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Phony
Medical Billing Telemarketers Agree to Post Performance Bonds as
Part of FTC Settlement
Four individuals and four
companies, operating as a common enterprise under various
business entities and fictitious names, have agreed to post
$150,000 bonds before marketing any medical billing employment
opportunities in the future, as part of a settlement with the
Federal Trade Commission. The FTC had filed a complaint in
federal district court alleging that the defendants,
collectively referred to as MediWorks, telemarketed a deceptive
medical billing employment opportunity to consumers. According
to the complaint, the defendants promised consumers that they
would earn a specific level of earnings, such as $4,800 to
$8,000 per month. They also promised to provide a list of
doctors who purportedly were ready to hire the defendants'
customers to process their medical claims. In addition to the
bond, the proposed settlements would require the MediWorks
defendants to disclose the success rate of any employment
opportunity or business venture they sell in the future.
The case against the defendants
was filed as part of "Project Biz-illion$," a
multi-prong attack by the FTC, the Justice Department, and law
enforcement officials from 29 states on traditional
get-rich-quick business opportunity and employment scams. The
FTC's complaint named Mediworks, Inc.; MediDistribution, Inc.;
United Legal Associates; Mediworks; Robert D. Seals; Tate
Stringer; Cory Dixon, doing business as MediPros; and Corinna
Krueger. The defendants operated telemarketing rooms located in
Sherman Oaks, CA and Studio City, CA. The complaint alleged that
the defendants, advertising in newspaper ads and on the
Internet, misrepresented the earnings consumers would realize,
the ease of signing up doctors as clients, and the availability
of their money-back guarantee. Consumers paid $325 to $369 for
the company's medical billing software.
In four separate proposed
settlements, which require the court's approval, the defendants
would be prohibited from making any false or misleading
statements to consumers concerning the sale of any medical
billing, employment, work-at-home, business or investment
opportunities and would require the defendants to disclose the
success rate of any employment or business opportunity they
offer in the future.
The settlements also require
each of the defendants to post a $150,000 performance bond
before engaging in any future medical billing, employment,
work-at-home, business or investment opportunities. The
settlement with Tate Stringer would require him to pay $20,000
in redress. The settlements with the other defendants do not
call for payment of redress based on their financial information
submitted to the FTC. However, the settlements contain an
avalanche clause for $8 million in the event the defendants
materially misrepresented their financial positions.
Finally, the proposed
settlements contain various record keeping provisions to assist
the FTC in monitoring the defendants' compliance.
The Commission vote to authorize
staff to file the four proposed settlements was 5-0. The
stipulated final orders were filed in the U.S. District Court,
Central District of California, in Los Angeles, on September 6,
2000.
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