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Tag: fake testimonials

  • BULLETIN: FTC Charges Central Coast Nutraceuticals In Acai-Berry Fraud Case That Alleges Overbilling And ‘Fake Endorsements’ From Oprah, Rachel Ray

    This website was part of a $30 million acai-berry scam that offered purported "free trials," overbilled customers repeatedly and fraudulently traded on the names of Oprah Winfrey, Rachel Ray and other celebrities and well-known brands, the FTC alleged.

    UPDATED 4:56 P.M. EDT (U.S.A.) Calling the operations of Arizona-based Central Coast Nutraceuticals Inc. (CCN) and affiliated companies a “$30 million” scam in 2009 alone, the Federal Trade Commission has obtained a court-ordered asset freeze in an acai-berry fraud case.

    Charged along with CCN were Graham D. Gibson, Michael A. McKenzy and four companies that shared the same Phoenix street address : iLife Health and Wellness LLC; Simply Naturals LLC; Health and Beauty Solutions LLC; and Fit for Life LLC.

    The FTC’s case file includes statements from Oprah Winfrey’s Harpo Inc. and author and TV personality Rachel Ray that they never endorsed acai-berry products as the alleged scammers claimed and that their intellectual property was being abused.

    The FTC’s action may send shockwaves across Internet Marketing slime pits, which routinely trade on celebrity names to sanitize “business opportunities” that imply famous people and entities endorse offers that appear online.

    At the same time, the FTC action may have a chilling effect on online hucksters who make misleading or unproven claims that their products cure anything from cancer to obesity.

    A big part of the scheme centered on bogus “free trial” offers and corrupt billing practices in which “numerous unauthorized charges” were made to customers’ credit-cards and debit cards, the FTC alleged.

    Another part of the scheme centered on false claims that using a product known as AcaiPure “could lead to rapid and substantial weight loss,” the FTC charged.

    “Too many ‘free’ offers come with strings attached,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection. “In this case, the defendants promised buyers a ‘risk free’ trial and then illegally billed their credit cards again and again — and again.”

    Vladeck said the FTC estimated “that about a million people have fallen victim to this scam,” with the scheme spreading in part owing to the fraudsters’ use of “fake endorsements” from Winfrey and Ray.

    “Ms. Oprah Winfrey has never endorsed or approved AcaiPure,” said Douglas J. Pattison, chief executive officer of Harpo Inc.

    In fact, Pattison said in court filings, Winfrey “has never endorsed any acai berry supplement or acai berry related product by name” and “has never approved or agreed to have her image or name used in conjunction with the sale and marketing of any acai berry related product.”

    Winfrey sued more than 40 companies for trademark infringement last year, amid claims scammers were using her image and brand to fleece the public.

    For her part, Ray said in court filings that she, too, had been victimized by Internet Marketers who used her image and brand to pull off fraud schemes.

    “I did not approve or agree to the use of my name or my image on this website. . . . I have never used, endorsed or approved AcaiPure. I am not associated with nor do I endorse or approve any acai berry product, company or online solicitation of such products, including AcaiPure,” Ray said.

    In another move that may cause great unease in the part of the Internet Marketing landscape that entitles itself to divine testimonials and plant the seed that famous people endorse their fraudulent offers, the FTC included photos of the websites and shared a video that allegedly made fraudulent claims.

    Visit the FTC website to view the video.

  • FIVE ARRESTED: SEC Says Bogus Stock-Tips Website Faked Testimonial From George Soros; Gryphon Holdings Inc., Kenneth E. Marsh, Others Charged With Operating ‘Sham’

    BULLETIN: Five people have been arrested in New York on charges of conspiracy to commit securities fraud and wire fraud.

    Their preliminary court appearances  are occurring now — and the allegations in the case are spectacular.

    Separately, the SEC has gone to federal court in New York to obtain an emergency court order freezing the assets of a company and defendants allegedly involved in the fraud. The company is a Staten Island investment-advisory business that allegedly sold bogus stock tips from “fictional trading experts.”

    Federal prosecutors said the firm has no trading desk, despite professing to have a “legendary” one. Prosecutors added that false academic claims about “Harvard, Oxford, Colombia, and Wharton” were part of the scheme — and that the purported ringleader used multiple names to pull off the fraud.

    U.S. District Judge Jack B. Weinstein of the Eastern District of New York granted the emergency freeze.

    Charged criminally in the case were Kenneth E. Marsh, 43, of Staten Island; Baldwin Anderson, 55, and Robert Anthony Budion, 28, both of Staten Island, Jeanne Lada, 44, of Freehold, N.J., and James Levier, 34, of Beachwood, N.J.

    Each of the criminal defendants also was named a defendant in the SEC’s civil case, which also names Gryphon Holdings Inc., which is operated by Marsh.

    Several relief defendants who benefited from Gryphon’s alleged misconduct also were named in the SEC’s civil complaint.

    “Gryphon and its associates attracted clients through postings on the Internet that falsely exaggerated their investment prowess,” said George S. Canellos, director of the SEC’s New York Regional Office. “They sold a bill of goods by pretending to be legitimate money managers with a long track record of extraordinary returns, distinguished clients, and hundreds of millions of dollars under management.”

    The company  “touted offices on Wall Street and around the world while, in reality, defrauding investors from a strip mall on Staten Island,” said David Rosenfeld, associate director of the SEC’s New York Regional Office.

    “Gryphon was nothing more than a sham designed to separate clients from their money,” Rosenfeld said.

    Like other recent securities cases, the complaint reads almost like a work of fiction. Multiple company names were used, and multiple aliases were used to pull of the scam, authorities said.

    “Gryphon is a New York corporation doing business under various names, including Gryphon Holdings, Gryphon Financial, Gryphon Daily, Gryphon Consulting Group, Gryphon Hedge Fund Partners LLC, Gryphon Management Hedge fund, Gryphon Financial UK Ltd, and Gryphon Australia,” the SEC said in the complaint.

    “Gryphon’s physical offices are located in a strip mall in Staten Island, New York, but the firm’s Internet posts depict an international operation with offices located on Wall Street, in Chicago, California, London, England, and Australia,” the SEC said. “The firm claims to have twenty-five to thirty employees and affiliations with expert, successful securities traders.”

    The defendants also used aliases, the SEC said.

    “In communications with Gryphon’s prospective or existing clients, Defendant K. Marsh has used various aliases, including ‘Kenneth Maseka,’ ‘Michael Warren,’ and ‘Marcus Thorn,’” the SEC said. Federal prosecutors added that “Warren” and “Maseka” are fictional, and the SEC said “Thorn” was, too.

    Other bogus storylines and identities included “Chris Wolfe,” whose average profit since 1995 purportedly ‘exceeded 1000% per trade’; ‘Marc Seigel,’ who purportedly ‘manage[s] in excess of 700 million in daily option trading volume’ and whose ‘talents trading options can be traced back five generations’; ‘John Gage,’ a graduate of Columbia and Wharton, a partner at Gryphon Financial and head of ‘equity Hedge Strategies,’” the SEC said.

    The bogus “Marcus Thorn” was claimed to have “delivered ‘189% gain’ on an ‘Intel play in one day,’” the SEC said.

    Marsh was banned in 2007 by the National Association of Securities Dealers, the predecessor to the Financial Industry Regulatory Authority, “from associating in any capacity with any firm that is a member of the NASD,” the SEC said.

    “Since at least 2007, Gryphon has advertised its services on several websites, which at various times included, among others, www.gryphondaily.com, www.gryphonfmancial.net, www.poisonpilltrader.com, www.cnbceffect.com, www.6ammoneymachine.com,” the SEC said.

    “Gryphon describes itself as the ‘World’s No. 1 Investment Newsletter,’ and provides its investment recommendations through various services bearing names such as ‘6AM Money Machine,’ ‘Raging Bull,’ ‘Wolves of Wall Street,’ ‘Wall Street’s Most Wanted,’ ‘Put Play of the Day,’ ‘Pure Profit,’ ‘WolfOption Trader VIP,’ ‘Elite Option Service,’ ‘Inner Circle,’ ‘Brain Trust,’ and ‘Mafia Trader.’ Once a client pays Gryphon for one or more of these advisory services, Gryphon representatives provide the client with investment recommendations on an individualized basis via telephone, e-mail, and/or through a password-protected section of Gryphon’s website,” the SEC said.

    Meanwhile, the SEC said fake testimonials were part of the scheme.

    “Gryphon’s website and promotional materials were also replete with false testimonials from clients about its performance and affiliations, and a purported endorsement of Gryphon by George Soros, that in fact Gryphon fabricated.

    “Gryphon claimed that Soros stated: ‘Alone the traders of Gryphon Financial are incredible, together the [sic] are unstoppable.’  The client testimonials falsely attested to the success of Gryphon’s recommendations, which purportedly resulted in a ‘huge nest egg,’ the ability to buy expensive cars, and freedom to no longer work,” the SEC charged.

    The scheme gathered more than $17.5 million over the past three years, the SEC said.

    Read the agency’s astonishing complaint.