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Phony Medical Billing Telemarketers Banned
From Engaging in Medical Billing and Work At Home Business Opportunities:
Defendants Were Part of FTC'S "PROJECT BIZ-ILLION$"
Sweep
Home Professions, Inc., Telesalescenter.Com., and their owner, Michael Petok, charged
by the Federal Trade Commission as part of a nationwide crackdown on fraudulent business
opportunities, have agreed to pay $27,647 to settle the charges against them. The FTC had
filed a complaint in federal district court alleging that the defendants operated a
fraudulent work-at-home medical billing business opportunity. The FTC alleged that the
defendants misrepresented the earnings consumers could realize, the ease of signing up
doctors as clients, the utility of their medical billing software, and the availability of
a money back guarantee. Under the settlement, the defendants are banned from the medical
billing and work-at-home industries.
The settlement announced today ends the litigation in this case, which was among 35
cases brought by the FTC and the Department of Justice as part of "Project
Biz-illion$," a multi-prong state/federal attack on traditional business opportunity
scams. This case, like most of "Project Biz-illion$" actions, was launched
against defendants that advertised in the classified section of daily newspapers to peddle
work-at-home scams. The FTC's complaint named Home Professions, Inc., Telesalescenter.Com,
based in San Juan Capistrano, California, and Michael Petok, doing business as Nationwide
Medical Billing, ProClaim Software, and OptiMed (collectively referred to as "Home
Professions"). According to the FTC, the defendants made unsupported earnings claims,
provided consumers with faulty software that was incapable of processing medical billing
claims, falsely promised consumers that they had a list of doctors who were ready to hire
the defendants' customers to process their medical claims, and misrepresented their refund
policy. A minimum investment ranging from $299 to $599 was required and the defendants'
ads typically stated that consumers would make "From $24K to $50K+ per year."
Under the settlement, which required the court's approval, the defendants are banned
from any future involvement in the sale of medical billing or other work-at-home business
opportunities, and are prohibited from misrepresenting any fact material to a consumer's
decision in connection with the sale of any goods or services. The settlement requires the
defendants to provide notice of the settlement to all customers who are currently making
payments under existing contracts and to allow those customers to rescind their contracts.
In addition, the settlement requires the defendants to pay $27,647, with an avalanche
clause that would require them to pay $2.9 million in the event they are found to have
made omissions or misrepresentations about their financial condition. Finally, the
settlement contains various recordkeeping and reporting requirements designed to assist
the FTC in monitoring the defendants' compliance.
The Commission vote authorizing staff to file the proposed settlement was 5-0. The
stipulated judgment and order for permanent injunction was filed in the U.S. District
Court for the Central District of California, Southern Division, on January 26, 2001, and
the court approved it on January 29.
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