Government cracks down on employment scams

Washington Post Staff Writer
Wednesday, March 2, 2011; 10:50 PM

The Federal Trade Commission has shut down operations at about a dozen companies that the agency said promised to help people find work but instead took their money.

The crackdown, announced Wednesday, was part of a yearlong sweep dubbed "Operation Empty Promises" that focused on rooting out employment scams. The Justice Department, the Postal Inspection Service and state law enforcement agencies also participated in the sweep, investigating more than 90 cases since last spring.

"While they were promising work, they were working over their victims," said David Vladeck, director of consumer protection at the FTC. He added that the companies "capitalize on the universal need for steady work and a stable income."

Since FTC Chairman Jon Leibowitz took over in 2009, the agency has targeted what it calls "last-dollar scams" that take advantage of consumers left vulnerable by the recession. Many are unemployed or may be saddled with debt, making them particularly susceptible to promises of guaranteed jobs or opportunities to work at home, officials said.

"In these difficult times, it is the fraudsters who find their window of opportunity," said Tony West, assistant attorney general for the Justice Department's civil division. Two companies were temporarily shut down last week after the FTC filed complaints against them in state courts.

The FTC said National Sales Group of Santa Barbara, Calif., advertised fake jobs on and charged applicants a fee for background checks. The company generated more than 17,000 complaints to law enforcement agencies, and CareerBuilder has since dropped the listings.

Another company targeted by the FTC, Ivy Capital, purported to help workers start their own Internet businesses and earn up to $10,000 a month. But the FTC said the Las Vegas-based firm instead defrauded consumers out of $40 million in fees for services such as tax advice and access to credit that were never delivered.

Tom Bernard of Florida said he signed up for Ivy Capital's program in June 2009 after he was laid off from his job. He spent roughly $12,000 on online seminars and fees before deciding that the program wasn't working and demanding his money back, he said. The company was only willing to refund $400, and Bernard said he has been trying to pay off his credit card ever since and is still unemployed.

He said he had thought the program "would be a way to help tide me over."

The FTC filed its complaint last week against Ivy Capital. The most recent post on Ivy Capital's Web site is from late 2009, and no one connected to the company could be reached for comment. An attorney for National Sales Group said he had no comment on the complaint. Although the FTC can halt business at a company it thinks is questionable, a court must decide whether it has violated the law.

"The announcement of these actions today is going to continue to be a warning bell for all of these advertisers," said Jeff Ifrah, a lawyer who specializes in white-collar defense. But, he added, "I think the FTC has a responsibility to communicate to the public with greater clarity as to what it considers to be deceptive."

Seven other employment cases brought by the FTC were closed as part of the sweep through settlements with the companies or court orders against them. They include La Association Nacional de Trabajo, Darling Angel Pin Creations, Global U.S. Resources, U.S. Work Alliance, Preferred Platinum Services Network, Abili-Staff and Entertainment Work.

Meanwhile, the Justice Department won 48 cases involving job scams in the past year and the Postal Inspection Service brought seven civil actions. Agencies in several states, including Maryland, and authorities in the District investigated 28 cases.

West, of the Justice Department, cautioned that it is consumers, not federal agencies, who are on the front lines of fighting fraud. Even if a company is found to have broken laws, consumers often do not get their money back.

"When consumers lose their money in frauds like this, it is very difficult to make them whole," he said.

That has led to another investigation by the FTC and the Justice Department into Business Recovery Services, which claimed to help consumers recover money from other job scams. The firm charged customers an advance fee of as much as $499 and produced few results, the agencies said. The Arizona-based company refused to answer questions about the case.

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