The Federal Trade Commission yesterday announced a tentative consent agreement with five former officers of a bankrupt Washington employment search firm that would prohibit them from using false and deceptive advertising and marketing practices.
If the agreement is accepted by the FTC, it will close the commission's investigation into the activities of National Executive Search Inc.; a related job-search firm, John William Costello Associates Inc., and five officers of the companies: John W. Costello Sr., John W. Costello Jr., James H. Sellors, William S. Spector and Roy B. Kelly, all Maryland residents.
The FTC yesterday also released a complaint alleging that the two companies and five men misrepresented the services they provided to clients in violation of the Federal Trade Commission Act.
The consent agreement would not constitute an admission of wrongdoing.
Until it declared bankrupcty in 1982, National Executive Search was a nationwide placement firm, whose chairman was the senior Costello. According to the FTC, he now operates a job-placement business, Management Assistance Program, in this area.
None of the five or their attorneys could be reached for comment yesterday.
According to the FTC complaint, NES and Costello Associates customarily promised job-seekers that they could expect several employment interviews through NES' efforts and assured them that the large majority of NES customers got jobs through the service.
One NES advertisement declared, "We're going to mount a full-scale program for you, right now . . . Executives U.S. and overseas $30,000 to $100,000 plus. You are marketable!"
For these services, clients paid an advance fee that ranged from $2,500 to more than $25,000, the FTC said.
Former clients have claimed in lawsuits that the fee amounted to 10 percent of the annual salary they hoped to earn.
But the FTC complaint alleges that the clients seldom received interviews or job offers, either from NES or from John William Costello Associates Inc., which was formed by the five NES officers after National Executive Search declared bankrupcty and which also was named in the FTC complaint and proposed settlement.
The Costello firm discontinued operations in August 1983, the FTC said. Neither firm was able to produce jobs for the large majority of clients, the FTC complaint said.
In October 1982, NES was the subject of an expose' on CBS's "60 Minutes," and that was followed by news articles and a rash of lawsuits by former clients.
A class action filed against NES and the Costello firm in 1983 claimed that between 2,000 and 3,000 people were defrauded by NES of between $2,000 and $8,000 each.
William Dobrovir, an attorney for the former customers, said the suit, which seeks $24 million in damages, is pending in U.S. District Court.
The FTC said financial information from the five former officers indicates that they don't have the money to pay refunds to the former clients.