Feds: Las Vegas companies tricked consumers seeking payday loans

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The Federal Trade Commission is suing several Las Vegas companies and two individuals it says have been victimizing consumers by tricking them into paying over and over again for worthless services related to payday loans.

An FTC lawsuit was filed under seal, or secretly, in federal court in Las Vegas on March 28 against Michael Bruce Moneymaker and codefendants. It was filed secretly so the defendants couldn't hide assets before the court seized them.

The suit was unsealed this week after U.S. District Judge James Mahan issued a temporary restraining order blocking the companies and individuals from further alleged violations.

The judge also froze their assets and ordered that a receiver be appointed to supervise the companies.

With the assets frozen, the FTC can move to seize them for the benefit of allegedly victimized consumers, should it prevail in the lawsuit.

The defendants are:

• Moneymaker, also known as Bruce Moneymaker, Mike Smith and Michael Bruce Millerd and doing business as Fortress Secured.

• Daniel De La Cruz, doing business as Fortress Secured.

• Belfort Capital Ventures Inc., Dynamic Online Solutions LLC, HSC Labs Inc., Red Dust Studios Inc. and Seaside Ventures Trust.

Sarah de Diego and Aaron Kelly, attorneys for defendants including Moneymaker, said in a statement: "As our client was only served with the complaint on Monday it is too early to say much other than that we are confident in the strength of our client's defense to these allegations and we are fully cooperating with the FTC. At the moment our main concern is obtaining relief from the complete asset freeze so that our client can pay for basic necessities and for his legal defense."

The FTC lawsuit says millions of dollars in consumer damage has been caused by the defendants "debiting the bank accounts of economically vulnerable consumers for worthless programs that consumers know nothing about, cannot afford, and, ultimately never receive."

The suit says the defendants target consumers who apply online for payday loans, in the process disclosing their bank account information.

The sensitive financial information of consumers is obtained by the defendants "disguising a pop-up box to look like it is part of the payday loan process."

"Defendants trick consumers into providing a so-called 'authorization' to be charged for these programs," the lawsuit says. "Significantly, defendants do not tell unsuspecting consumers the program's name, its so-called benefits (such as a purported credit line to buy electronics), or its cost.

"Instead, armed with consumers' bank account numbers, they simply start taking consumers' money on a weekly or monthly basis. Thereafter, defendants make concerted efforts to dissuade consumers from trying to get their money back," the FTC alleged.

Some of these programs are called Uniguard, Freedom Subscription, Illustrious Perks, Select Platinum Credit and Kryptonite Credit, the lawsuit said.

These programs purport to provide free "store value" Visa cards, free voicemail, free airline tickets and a $10,000 secured credit line, the suit says.

"Significantly, other than through their highly deceptive billing scheme, defendants do not provide a means to purchase their so-called programs," the FTC alleged in the complaint. "Even the websites for the programs do not contain a click-through mechanism or phone number for consumers to use to enroll."

Given their financial problems that caused them to seek payday loans, allegedly victimized consumers have told FTC investigators they would never have signed up for these programs given their costs: up to $49.99 for enrollment and up to $19.98 on a recurring basis, the lawsuit says.

"Defendants' debits overdrew hundreds of consumers' bank accounts," the lawsuit says.

One of the defendants, Belfort Capital Ventures, runs a call center in Las Vegas at 8668 Spring Mountain Road, Suite 101, the lawsuit says.

This isn't Moneymaker's first run-in with regulators. The FTC lawsuit said that in 2009 and 2010, three state attorneys general obtained default judgments against he and companies he controlled for making robocalls to phone numbers on the states' and the FTC's Do Not Call lists.

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