Infomercial Scammers Ordered to Pay $478 Million to FTC

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On Thursday, the FTC announced of the largest litigated judgments ever obtained by the agency. In its lawsuit against the marketers of a series of real estate infomercials, U.S. District Judge Jacqueline Nguyen in Los Angeles entered a judgment for $478 million against the defendants along with a lifetime ban from infomercial production and telemarketing. The defendants included Douglas Gravink and Gary Hewitt. Both were jointly and severally held responsible for the monetary part of the judgment.

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

In June 2009, the FTC had filed the lawsuit against the marketers of three “systems” for getting rich quick, including “John Beck’s Free & Clear Real Estate System.” The John Beck system promised consumers they would learn how to buy homes for “pennies on the dollar” from government sales. However, the FTC held that the people behind the scheme made false and unsubstantiated claims and almost all buyers of the $39.95 product lost money.

  

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Lawyers for Beck, who is responsible of paying $113.3 million of the judgment, declined commenting to the media. However, Larry Rus, a lawyer representing the other two defendants Gravink and Hewitt, said it was likely that the order for a lifetime ban would be challenged. He said, “We just believe the evidence doesn’t support that kind of a harsh and broad order.”

While John Beck found the ‘system,’ Gravink and Hewitt had founded Family Products LLC, the company behind the advertising. According to the FTC the ‘system’ had duped almost a million consumers.

The present case, Federal Trade Commission v John Beck Amazing Profits, LLC, was part of a series of cases filed by the FTC to prevent scams targeting financially distressed people.