A series of deceptive robocalls has resulted in $30 million worth of civil penalties, a smackdown the Federal Trade Commission claims is the largest penalty ever imposed for violations of the Do-Not-Call Registry.
Paul Navestad was hit with a $20 million judgment - the largest ever against a defendant in an FTC case - while Christine Maspakorn received a $10 million judgment.
According to the court, Navestad and Maspakorn placed more than 8 million robocalls, including 2.7 million calls to phone numbers on the federal Do Not Call list. Operating as the Cash Grant Institute, the duo claimed that cash grants were available from federal, state, and local governments, private foundations, and "wealthy individuals."
The calls claimed that consumers were pre-qualified for grants up to $25,000 and directed them to visit the Navestad and Maspakorn's websites. However, these sites - including requestagrant.com and cashgrantsearch.com - instead charged a fee to provide general information about how to obtain public and private grants.
"It was only after consumers had paid the fee that they learned that it was very difficult to obtain cash grants from public or private sources, that very few people qualified for such grants, and that obtaining a grant involves a lengthy, competitive application process," the FTC said.
The FTC stopped the scheme and froze the duo's assets in 2009. Navestad and Maspakorn refused to testify or turn over assets, though through his attorney, Navestad claimed he was only a consultant. District Court Judge Michael Telesca was not convinced and found that the FTC's evidence told a different story.
Rep. Edward Markey, who authored legislation to establish the Do Not Call registry, said in a statement that he was pleased the FTC pursued and brought charges against Navestad and Maspakorn.
"With Americans struggling through some of the toughest economic times in generations, it is the height of unscrupulousness to deceive consumers with the false promise of imminent financial relief," Markey said. "The Commission has been a tough cop on the beat for consumers, and I commend the court for agreeing with the FTC."
The judgment comes about two months after the Federal Communications Commission approved rules that will make it more difficult for companies to use automated telemarketing calls, or robocalls. Specifically, the new rules will require companies to get written consent before calling you with automated offers. That can include an online form, though.
For more, see the court's full order.
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