A group of local companies that allegedly bilked consumers by purporting to help them obtain non-existent government grants was insolvent when authorities moved to shut them down.
A preliminary report by the receiver appointed to take charge of the companies’ operations says the businesses “operated only by signing up new victims faster than the old victims could obtain refunds.”
A federal judge last month halted the companies’ activities and froze their assets after the Federal Trade Commission and the attorney generals of Kansas, Minnesota and North Carolina alleged they had engaged in deceptive business and telemarketing practices.
The companies — the receiver has uncovered almost two dozen so far — include Affiliate Strategies Inc., Apex Holdings International LLC, Grant Writers Institute LLC and Landmark Publishing Group LLC.
The receiver, Larry E. Cook, said his investigation of the companies’ books revealed “several thousand intercompany transfers,” making it difficult to sort out their profits and losses. But he said that his investigation indicated that when the companies’ bank accounts were frozen on July 24, there was less than one day’s operating cash requirements in the accounts.
“The companies were incurring very high expenses for postage, printing, marketing leads and labor,” Cook’s report states.
Of immediate concern, the report adds, were “the large distributions and salary paid” to Brett Blackman, president and chief executive of Affiliate Strategies and a principal owner of the other companies.
Cook said that Blackman got $841,545 from Apex Holdings in 2008 and in turn made net contributions of $491,559 to Affiliate Strategies. That left him with net distributions of $349,986 in addition to a salary of $118,049, or a total of $468,035 last year.
Anthony Rupp, an attorney for Blackman, declined to comment on Cook’s report.
Since taking charge of the companies nearly a month ago, Cook, his attorneys at Lathrop & Gage and Lathrop’s staff have fielded “hundreds of calls” from consumers seeking refunds, trade creditors and banks, Cook’s report states.
The report says that a preliminary review of 32 U.S. Postal Service crates received by Lathrop on August 19 indicates most of the mail consists of returned grant writing books from consumers seeking refunds, payments from consumers for grant writing materials and other demands for refunds dating back to March.
“Although it is difficult to summarize the mass volume of calls and letters, a majority of the communications are from elderly individuals, or their children, who have discovered automatic checking account deductions from their, or their parents’, checking accounts and are requesting refunds,” the report states.
In court documents, the affiliated companies maintain the allegations by the FTC and the attorneys general were “based completely on anecdotal claims which badly misconstrue” the defendants’ “legitimate businesses.” The companies say they will be able to prove that have offered their products to thousands of customers “who have never made any complaints.”
Cook has set up a Web site, www.asireceiver.com, that provides information about the case. U.S. District Judge Julie Robinson has scheduled a Sept. 1 hearing in Topeka on whether to grant authorities’ request for a preliminary injunction against the companies, Blackman and other defendants.
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Rajeel is the Web designer and also a blogger at Lab Of Web. He is a 15 yrs old teen guy who lives in Kerala, India, and have great interest in Computers and other Tech Stuff. That's why he loves to call himself as a TeeN GeeK. Follow Rajeel on Twitter for updates, design and web development.
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