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College Funding Scam Faces $1.4 Million Penalty

January 12, 2005
Four defendants operating a college financial aid scam have agreed to a multimillion dollar judgment with the Federal Trade Commission. The Commission alleged that the defendants misrepresented several claims made to consumers regarding their ability to obtain 100 percent of all funds necessary for college.

Under the terms of separate settlements, the defendants must pay consumer redress totaling $1,433,000. Further, the individual defendants must post a $1 million bond before engaging in the advertising, promotion, or sale of college financial aid assistance programs.

The FTC alleged that, using seminars and sophisticated Web sites, the defendants promoted and marketed a college financial aid assistance program promising that, for $1,000-$2,000, they would get 100 percent of the funding necessary for students to attend college.

The complaint alleged that the defendants violated the FTC Act by misrepresenting that they would:

(1) secure 100 percent of the funding necessary to attend college;
(2) reduce the out-of-pocket expenses to attend college; and
(3) fully refund consumers’ money if they failed to secure 100 percent of the funding necessary to attend college.

Covered by the settlement are: The College Advantage. Inc., doing business as College Funding Center; Alan E. Baron and relief defendant Donna S. Baron; C Funding Group, LLC, d/b/a College Funding Group; and Edward F. Jacob and Claudia L. Jacobs.

The settlement with the Jacobs requires them to pay $1,400,000 in consumer redress. The settlement with the Barons requires them to pay $33,000 in redress. In addition, the defendants are to post a $1 million performance bond prior to any future involvement in the promotion and marketing of college financial aid assistance programs.

Both final judgments contain a suspended judgment of $15,509,564 and an avalanche clause that would reinstate the entire judgment if it is found that the defendants made material misrepresentations in their financial statements.

Consumers who were customers of College Funding Center can leave their name, address and phone number at Collegefunding@ftc.gov.

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