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LA Company Owes $25M for Work-at-Home Scam

(CN) - A Thousand Oaks, Calif., that deceived consumers in its marketing of work-at-home business opportunities must pay them $25 million, a federal judge ruled.

U.S. District Judge Dean Pregerson entered the permanent injunction Tuesday against the Zaken Corp. and its president, Tiran Zaken.

Federal prosecutors said Zaken wantonly deceived consumers while selling a "Wealth Building Home Business Plan" called QuickSell.

"For an initial investment of $148, consumers became Associates of QuikSell Liquidations and received a manual including instructions on how to locate excess inventory," the Justice Department said.

"The defendants represented that once purchasers of the opportunity identified businesses interested in selling excess inventory, The Zaken Corp. would find a buyer for the inventory. If The Zaken Corp. succeeded in negotiating a sale of the inventory, it promised to give the associate a 'commission' equal to half the profit on the sale," the agency said.

Zaken allegedly lured customers with claims that purchasers of its program could expect to earn between $3,000 and $6,000 a week with just two to four hours of work.

Pregerson's injunction comes after she found, in a Sept. 18 ruling, that fewer than 1 percent of the 111,000 people who bought the Zaken program earned "any income at all" and that "more than 99.8 percent never earned any commission whatsoever."

Prosecutors said an individual bought the QuIkSell program, he was inundated with advertisements to purchase additional business "tools" costing hundreds or thousands of dollars.

The court found that consumers were encouraged to spend an additional $2,300 if they were "serious about this business and ... really wanted to make the kind of money others have made."

However, after making this additional investment, consumers received only a directory consisting of "largely outdated telephone numbers of companies who were out of business," Pregerson wrote.

The judge said that by engaging in these activities Tiran Zaken and The Zaken Corp. violated the Federal Trade Commission Act and the Federal Trade Commission (FTC)'s Business Opportunity Rule, which requires sellers of business opportunities to provide specific, truthful information to help consumers evaluate a business opportunity prior to purchase.

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