The Federal Trade Commission raided Strategia Marketing on Wednesday, saying the Largo telemarketing company scammed tens of thousands of customers out of millions of dollars.
The FTC alleged in court documents filed Wednesday that Strategia, formerly called Suntasia, used at least 15 different business names to defraud consumers nationwide.
"I've been doing consumer fraud cases for the Federal Trade Commission for 25 years," said C. Steven Baker, director of the FTC's Midwest Region. "And I believe this may well be the biggest telemarketing fraud I've ever seen."
Strategia offered consumers supposedly free trial memberships in discount shopping and travel clubs, deceived them into divulging bank information and charged their accounts without authorization, the FTC claimed.
Since 2004, more than 5,000 formal consumer complaints were submitted to law enforcement agencies and the Better Business Bureau, Baker said, adding that on average only 8 percent of fraud victims ever officially complain.
Reached at his Safety Harbor home Wednesday night, Donald L. Booth, general counsel for Strategia, said the company didn't want to comment before reviewing the lawsuit.
After the FTC filed the complaint, the U.S. District Court in Tampa temporarily stopped the company's telemarketing operation, froze the assets of all defendants and appointed a receiver to temporarily run the company and its affiliates.
No criminal charges were filed Wednesday.
The FTC's suit names six individuals and nine companies - several doing business under various names - as defendants. The nine interrelated companies employ 700 to 800 people at the Ulmerton Road offices.
Starts with 'free' trial
According to the FTC's suit, the company's scheme worked this way:
Telemarketers called consumers offering "free" trial memberships in discount shopping and travel clubs. They tricked consumers into providing bank information with claims they were calling valued bank customers to verify account information, the FTC said.
The free gifts touted by the company had many undisclosed conditions that rendered them worthless, according to the suit.
Consumers were told they could keep those gifts even if they canceled. But that wasn't the case, the suit stated. Plus, it was nearly impossible to cancel. Consumers had to call three separate numbers to cancel, and cancellation periods sometimes ended before consumers got information in the mail.
Gayla Scott, 30, a Fort Myers single mom, lost almost $300.
"It can happen to anybody," she said.
Scott, who spoke at a news conference about the investigation Wednesday, said a company called Florida Dreamway Escapes called her last year. The caller said Scott qualified for a free vacation in Orlando.
Mom's treat for son
Scott said she wanted to treat her 12-year-old son for his upcoming birthday. She was told she had 10 days to cancel, and even if she did, she'd win a one-night stay in Orlando, she said.
But a couple of days after she received a packet about the vacation, the company deducted money from her account. When she called to cancel, she was told she could not get a refund. Instead, the company offered her $200 in gas vouchers.
Then she noticed more money was taken out of her account by two other companies: Travel Agents Go Direct and Prism Long Distance.
Scott eventually got her money back with assistance from the Better Business Bureau.
The federal inquiry is separate from a similar civil investigation by Florida Attorney General Bill McCollum.
McCollum's office is looking into the company's marketing practices as they relate to the sale of consumer data, unfair and deceptive trade practices regarding telemarketing sales and unauthorized debiting of consumer bank and credit accounts, according to Sandi Copes and the office's Web site.
Strategia is affiliated with FTN Promotions Inc., which was once based at 9641 Gulf Blvd. in Treasure Island. In 2000, Florida Travel Network, which did business at the same address, was ordered by the state Attorney General's Office to pay refunds to settle claims it duped consumers into buying vacation packages.
The Better Business Bureau of Florida's West Coast has logged 174 complaints about the company in the last 36 months, according to the bureau's Web site. The Largo Police Department has received dozens of complaints about the company, according to Largo police Sgt. John Trebino.
As the company was searched Wednesday morning, county and police officials told employees to leave.
Leon Talpalar, 59, of Redington Beach, who had been at the company only five days, said he felt foolish and used.
"We just found out it's a scam," said Timothy Harvey, 42, of Largo, who started at the company two months ago. "... We were duped, too."
Times staff writers Abhi Ragnunathan and Carrie Weimar and Times researcher Angie Holan contributed to this report. Lorri Helfand can be reached at 445-4155 or firstname.lastname@example.org.
AT A GLANCE
Companies: FTN Promotions Inc., Guardian Marketing Services Corp., Strategia Marketing LLC, Co-Compliance LLC, JPW Consultants Inc., Travel Agents Direct LLC, Agent's Travel Network Inc., Bay Pines Travel Inc. and Suntasia Properties Inc.
Company executives: Byron W. Wolf, Roy A. Eliasson, Alfred H. Wolf, Donald L. Booth, Jeffrey P. Wolf and John Louis Smith II.