FTC wins $478 million judgment against infomercial scammers

Thu Aug 23, 2012 5:13pm EDT

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(Reuters) - A U.S. judge has issued a $478 million judgment against the marketers of a series of get-rich-quick real estate infomercials that the Federal Trade Commission said duped almost a million consumers with their claims.

The decision, announced by the FTC on Thursday, marked the largest litigated judgment ever obtained by the agency. It was part of one of several cases the agency has filed as part of its mission to deter scams targeting financial distressed consumers.

"This huge judgment serves notice to anyone thinking of using phony get-rich-quick schemes to defraud consumers," Jeffrey Klurfeld, director of the western region of the FTC, said in a statement.

The FTC filed the lawsuit in June 2009 against the marketers of the three "systems" for making money quick, including "John Beck's Free & Clear Real Estate System." The John Beck system promised to teach consumers how to buy homes for "pennies on the dollar" during government sales, according to the complaint.

But the FTC said the people behind that system and two others made false and unsubstantiated claims about how much money consumers could make using that system and others. Despite the marketing, nearly all buyers of the $39.95 products lost money, the FTC said.

U.S. District Judge Jacqueline Nguyen in Los Angeles, who entered the judgment Tuesday, also imposed a lifetime ban from infomercial production and telemarketing against three defendants including Douglas Gravink and Gary Hewitt, who founded Family Products LLC, the company behind the advertising.

Gravink and Hewitt, who are jointly and severably responsible for the monetary part of the judgment, will likely appeal the order to the extent it imposes a lifetime ban, said Larry Russ, a lawyer for the two at Russ August & Kabat.

"We just believe the evidence doesn't support that kind of a harsh and broad order," Russ said.

Lawyers for Beck, who is responsible for $113.3 million of the judgment alongside Gravink and Hewitt, declined comment.

The case is Federal Trade Commission v John Beck Amazing Profits, LLC et al, U.S. District Court for the Central District of California, 09-cv-04719

(Reporting By Nate Raymond in New York; Editing by Bernard Orr)

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