The mastermind behind a get-rich-quick scheme whose infomercials lured hundreds of thousands of victims is being sued by the Federal Trade Commission for defrauding consumers.
Russell Dalbey, CEO and founder of the company behind the "Winning in the Cash Flow Business" program, swindled consumers with fake claims about the fast, easy, big money they could make finding, brokering and earning commissions on seller-financed promissory notes, the FTC charged.
Although consumers paid as little as $40 to get started, they were pressured into spending far more on worthless products, the FTC charged, with many consumers losing thousands of dollars." 'Winning in the Cash Flow Business' was a real loser for hundreds of thousands of consumers nationwide," David Vladeck, director of the FTC's Bureau of Consumer Protection, said in a statement.
"When someone is selling a program designed to help people make money, they have to accurately describe how much consumers can expect to make and be truthful about how quickly they will be able to do so," Vladeck added. "None of that happened in this case, and people who bought the program paid the price."
The FTC's complaint against Dalbey and others involved in marketing the program, which was filed jointly with Colorado Attorney General John W. Suthers, accuses the defendants of misleading consumers about the amount of money they could earn using the program, as well as how quickly and easily they could rake it in.
The FTC and the state of Colorado are seeking a court order to stop Dalbey, his wife and their businesses from making misleading claims, as well as to recover money to refund their victims. Defendants include Russell T. Dalbey; DEI LLLP; Dalbey Education Institute LLC; IPME LLLP; Catherine L. Dalbey; and Marsha Kellogg, a consumer who provided a false testimonial for the service.
Dalbey began pitching his "wealth building" program on the Internet and via direct mail in 1996, and since 2002, millions of consumers nationwide have been bombarded with 30-minute infomercials for the "Winning in the Cash Flow Business" program, which were hosted by TV personality and repeat DUI offender Gary Collins.
The program promised to teach consumers how to find, broker and earn commissions on seller-financed promissory notes -- privately held mortgages or notes that are often secured by the home or land. The infomercial claimed consumers could successfully earn substantial income brokering promissory notes in three easy steps -- "Find 'Em," "List 'Em" and "Make Money."
"[Y]ou'll be amazed at just how easy it is to generate a stream of extra income every month. Build financial freedom and a better quality of life in just minutes a day. Or even retire earlier than you ever dreamed possible. Order now and you'll be ready to profit in minutes," the infomercials claimed.
These claims were supported by "testimonials" from consumers who claimed to have made "$1.2 million in 30 days," "$79,000 in a few hours" and "$262,216 part time," according to some. "In less than 30 days, I closed two transactions, and I netted 1 point – a little bit over $1.2 million," a testimonial by "Don B." from New York stated.
Those who fell for the infomercial's spiel shelled out approximately $40 to $160 on the initial program but were soon encouraged to spend hundreds or thousands of dollars more on multi-day seminars, coaching sessions and promissory note holder lead lists. Very few of these consumers ever made the money Dalbey promised them, the FTC said.
The complaint accuses Dalbey and his co-defendants of violating the FTC Act and Colorado law by making false and unsubstantiated claims about the "Winning in the Cash Flow Business" program, as well as their coaching programs, workshops, seminars and note holder leads.
Although Dalbey claims to have made big money in the promissory note business, the FTC charged, most of his note-related income for the past two decades came from pitching products and services that purportedly teach consumers how to find and broker these notes.
The defendants are also accused of inflating the success customers could expect with the program in the consumer testimonials. One of these customers, Marsha Kellogg, claimed in one testimonial that she earned $79,975.01 from a single promissory note transaction, while she actually earned $50,000 less.
Kellogg agreed to an order settling the FTC charges against her -- the first time the FTC ever charged a consumer with making misrepresentations in a product or service testimonial. The order forbids Kellogg from making future misrepresentations, and she has agreed to cooperate in the case against Dalbey and his co-defendants.
Consumer information from the FTC about how to spot and avoid investment fraud, "get-rich-quick" schemes and other types of wealth-building scams can be found here.
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