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 user 2008-04-29 at 11:36:32 am Views: 28
  • #19633
    Court Bars Bogus Ink Cartridge Business
    2008 -The operators of a fraudulent ink cartridge display rack
    “opportunity” have been found guilty of several violations by a U.S.
    District Court and ordered to repay nearly $9 million in reparations to
    consumers.At the request of the Federal Trade Commission, the U.S.
    District Court for the Northern District of Georgia issued an order
    finding that Holiday Enterprises Inc. violated the FTC Act and the
    Commission’s Franchise Rule and Business Opportunity Rule. The court
    order against Holiday Enterprises and its principals Richard J. Morrell
    and Richard J. Cascario permanently bars them from similar violations
    in the future and requires them to pay $8.98 million.

    invested a minimum of $7,950 for three racks, and up to $55,950 for 20
    racks, to take part in the business opportunity.As reported in the
    March 2007 issue of Recharger Magazine, the FTC charged that Holiday
    Ink Inc. sold ink cartridge display racks by misrepresenting that
    purchasers would earn a substantial income, misrepresenting the
    locations available for the racks, and using shills to reinforce those
    false claims. The FTC also charged that the defendants did not provide
    complete and accurate disclosure documents, did not provide an earnings
    claim disclosure, and did not have a reasonable basis for their
    earnings claims. Consumers invested a minimum of $7,950 for three
    racks, and up to $55,950 for 20 racks, to take part in the business

    The summary judgment against the defendants states
    that the Commission provided ample proof that Holiday Ink violated the
    FTC Act by “routinely and knowingly” making material misrepresentations
    to consumers in connection with their sale of business opportunities.
    These misrepresentations included the assertion that consumers could
    earn substantial income by buying one of the defendant’s business
    opportunities and that buyers would receive ink cartridge display racks
    and cartridges through which they could derive “substantial income and
    guaranteed profits.”

    The court found the defendants had no
    substantiation for such claims, and also misrepresented that they would
    provide buyers with “high-traffic, high-volume” locations in which to
    place their display racks and that they had “references” who were
    successful and profitable distributors. In fact, the “references” were
    nothing more than employees of the defendant or unsuccessful
    distributors. The court also found that the defendants violated the
    FTC’s Franchise Rule in a variety of ways, including failing to make
    required disclosures about the company and its principals, failing to
    disclose information on litigation in which they have been involved
    since 2001, and failing to provide potential buyers with the names of
    previous buyers of their business opportunity. The court also found
    Morrell and Cascario individually liable for their knowing
    participation in the deceptive acts of the corporate defendant, and
    relief defendant NMC Properties Inc., liable for its ill-gotten gains.

    the summary judgment, the court permanently barred Morrell from
    promoting, advertising, marketing, offering to sell, or selling any
    franchise, business opportunity, or business venture. The judgment
    permanently barred both individual defendants from making, or assisting
    others in making any statement or representation of material fact in
    connection with the sale of any venture, franchise, business
    opportunity, or other product or service. The court also barred the
    defendants from violating the Franchise Rule and the Business
    Opportunity Rule in the future and from distributing their customer