with two separate schemes in which investors allegedly were defrauded of a total of $350,000 that they invested in purported medical ventures. In the first scheme, Joseph Denti Jr., Joseph Giardina and Heidi Francavilla allegedly stole $250,000 from a doctor by convincing him to advance that amount for a bogus investment involving a surgical center. They allegedly diverted his funds for their personal benefit. In the second scheme, Ralph Perricelli Jr. and Joseph Denti Jr. allegedly convinced a married couple to invest $100,000 in a blood-testing laboratory by falsely claiming to be joint owners of the lab. NJ

March 16, 2016

A Seattle-based man and his three companies will pay back as much as $7,750,000 to approximately 165,000 consumers nationwide. Benjamin Rogovy used systematic deception in the running of his for-profit company, Christian Prayer Center, including the creation of fake religious leaders and posting false testimonials to entice consumers to pay for prayers. In a separate business, Rogovy used deceptive and unfair business practices to run the Consumer Complaint Agency, a for-profit business that promised consumers it would advocate on their behalf regarding their complaints against businesses. Instead, the company charged consumers up to $25 for doing little more than passively forwarding complaints. Rogovy’s actions violate Washington’s Consumer Protection Act, which forbids businesses from making false claims, and the Charitable Solicitations Act, which prohibits churches and charities from using misleading or deceptive statements in any charitable solicitation. WA

March 16, 2016

The U.S. District Court for the Central District of California has permanently barred Stacy John Sanchez of Orange County, California, from preparing federal tax returns for others. According to the complaint, Sanchez owned and operated 12 Liberty Tax Service franchise locations, primarily in the Los Angeles and Las Vegas areas. At these locations, Sanchez and his employees prepared federal income tax returns that, among other things, contained bogus Schedules C (Profit or Loss From Business), fake Form W-2 (Wage and Tax Statement) information and falsely claimed dependents, the suit alleged. In addition, the complaint alleged that Sanchez and his employees prepared fraudulent income tax returns using stolen names and social security numbers and kept the bogus refunds generated by these identity theft returns. The estimated loss to the U.S. Treasury from Sanchez and his employees’ misconduct is at least $14 million, according to the complaint.

March 15, 2016

The CFPB requested a California district court to enter a final judgment and order banning Student Loan Processing.US and its sole owner, James Krause, from any future involvement in debt relief and student loan services.  The proposed order also requires the company to shut down all operations within 45 days of the judgment and to pay $8.2 million in refunds to thousands of harmed consumers – although most of that payment will be suspended due to the defendant’s inability to pay.  The CFPB’s lawsuit alleged that Student Loan Processing.US charged consumers illegal upfront enrollment fees before providing any services, deceived customers about the costs of their services, and falsely represented an affiliation with the DOE. CFPB

March 15, 2016

Florida announced an Assurance of Voluntary Compliance with You Fit, LLC, relating to the company’s advertising and business practices. You Fit is a Broward-based company that operates health clubs across Florida and in several states. According to consumer complaints, the company advertised month-to-month memberships as requiring no commitment or no obligation and did not disclose certain additional required commitments and fees until after members signed their contracts. Complainants also alleged that, in some cases, the company failed to acknowledge some membership cancellations and continued to charge monthly fees even after consumers attempted to cancel. FL

March 15, 2016

New York announced a settlement with the owner of two Manhattan restaurants for wage underpayments. The owner, Wallace Lai, admitted to a number of labor law violations, including keeping tips intended for delivery workers after customers ordered through online delivery services. From May 2014 until January 2015, the restaurants delivered food to customers through the food delivery websites Delivery.com, GrubHub.com, and Seamless.com. Through those websites, customers paid with credit cards, typically including a tip for delivery workers. Lai unlawfully kept the tips charged through the sites – never paying them to the delivery workers as customers intended. New York Labor Law prohibits employers from keeping any part of the tips that are intended for service employees, including delivery workers. NY

March 15, 2016

The CFTC announced that a federal district court has unsealed a civil complaint the CFTC filed with the Northern District of Illinois on February 2, 2016, against two foreign web-based binary options firms, Vault Options, Ltd. and Global Trader 365, both Israeli web-based companies. The CFTC’s complaint alleges that the two firms unlawfully solicited and accepted more than $1 million from at least 50 U.S. customers to trade off-exchange binary options contracts, defrauded those customers, and operated as unregistered Futures Commission Merchants.  CFTC