Federal Court Enters Order and $25 Million Judgment Against Los Angeles Area Work-at-Home Scheme
An order of permanent injunction against The Zaken Corp. of Thousand Oaks, California, and company president Tiran Zaken, of Calabasas, California, was entered today by U.S. District Court Judge Dean D. Pregerson, finding that they made false and misleading statements in marketing work-at-home business opportunities and promising commissions to consumers, the Justice Department announced. In a written opinion entered Sept. 18, the court found that 110,000 consumers had bought the defendants’ program and “more than 99.8 percent never earned any commission whatsoever.” The court ordered the defendants to pay $25,406,781 as redress for consumer injury.
“This order reflects the Department of Justice’s commitment to protecting consumers from fraud schemes,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division. “Those who take advantage of Americans searching for an honest day’s work, depriving them of their savings, will be held accountable.”
The Zaken Corp. sold consumers a “Wealth Building Home Business Plan” called QuikSell. For an initial investment of $148, consumers became Associates of QuikSell Liquidations and received a manual including instructions on how to locate excess inventory. The defendants represented that once purchasers of the opportunity identified businesses interested in selling excess inventory, The Zaken Corp. would find a buyer for the inventory. If The Zaken Corp. succeeded in negotiating a sale of the inventory, it promised to give the associate a “commission” equal to half the profit on the sale.
The Zaken Corp. and Tiran Zaken lured customers with claims that purchasers of their program could expect that “two to four hours a week working this business will earn participants an average of $3,000 to $6,000.” They further claimed that “the average commission checks associates get … will be approximately $4,280!” In the court’s written decision, Judge Pregerson of the Central District of California found that “fewer than one percent of consumers ever earned any income at all.”
Once consumers purchased the QuikSell program, they were inundated with advertisements to purchase additional business “tools” costing hundreds or thousands of dollars. The court found that consumers were encouraged to spend an additional $2,300 if they were “serious about this business and … really wanted to make the kind of money others have made.” However, after making this additional investment, consumers received only a directory consisting of “largely outdated telephone numbers of companies who were out of business.”
The court found that The Zaken Corp. and Tiran Zaken violated the Federal Trade Commission Act by making false claims regarding the earnings potential of QuikSell. The court also found that The Zaken Corp. and Tiran Zaken violated the Federal Trade Commission (FTC)’s Business Opportunity Rule, which requires sellers of business opportunities to provide specific, truthful information to help consumers evaluate a business opportunity prior to purchase. The FTC promulgated an updated Business Opportunity Rule in 2012, in order to protect consumers from exactly this sort of work-at-home scheme, in which sellers lure victims with false representations of substantial earnings.
Pursuant to the injunction issued by the court, The Zaken Corp. and Tiran Zaken are permanently banned from advertising or selling any work-at-home opportunity or business opportunity.
This case was brought by the Department of Justice as part of “Operation Lost Opportunity,” a sweep of business opportunity fraud cases coordinated by the FTC. Trial Attorneys Ann Entwistle and Lisa Hsiao of the Justice Department’s Consumer Protection Branch litigated this case with support from Dana Barragate of the FTC’s East Central Region, the FTC’s Division of Marketing Practices and Assistant U.S. Attorney Anoiel Korshid in the Central District of California.