FTC sues local entitites



    The Federal Trade Commission has filed suit against 10 individuals and dozens of Southern Oregon companies alleging deceptive trade practices in a scheme to renew marked-up newspaper and magazine subscriptions.

    A complaint filed in U.S. District Court in Medford alleges that 10 local officers behind 25 companies engaged in deceptive practices that involved sending mailers that looked like genuine subscription-renewal notices for the Wall Street Journal, New York Times and Washington Post, among others, while charging markups of up to 40 percent.

    The FTC provided an example mailer sent to a Washington Post subscriber in 2014, seeking $599.95 on a red and blue "Notice of Renewal/New Order" form directing payment to Readers Payment Service in White City. 

    "You're receiving one of the lowest available rates we can offer for your regular subscription," the mailer says.

    More than 375 newspapers have sent cease-and-desist letters against the companies demanding the companies stop soliciting or accepting payments for their subscriptions, the FTC complaint says. The complaint claims that the Oregon companies used strategies to avoid publications' detection — by creating new "shell corporations" to process and submit orders, for example.

    The suit names 94 companies, many of which reportedly were shell companies of the 25 chiefly involved. The suit alleges "complicated interrelationships" between the companies, to the point the companies are grouped by their role in the scheme.

    "Direct Mail Marketing Defendants" included Associated Publishers Network of White City and Express Publishers Service and Liberty Publishers Service, both of Eagle Point, which would print and send mailers that included the deceptive "Notice of Renewal/New Order" notices, the complaint alleges.

    The mailers would direct subscribers to send payment to a different company within their network, grouped as "Receiving Defendants" in the FTC complaint, such as Adept Management of Eagle Point, Publishers Payment Processing of New York or Crown Resource Management of Carson, Nev. 

    Once paid, other companies in the network, such as Magazine Clearing Exchange of White City and Consolidated Publishers Exchange of Trail, would submit orders to third-party clearing houses or directly to publishers on behalf of the subscriber.

    Maximillian, Reality Kats and Hoyal & Associates, all based in Medford, provided financial and consulting services for the companies, the FTC complaint says.

    The suit named Linda Babb, Shannon Bacon, Jeffrey and Lori Hoyal, Colleen Kaylor, Laura Lovrien, Noel Parducci, Lydia Pugley, Dennis Simpson and William Strickler for their roles in the scheme.

    The Oregon Department of Justice filed suit against the companies in 2015 before settling that June for $3 million plus restitution for Oregonians who believed they were victimized.

    As of June 27, all involved in the suit have denied wrongdoing through responses filed in U.S. District Court. Jeffrey Hoyal claimed that no one named in the suit other than Simpson has sold subscriptions since mid-2015, complying with a stipulation of the Oregon settlement.

    Others named in the suit claimed that the FTC's allegations of their roles were "threadbare," which the FTC refuted in a response filed Monday.

    "Simply put, the fact that the Complaint does not allege with particularity the actual involvement of each shell entity in the common enterprise is not fatal," the response says.

    The FTC complaint seeks a permanent injunction against the defendants, a possible freezing of their assets and an unspecified amount of restitution for the victims, among other measures.

    Reach reporter Nick Morgan at 541-776-4471 or nmorgan@mailtribune.com. Follow him on Twitter at @MTCrimeBeat.

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