The Federal Trade Commission is suing a second Las Vegas vending machine promoter in a crackdown on alleged business opportunity scams.
The U.S. Department of Justice, on behalf of the Federal Trade Commission, this week sued Global Vending Services Inc., 4200 W. Russell, Suite 111, its president Nicholas Chomakos also known as Nick Choma, and secretary and treasurer Matthew Capicchioni also known as Matt Capi.
The U.S. District Court lawsuit alleged violations of the Federal Trade Commission Act and federal franchise regulations.
Similar allegations were leveled this week in an FTC lawsuit against another Las Vegas vending machine franchisor, Vendco LLC, accused by the FTC of running a vending machine business opportunity scam that allegedly victimized thousands of consumers.
Curt and Johan Briguglio also known as Curt and Jo Briggs, owners of Vendco, 3620 N. Ranch Drive, Suite 107, were accused of promoting their vending machine franchise as a "recession-proof business" that offers a "never-ending supply of locations" and a "quick return on investment" and of requiring prospective franchisees to make a minimum payment of several thousand dollars.
But the FTC said in the Vendco case that many consumers "don't even recover their initial investment, let alone make any money" and accused the defendants of reneging on promises to find profitable, high-volume locations and perform warranty work on the vending machines.
"Ironically, defendants also distinguish themselves from vending companies they claim are running scams," the FTC said in the Vendco lawsuit. "The defendants warn consumers to stay away from 'some boiler room type of company that's telling you, you know, blowing smoke and all that stuff and you know, you just got to watch who you call.' "
In the Global Vending case, the defendants were accused of claiming in newspaper classified ads that prospective franchisees could earn up to $100,000 and telling callers of their toll-free telephone number that they could consistently expect to make $120 profit per machine per week.
But Global Vending and its principals allegedly violated the federal Franchise Rule -- which requires a franchisor to provide prospective franchisees with complete and accurate basic disclosure documents to enable them to assess the risks involved in the purchase of the franchise -- when they failed to provide consumers with basic disclosure documents and earnings claim documents to substantiate their earnings claims.
The Global defendants also allegedly made earnings claims without disclosing the number and percentage of prior franchisees they claim achieved the same or better results.
Bob Schroeder, the FTC's assistant regional director, said the agency has been targeting these businesses on a regular basis and will continue to file such actions nationwide.
"That's a fairly common area for law enforcement because there are a lot of consumers looking for ways to earn money as a home-based business and are susceptible to sellers that make exaggerated earning claims," he said. "Las Vegas is a place where there's a fairly substantial level of telemarketing and the vending machine sellers are using telemarketing to sell their business opportunities."
Schroeder said he couldn't specify the number of Las Vegas consumer complaints, but said the FTC, on behalf of the victims of Vendco's alleged scam, wants consumer redress including "a rescission of contracts, refunds and disgorgement of ill-gotten gains."
In the Global Vending case, the Justice Department is seeking both consumer redress and civil penalties of up to $11,000 for each violation of the Franchise Rule.
"The court, in deciding the amount of civil penalties to be imposed, will consider the number of consumers affected, the seriousness of the violations, the amount of monies lost and the ability of the defendants to pay," Schroeder said.
Mr. Briggs declined comment on the allegations, Global officials could not be reached for comment.
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