TALLAHASSEE — Attorney General Bob Butterworth, Comptroller Bob Milligan and Statewide Prosecutor Melanie Ann Hines today filed criminal and civil actions against a California-based pyramid scheme whose activities have affected as many as 17,000 Floridians.
Criminal charges were filed in Duval County Circuit Court against two individuals and two corporations. The defendants are International Metals and Trade Corporation (IMTC) of San Diego, Calif; Global Marketing Services Inc., of Nevada; IMTC president and principal Neil H. Phillips, also of San Diego, and IMTC vice president Robert Charles Benzing of Daytona Beach.
In addition, IMTC and Phillips were charged in a civil complaint with deceptive trade practices and operating a pyramid scheme. At the attorney general’s request, the court today issued an injunction prohibiting IMTC from conducting any business in Florida, including accepting distributorship applications, disposing of assets and destroying records.
The civil complaint also asks the court to require that IMTC issue refunds to all Florida investors who request them. As many as 17,000 Floridians are believed to have participated, many of whom never received any products. More than 100 participants have complained to the Attorney General’s Office about IMTC’s refusal to issue refunds, even though some of the requests were made within the required three-day recision period.
“The true damage of these kinds of schemes is more than just their financial impact,” said Butterworth. “They encourage consumers to recruit their friends and family members. When it all collapses, the social fabric is torn in ways that can be very hard to mend.”
Florida’s statute against pyramid schemes requires that sales commissions be based primarily on the sale of products from distributors to consumers. According to the complaint filed today, IMTC investors were required to pay $200 for a “distributorship” that entitled them to receive items from various catalogs — but only after they first sold an additional 50 distributorships to individuals they recruited.
Under this scheme, the initial $200 would sit in a “layaway account” and the purchase could not be concluded until the 50 additional distributorships had been sold. The initial participant would then receive a recruiting bonus of $2,000 or more, depending on the number of distributorships sold.
The attorney general’s complaint further alleges that the consumer funds held in “layaway accounts” were not in any type of escrow account and, in fact, were used to pay recruitment bonuses to other participants.
In February, investigators from the Attorney General’s Office, Florida Department of Law Enforcement and Florida Comptroller’s Office executed a search warrant at IMTC’s San Diego headquarters.
All four defendants were criminally charged with racketeering, conspiracy to commit racketeering, securities fraud, organized fraud and operating a lottery via a pyramid scheme. IMTC and Phillips were additionally charged with approximately 100 counts of unregistered sale of securities.
The civil complaint was prepared by Assistant Attorneys General Richard Fishkin and Eugene Castagliuolo. The criminal complaint was prepared by Assistant Statewide Prosecutor Crystal Broughan.
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This post was written by admin on December 18, 2008
