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SALT LAKE CITY (AP) -- Federal prosecutors have filed a civil lawsuit against a Centerville, Utah, company that promised a home-based business opportunity would bring investors immediate cash flow and incredible returns.
But the Federal Trade Commission and the U.S. Department of Justice say the promise was bogus and lacked a basis for the claim. Both agencies are parties in the lawsuit filed Dec. 6 in U.S. District Court.
The action is among 100 included in "Project False Hopes," an 11-state federal crackdown on work-at-home scams. Other cases involves home-based business opportunities for vending machines, ATM and Internet terminals, envelope stuffing and medical billing.
The Utah lawsuit alleges Universal Advertising Inc., failed to provide complete and accurate financial information to potentials buyers and failed to disclose the number of prior investors who had achieved the profit levels claimed in promotional material.
Named as defendants are Universal and its president Paul E. Porter. He has declined comment and would say how many franchises were sold.
The lawsuit seeks monetary penalties, refunds to franchise holders, rescission of contracts and injunction against further violations of the FTC regulations and the federal franchise rules.
Universal's franchise opportunity worked like this: investors spent a minimum to $3,995 for a "Profit Center" display rack that holds business cards or brochures. Then by themselves or with a paid professional locater, franchisees set the racks up in restaurants, hotels or other business where customers wait.
Franchisees could then charge advertisers a fee for posting their promotional materials on the racks.
A display rack "can produce a very handsome income," a Universal web site states. The site suggests each rack could generate up to $5,040 yearly. The site also states in small print that Universal makes no guarantee an investor would meet those results.
Prosecutors contend the disclaimer doesn't meet legal standards.
"Despite the purported disclaimer, however, Universal does represent - repeatedly, throughout its Web site - that a purchaser will earn a substantial income with the Profit Centers," the lawsuit says.
------ Information from: The Salt Lake Tribune, http://www.sltrib.com
(Copyright 2006 by The Associated Press. All Rights Reserved.)
