When it comes to recouping losses in alleged scams like this, there’s often little money for the victims. As the unemployment rate has spiked in recent years, the FTC has ramped up efforts to shut down operations that prey on the financially distressed, including the unemployed. But in many cases, the ill-gotten gains have been spent or hidden by the time the government uncovers the fraud and the case winds its way through the courts.
Unlike established companies that run legitimate businesses with a reputation to protect, many of these are small operations run by obscure firms. In many cases, they can’t afford to cover the losses, in part because the scams are expensive to run and the profits are meager, according to experts who track these types of cases.
“This is the real tragedy of taking the last dollar from people who are already down on their luck,” said Amy Mudge, an advertising attorney in the District. “You can’t get blood from a stone. . . . There’s nothing to give back.”
David Vladeck, director of the FTC’s Bureau of Consumer Protection, said there’s great value in shutting down these companies even if victims can’t get a full refund.
“One way to look at these cases is injuries averted,” he said. “If you start adding up the losses we’ve avoided in the cases we’ve done in the last couple of years, you get to $1 billion pretty quick.”
As part of the settlement that Abili-Staff reached with the FTC, the firm was disbanded. The agency approved the settlement last January.
Adam Cortez, a Texas attorney who represented Abili-Staff and its owners, said his clients did not admit any wrongdoing and maintained that they were running a legitimate operation. But they settled the case, he said, because the FTC “applied a one-size-fits-all regulatory approach” that made it difficult for them to defend themselves.
The FTC has toughened its stance toward first-time offenders, according to Vladeck. In several recent cases, the agency has succeeded in banning alleged fraudsters from engaging in the same line of business again. In the past, the FTC only sought such bans against recidivists.
Since 2008, the FTC has brought at least 20 cases involving alleged job-related and business opportunity scams affecting millions of people, and it has gotten a financial judgment in nearly all of the instances. But that does not guarantee that the victims will get any money back.
On occasion, the FTC can’t locate the people accused of perpetrating the fraud. In 2009, the FTC won a $430,000 court judgment against Warner Ramos Borges, who advertised cleaning and maintenance jobs then allegedly tricked job seekers into paying him $100 a pop for an unnecessary certification number that he said they needed.
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