FTC Serious about Enforcement of its Orders- $480m and Permanent Ban for Stipulated Order Violation

Three get-rich-quick system marketers have been permanently banned from the infomercial and telemarketing business as the result of a U.S. District court order granted at the request of the Federal Trade Commission ("FTC"). The FTC’s efforts to stop scams that mislead and target consumers who are financially distressed resulted in the largest litigated summary judgment ever obtained by the agency. The marketers, including “John Beck’s Free & Clear Real Estate System,” “John Alexander’s Real Estate Riches in 14 Days” and “Jeff Paul’s Shortcuts to Internet Millions” were ordered to pay the unprecedented sum of $480 million in consumer redress. While other individual defendants were ordered to pay a smaller portions of the $480 million, ($11 million; $34 million; $113 million), Gary Hewitt and Doug Gravink, as the individuals in control of the whole “get rich” enterprise, were held “jointly and severally” liable for the entire amount and have been banned for life from telemarketing and infomercials in violation of the FTC Act and Telemarketing Sales Rule. The court found justification in the severity of the judgment against Hewitt and Gravink due to their “long history of blatantly disregarding the law,” violating prior FTC orders, extensive injury to consumers in the amount of nearly $500 million and how easily their techniques could be transferred to other deceptive products. Their personal involvement in the deception of the consumers was found to be deliberate, blatant and extensive, resulting in the hugely substantial judgment as well as the highly restrictive “fencing-in” relief of lifetime bans.