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Sherri L. Pollock, the remaining defendant named in a Â鶹´«Ã½ Trade Commission lawsuit, has agreed to post a $250,000 surety bond to protect customers before engaging in telemarketing activities in the future, as part of a settlement resolving charges arising from her role in an allegedly fraudulent "telefunding scheme." The FTC alleged that the scheme participants induced elderly consumers, who had previously lost money to fraudulent telemarketers, to make purportedly tax-deductible donations of $1,000 or more. In addition to the bond requirement, the settlement would permanently prohibit Pollock from engaging in future misrepresentations in connection with soliciting charitable donations or payments in return for prizes or awards, and any other misrepresentations regarding any material aspect of any future telemarketing or telefunding business.

In January of this year, the FTC filed a complaint in federal district court leveling charges against PFR, Inc., d/b/a PFR and Awards Center, and its President, Joseph M. Mantashigian, and on April 27, amended its complaint by adding Sherri L. Pollock. The FTC alleged that, through their sales personnel, the defendants made unsolicited calls to consumers to whom previous prize-telemarketers had promised substantial valuable prizes -- such as $50,000 or more in cash -- that were never delivered. The defendants allegedly told the consumers that they were holding the very prizes that had been promised, and that they would deliver those prizes to the consumers in return for a tax-deductible donation to Mission Foundation, Inc. The defendants also falsely claimed that the value of the prize to be awarded greatly exceeded the amount of the donation to be given by the consumer, the FTC alleged. (In August, the FTC announced that defendants PFR and Mantashigian had agreed to settle the charges against them.)

The settlement of the charges against Pollock, which requires the court's approval to become binding, would permanently prohibit her from making, in telemarketing or telefund- ing calls to consumers, the types of misrepresentations alleged in the FTC's complaint. Specifically, Pollock would be prohibited from falsely representing to consumers that:

• she is in the business of holding and distributing prizes or awards that other companies had promised consumers but did not deliver;
  
• she will deliver prizes worth at least as much as the payment consumers must make to claim the prizes;
  
• payments made by consumers in response to her solicitations are tax-deductible; and
  
• consumers will win awards or money.

In addition, Pollock would be prohibited from misrepresenting, when soliciting charitable donations, payments for prizes or telemarketing any good or service, any fact material to a consumer's decision to make a charitable donation or payment. Pollock also would be prohibited from misrepresenting the terms, effect, basis, and purpose of the settlement agreement.

The settlement would require Pollock to take reasonable steps to monitor employee activities in connection with telemarketing and telefunding.

The bond provision included in the settlement would require Pollock to post a $250,000 surety bond before she solicits money in return for prizes, or telemarkets any goods or services. A $250,000 surety bond also would be required before Pollock could hold any ownership interest in an entity that engages in telemarketing activities. The settlement further would require Pollock to disclose the existence of any bond she posts pursuant to these requirements in all written sales materials sent to consumers.

The settlement would not require the payment of redress, but it would permit the FTC to reopen the matter should Pollock be found to have misrepresented her financial condition. Finally, the settlement contains various reporting requirements that would assist the FTC in monitoring Pollock's compliance with the settlement agreement.

The Commission vote to file the proposed stipulated order was 5-0.

The proposed settlement was filed in the U.S. District Court for the District of Nevada, in Las Vegas, on Dec. 14. The U.S. Attorney's Office in Las Vegas, the Las Vegas office of the Â鶹´«Ã½ Bureau of Investigation, and the Nevada Attorney General's Telemarketing Unit provided substantial assistance to the FTC in this matter. The matter is being handled by the FTC's Division of Service Industry Practices and its San Francisco Regional Office.

NOTE: The stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. The order has the force of law when signed by the judge.

The FTC has developed a free fact sheet that offers tips for consumers on protecting themselves from recovery room scams. Copies of the "Telemarketing Recovery Room Scams" brochure, the stipulated final order, as well as other documents associated with this case, will be available shortly from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest FTC news as it is announced, call the FTC's NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web Site at: http://www.ftc.gov