A U.S. federal judge last week ordered Tiran Zaken and his company to pay more than $25 million in restitution for false and misleading statements about a work-at-home business that promised big commissions for just a few hours of effort a week.
Based on a written opinion entered in September, the court found that 110,000 consumers had bought the defendants’ work-at-home program and “more than 99.8 percent never earned any commission whatsoever.
U.S. District Court Judge Dean D. Pregerson ordered Zakan the Zakan Corp. to pay $25,406,781 as redress for consumer injuries.
Acting Assistant Attorney General Joyce R. Branda of the DOJ’s civil division said, “Those who take advantage of Americans searching for an honest day’s work, depriving them of their savings, will be held accountable.”
Zaken Corp. of Thousand Oaks, California sold consumers a “Wealth Building Home Business Plan” called QuikSell.
For an initial investment of $148, consumers became “associates of QuikSell Liquidations.” They received a manual with instructions on how to locate excess inventory and sell it to through Zakan Corp.
The company promised to give the associate a commission equal to half the profit on the sale.
The defendants “lured customers with claims that purchasers of their program could expect that two to four hours a week working this business will earn participants an average of $3,000 to $6,000,” the DOJ said.
But Judge Pregerson of the Central District of California found that “fewer than one percent of consumers ever earned any income at all.”
The false claims about commissions violated the Federal Trade Commission Act, Judge Pregerson said.
The court also found that Zaken and his company violated the Federal Trade Commission’s Business Opportunity Rule. It requires sellers of business opportunities to provide specific, truthful information to help consumers evaluate a business opportunity prior to purchase, the DOJ said.
The Business Opportunity Rule was updated in 2012 to protect consumers “from exactly this sort of work-at-home scheme,” the DOJ said.
The court’s order Wednesday permanently banned Zaken and his company from advertising or selling any work-at-home opportunity or business opportunity.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.