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 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 financially distressed consumers.
"This huge judgment serves notice to anyone thinking of using phony getrich-quick schemes to defraud consumers," said Jeffrey Klurfeld of the FTC.
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, 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.
