(To learn more about the FTC, watch this exclusive Consumer Ally interview with FTC Chairman Jon Leibowitz.)
The penalty against Civic Development Group, LLC; CDG Management LLC; and owners Scott Pasch and David Keezer was the largest in FTC history for a consumer protection case.
"This scheme packed a one-two punch: it deceived the people who donated, and it siphoned much-needed funds from police, firefighters, and veterans groups," FTC Consumer Protection Director David Vladeck said in a written statement. "The court's final settlement order packs a one-two punch of its own: a record-breaking financial penalty for violating an FTC order and a lifetime ban on soliciting charitable donations."
To pay the penalty, the company's owners have been ordered to turn over some of the luxuries they've accumulated from their enterprise including:
- a $2 million home
- Picasso and Van Gogh paintings worth a total of $1.4 million
- an $800,000 guitar collection
- $270,000 from a recent sale of a wine collection
- $117,000 in jewelry
- vehicles including three Mercedes, a Bentley and a Range Rover.
The FTC's involvement dates to 1998, when the government alleged Civic Development had misled consumers into believing their donations would buy bullet-proof vests for local police and pay death benefits for the survivors of officers who had died.