Current Events in July 2009

Scammers who duped consumers into paying more than $30 million for bogus business opportunities have settled Federal Trade Commission (FTC) charges that their deceptive claims violated federal law.

The settlements prohibit future violations by the defendants, who promised consumers that they would receive access to overstocked merchandise, expert training in the surplus goods industry, and substantial income.

Among those who settled with the FTC are Sheldon and Judith Takala Fidler and nine companies they controlled: World Traders Association, Inc., United Traders Association, Inc., International Merchandise Group, Inc., Trans-Global Connections, Inc., Musketeer Partners, Inc., Fulfillment Options, Inc., International Associates Worldwide, Inc., Magna Delta, LLC, and Office Options, LLC.

The FTC filed suit in February 2005 as part of "Project Biz Opp Flop," a crackdown on deceptive business opportunity and work-at-home schemes. The settlements entered last April ban the defendants from the business opportunity and franchise industries and prohibit them from misrepresenting any goods or services.

The settlement orders also bar the defendants from selling or otherwise benefiting from personal information about customers who paid them before the orders were entered. In addition, the orders impose a $30.7 million judgment, which is suspended based on the defendants' inability to pay.

In March 2007, in a related criminal proceeding instituted by the United States Attorneys Office for the Central District of California, Sheldon Fidler pleaded guilty to two counts of mail fraud and received a 60-month prison sentence; he is currently in jail. Judith Fidler pleaded guilty to one count of criminal contempt and received two years of probation.

There are laws against false advertising, even on the Internet. In New York, Attorney General Andrew Cuomo has reached a settlement with a plastic surgeon over fake consumer reviews published online.

Under the settlement, the cosmetic surgery company Lifestyle Lift will stop publishing anonymous positive reviews about the company to Internet message boards and other Web sites, and will pay $300,000 in penalties and costs to the State of New York. The case is believed to be the first in the nation aimed at combating "astroturfing," a growing problem on the Internet.

According to Cuomo, Lifestyle Lift employees published positive reviews and comments about the company to trick Web-browsing consumers into believing that satisfied customers were posting their own stories.

"These tactics constitute deceptive commercial practices, false advertising, and fraudulent and illegal conduct under New York and federal consumer protection law," Cuomo said.

He says the settlement marks a strike against the growing practice of "astroturfing," in which employees pose as independent consumers to post positive reviews and commentary to Web sites and Internet message boards about their own company.

"This company's attempt to generate business by duping consumers was cynical, manipulative, and illegal," said Cuomo. "My office has and will continue to be on the forefront in protecting consumers against emerging fraud and deception, including astroturfing, on the Internet."

Lifestyle Lift has more than 40 locations across the U.S. The company engaged in a concerted effort to bombard Internet message boards with positive stories about themselves.

According to the complaint, Lifestyle Lift's president believed that negative Internet postings had significantly hurt the companys reputation and thought the success of the company hinged on controlling messages posted online. Company employees were allegedly directed to create accounts with various Internet message boards and pose as satisfied customers of Lifestyle Lift. Employees also reportedly attacked legitimate message board posters who criticized Lifestyle Lift and tried to get those posts removed from message boards.

Internal emails discovered by Cuomo's investigation show that Lifestyle Lift employees were given specific instructions to engage in this illegal activity. One e-mail to employees said: "Friday is going to be a slow day--I need you to devote the day to doing more postings on the web as a satisfied client." Another internal email directed a Lifestyle Lift employee to "Put your wig and skirt on and tell them about the great experience you had."

In addition to posting on various Internet message board services, Cuomo said Lifestyle Lift also registered and created stand-alone Web sites, such as MyFaceliftStory.com, designed to appear as if they were created by independent and satisfied customers of Lifestyle Lift.

The sites offered positive narratives about the Lifestyle Lift experience. Some of these sites purported to offer forums for users to add their own comments about Lifestyle Lift. In reality, however, Cuomo says Lifestyle Lift either provided all the "user comments" themselves, or closely monitored and edited third-party comments to skew the discussion in favor of Lifestyle Lift.

Under the terms of the settlement, Lifestyle Lift employees will no longer pose as consumers when publishing on the Internet. The company will not promote Lifestyle Lift's services on the Internet without clearly and conspicuously disclosing that they are responsible for the content. The company will also pay $300,000 in penalties and costs to New York State.

It's hard to believe the nation's banks could be in such rocky financial condition, considering the amount of money they collect from their customers in the form of fees.

Charles, of Cary, North Carolina, says he's been a customer of a local bank for five years, and claims to have spent more than $3,000 per year on overdraft fees.

"My last overdraft, which I ran 29 cents over in the account, cost me $200," Charles told ConsumerAffairs.com. This is highway robbery and they know it and I know it. It's a shame no one has not put a stop to this."

If someone were to put a stop to it, banks might be even less profitable since they clearly count on customers overdrawing their accounts and triggering overdraft fees. And those $35 fees can add up to some pretty sizable sums.

In fact, data from the federal government estimates that U.S. banks will collect more than $38 billion in fees this year from consumers who overdraw their checking accounts. Banks will collect billions more from other account penalties, including credit card late fees.

Moebs Services, which collected the information, reports that the average overdraft fee has risen to $27.50 this year, up from $25 last year. A 2008 study from the Federal Deposit Insurance Corp. found that insufficient funds and overdraft fees account for 74 percent of consumer bank service charges.

A 2008 study from Bankrate.com showed an increase of 2.5 percent in bounced check fees from the year before, up to nearly $30. Consumers also pay more at the ATM machine, with the average ATM fee now nearly $2, an increase of more than 10 percent in one year.

With all of these changes, consumers are feeling the pinch and the Federal Reserve is looking at additional regulations and Congress is considering new legislation. The Center for Economic and Entrepreneurial Literacy reminds consumers that financial forethought can help lessen the sting.

"Economic illiteracy is at the heart of our current economic crisis," said James Bowers, managing director for CEEL. "As banks continue to raise account and overdraft fees, it is more important than ever to read the fine print, create and stick to a family budget and learn all the facts before taking on new financial burdens, like opening a credit card account or purchasing a car. Unfortunately, CEEL's recent survey shows that many Americans don't understand basic facts about economics and many don't have the tools to manage their personal finances."

A December 2008 study from CEEL highlights the need for increased education on personal finance and economic issues. The national survey showed what the group calls a disturbing number of Americans are unable to answer simple questions about borrowing, interest rates and even basic math. Many respondents also admitted to making poor decisions with their own finances.

Highlights from the survey include:

• 54 percent of respondents could not identify what a subprime mortgage was.

• 56 percent of respondents could not identify FICO score as the most important factor in getting a loan.

• 65 percent of respondents could not identify what would remain if you subtracted 25 percent from 8. One in three respondents could not identify what 1 percent of 50,000 was.

• 75 percent did not know that when in need of short-term emergency cash, bouncing a check costs more than wire transfers, credit card advances, and short-term payday loans.

• Half of respondents have overdrafted their checking account at one time, while a third of respondents have paid a bill late in the past year.

"It is clear that we need to increase personal finance education at all ages so we have better informed employees, borrowers, and voters," Bowers said.

Ordering a product advertised in an infomercial, or pitched by a telemarketer, can be risky business. Time after time consumers who thought they were getting something free, or at low cost, were outraged to discover their credit cards had been charged for products and services they didn't ask for.

Vicky, of Glendale, Arizona, discovered that sad fact when she agreed to pay $3.95 "shipping and handling" for a CD that she thought would show her how to land all sorts of government grants.

"Little did I know that granthelp.com would continue to bill my credit card $74.95 per month for the rest of my life," Vicky told ConsumerAffairs.com.

Ellice, of Derby, Kansas, said she had a similar experience when she ordered one Video Professor CD for $6.95.

"There wasn't an invoice, statement or anything else in the first box to know what was coming or if I needed to cancel," she said. "I received two and thought, how nice, but didn't order them. Sure enough on my next Discover bill I was charged $6.95 and $189.91 twice! How can infomercials get away with this?"

It's a never-ending story. The kinds of companies that pitch their products on infomercials and in Internet pop-up ads seem predisposed to abusing their customers. Not content selling the consumer the inexpensive item that they want, these marketers upsell more expensive items, hiding details of the transaction in fine print - or make it up altogether.

Once a marketer has a consumer's credit card information, they can place as many charges on the account as they think they can get away with. For every consumer who jumps through all the hoops to get their money back, 50 more give up in frustration or simply let it slide.

But there is a way to prevent this--aside from not ordering this stuff in the first place. If you feel you must have the gadget being hawked on late night cable, consider paying for it with a pre-paid debit card.

Pre-paid debit cards are designed for people with poor or no credit and many come laden with fees of one sort or another. It's certainly not the kind of card you want to use on a day to day basis if you don't have to, but in cases where safety is an issue, it might be worth paying a small fee or two.

The one advantage prepaid debit cards have over bank debit cards is a limit to what can be purchased with them. With a bank debit card (which should never, ever be used in online or telemarketer transactions), the bank will honor any purchase, and if you don't have enough money in your account, it charges a hefty fee. It also expects you to give back the money it "loaned" you.

Most prepaid debit cards don't work that way. If the amount of your purchase exceeds the money on your card, the purchase is denied.

If you bought the advertised widget for $19.95 with your card that only had $40 on it, and the next month the company tried to say you purchased something for $79.95 and tried to put that on your card, the transaction would be cancelled.

That said, pre-paid debit cards can be very expensive once you start adding up all the fees, but every card is different, so it pays to shop around. Look for a card that does not have a monthly fee (many cards charge between $5-$9 each month).

"The best thing for a consumer to do when considering a pre-paid card is to compare the fee structures of many of the leading cards in the market and determine which structure best fits the way they plan to use the card," Ben Woolsey, director of marketing and consumer research at Creditcards.com, told ConsumerAffairs.com.

The card issuer has to make money some way, so look for a card that charges fees for activities you don't plan to use very much. For example, if you're not going to use it at ATMs, it's OK to get a card that charges a big fee for ATM transactions.

There is usually a fee associated with putting money on the card and many charge a small transaction fee, but that might be acceptable if you think you'll use the card just once a month. By using a pre-paid debit card for "risky" transactions, those fees might seem very small indeed.

A class action lawsuit filed against Intel claims that the chip maker artificially inflated laptop battery lifespans, fraudulently enticing consumers to buy machines equipped with Intel chips.

The suit was filed late last month in California by veteran class action firm Girard Gibbs. and claims that Intel cited a test known as MobileMark2007 to inflate battery life estimates and entice consumers to pay more for their laptops. Some consumers have found their battery life to be as little as half the amount advertised. The suit charges that Intel "wrongly increased its profits from the sale of laptops with Intel processors."

MobileMark came into widespread use several years ago. It measures battery life while a machine is performing a number of tasks, including playing a DVD or creating a spreadsheet. The test was developed by the Business Applications Performance Corporation (BAPCo), a nonprofit trade group whose membership is made up mostly of laptop and chip manufacturers. Indeed, BAPCo counts among its members Intel, one of the very companies who would stand to profit from the use of the MobileMark test.

Critics contend that the test treats battery life as a one-size-fits-all proposition. MobileMark, among other things, assumes that the user has his or her screen brightness set to extremely low levels--20% as bright as the average consumer's--and that accessories like Bluetooth aren't running. The test does include a "productivity" portion, in which a robot uses programs like Excel and e-mail. That test, however, doesn't include some of the most energy-draining applications, like iTunes and Windows Media Player.

Advanced Micro Devices (AMD), a well-known manufacturer of processors and other technology, started the ball rolling when it suggested that laptop batteries often don't live up to their advertised lifespan. The company contends that tests used to provide the estimates--including MobileMark--don't account for the length or intensity of use while the machine is unplugged. AMD also complained that, when using the MobileMark test, Intel-equipped computers invariably have longer battery lives than machines containing AMD processors.

Some, including AMD, have suggested that computer manufacturers perform two separate tests: one for "resting time," when the computer is turned on but not in use, and one for "active time," when the machine is being engaged by its owner. This would allow active laptop users to adjust their expectations based on how much they use their machine. Such user-specific statistics are hardly without precedent; for years, car manufacturers have provided both highway and city estimates for fuel consumption, allowing drivers to base predictions on their own pattern of behavior.

Although the suit has already been filed, Girard Gibbs is still looking for consumers affected by unexpectedly short battery lives. Affected consumers can contact the firm via their Web site.

July 12, 2009
Illinois Attorney General Lisa Madigan has secured the indictment of a former Chicago resident who allegedly operated a Ponzi scheme that defrauded 67 investors out of more than $10 million.

"Our office is committed to protecting the financial safety of Illinoisans," said Madigan. "It is imperative that we expose and penalize criminals who would seek to destroy the livelihood of so many hard-working members of our community."

According to the indictment, Raul Marrero, 37, advertised fabricated investment opportunities, including real estate ventures involving commercial strip malls, on Spanish language radio shows.

Beginning in 2005 and continuing until at least January 2008, Marrero allegedly solicited more than $10 million through his three Oak Brook Terrace, Ill.-based companies, Reeden Capital Group, Multi-Family Three LLC, and Reeden Real Estate. Marrero allegedly used the investment funds to pay off other investors and cover business and personal expenses.

He also allegedly secured an estimated $1.9 million for his own personal profit.

The grand jury indicted Marrero on five counts of theft of over $100,000, a Class One felony, three counts of theft of over $10,000, a Class Two felony, and nine counts of securities fraud, a Class Two felony.

The highest charge, Class One felony theft, carries a maximum penalty of 15 years served in the Illinois Department of Corrections.

By Lisa Wade McCormick
ConsumerAffairs.com

July 10, 2009
Federal authorities have filed additional charges--and rescued hundreds of more dogs--in connection with Wednesday's multistate busts of dog fighting rings.

Gruesome details of these barbaric contests and the treatment of the dogs continue to surface in this investigation, which the Humane Society of the United States (HSUS) calls the "largest simultaneous raid of multiple dogfighting operations" in the country's history.

In this massive crackdown--triggered by a Humane Society of Missouri investigation--authorities have now charged 26 people for their roles in conspiracy to promote and participate in illegal dog fights and rescued more than 350 dogs in Missouri, Illinois, Iowa, Texas, Oklahoma and Arkansas.

Most of the dogs rescued from this vicious blood sport are Pit Bull Terriers.

"Dog fighting inflicts serious injuries and death upon dogs that are bred and trained to be dangerously aggressive," said Matt Whitworth, Acting United States Attorney for the Western District of Missouri.

"Like many dog owners, I am appalled that such a cruel and inhumane activity occurs in our state. We will vigorously prosecute those who illegally practice this so-called sport."

The latest defendants charged in this investigation -- which included assistance from various federal and state law enforcement agencies -- were named in an indictment unsealed on Wednesday in the Western District of Missouri.

In that action, federal authorities charged seven people from Missouri, Iowa, and Nebraska, for their involvement in dog fighting operations and illegal gambling and bookmaking activities:

• Rick P. Hihath, 55, of St. Joseph, Missouri, who works for a state school for the handicapped;

• Cris E. Bottcher, 48, of Gilman City, Missouri, a registered nurse at Harrison County Community Hospital in Bethany, Missouri;

• Julio Reyes, 28, of Tecumseh, Nebraska;

• Jill D. Makstaller, 43, of Perry, Iowa;

• Zachary R. Connelly, 32, of Ogden, Iowa;

• Kevin P. Tasler, 51, of Jefferson, Iowa;

• Ryan J. Tasler, 42, of Woodward, Iowa, who works for the Madrid Community School District

The indictment alleges that from January 15 to May 8, 2009, the defendants participated in a conspiracy to travel across state lines to sponsor a dog in an animal fighting venture and participated in illegal gambling and bookmaking activities.

According to the indictment, the defendants "acquired, bred, and trained" Pit Bull Terriers for the purpose of entering them in animal fighting ventures, and then denied the dogs adequate and humane medical treatment for the injuries they suffered during the fights.

The indictment further alleges the defendants "routinely and inhumanely" destroyed dogs that became severely injured during the fights by shooting them in the head. The defendants then threw the carcasses in the river or burned them in a barrel, authorities allege.

The indictment also charges Hihath and Bottcher with two counts of sponsoring or exhibiting a Pit Bull Terrier in an animal fighting venture.

In addition, Makstaller, Reyes, Zachary Connelly, Ryan Tasler and Kevin Tasler are each charged with one count of transporting animals for participation in a dog fight.

In painstaking detail, the indictment cites dog fights that allegedly took place at Bottcher's farm in Gilman City, Missouri:

Two fights allegedly occurred on February, 28, 2009. Hihath fought a dog "Black Sheep" and Bottcher entered a dog named "Pope Joe" in the match fight. According to the indictment, Bottcher and Hihath built the dog fighting pit for the contest. Hihath refereed the match when Bottcher fought "Pope Joe." The two men also placed bets on the fight, the indictment alleges. Three dog fighters from central Iowa allegedly attended this fight: Kevin Tasler, Ryan Tasler and Connelly. The indictment also states that Ryan Tasler was the spongeman, meaning he provided sponges to the dogs handlers to wipe blood off the animals or cool them down during the fights;

On April 25, 2009, 12 roll fights allegedly occurred at Bottcher's farm. These are shorter fight between two dogs and are used to build the dogs' confidence and expose the animals to a variety of fighting styles, authorities said. Roll fights are viewed as a way to test younger dogs and usually dont involve gambling. According to the indictment, Bottcher held those fights in an outbuilding on the farm. Hihath allegedly promoted the fight and had at least two dogs in the contest. The indictment states that several dog fighters from Iowa attended and participated in the fight, including Kevin Tasler and Makstaller. Reyes, a dog fighter from Nebraska, also attended the fights and transported two dogs to participate in the contests. Hihath allegedly handled a dog in five of the 12 rolls, while Bottcher allegedly handled a dog in four of the rolls, the indictment states. At the end of the fight, Bottcher allegedly used a .22-caliber rifle to shoot and kill two dogs that fought in roll fights that night but did not perform to the owners expectations. According to the indictment, Bottcher shot each animal twice in the head and then placed the carcasses in plastic containers outside of the garage;

On May 8, 2009, two dog fights allegedly occurred. According to the indictment, Bottcher held the fights in an outbuilding and was the handler for his dog, "Pope Joe," for the first fight of the night. Hihath allegedly promoted the fights, handled the bet monies, and refereed the second fight. Bottcher and Hihath allegedly built the pit for the dog fight. Authorities said more than 13 dogs were seen on the Bottcher's property. Four dog fighters from Iowa--Connelly, Ryan Tasler, Kevin Tasler and Makstaller--attended the fights, according to the indictment. Connelly allegedly handled his dog, "Tommy," in the second fight that night. Markstaller refereed the first fight, the indictment states, and was the timekeeper for the second fight. Tasler was the timekeeper and spongeman for the first fight, according to the indictment. Reyes allegedly brought his dog from Nebraska and was the spongeman for the second fight. Bottcher, Hihath, Ryan Tasler, Kevin Tasler, Reyes, Connelly, and Makstaller allegedly placed bets during that fights.

These charges coincide with legal action authorities in the Eastern District Court of Missouri took on Wednesday against five men for their involvement in illegal dog fighting ventures.

"Forcing a dog to fight to its death is not a sport," said John V. Gillies, Special Agent in Charge of the St. Louis office of the Federal Bureau of Investigation (FBI). "There is nothing respectable about encouraging two animals to torture and dismember each other. Individuals who participate in dog fighting claim to care for the animals, but they don't hesitate to electrocute their helpless dog once it loses a fight and can no longer provide any financial benefit."

If convicted, each of the defendants name in both cases face a maximum penalty of five years in prison and fines of up to $250,000 for each count.

Federal authorities also filed motions seeking legal ownership of all the dogs rescued and placing the animals in the care and custody of the Humane Society of Missouri.

"The Humane Society of Missouri provided initial information that led to this investigation," said Acting United States Attorney Michael Reap. "During the course of the investigation they also cared for animals involved when possible, and they are presently designated to provide continuing care for the seized dogs."

Animal behavior experts with the Humane Society of Missouri and other organizations will also evaluate each of the dogs rescued to see if they can be adopted.

Organized dogfighting is now a felony in all 50 states, according to the HSUS. But an estimated 40,000 people, HSUS officials said, still follow the barbaric dogfighting circuits across the U.S.--and an additional 100,000 meet on neighborhood streets, alleys and hideaways.

More about pets ...

Another so-called credit repair operation has drawn the ire of law enforcement officials. In Texas, Attorney General Greg Abbott has charged a Houston-based credit repair firm with violating the Texas Deceptive Trade Practices Act.

The state's enforcement action names Jubilee Financial Solutions LP, also known as The Credit Card Solution (TCCS)--a self-proclaimed "debt invalidation" business--its parent company, Jubilee Financial Management LLC, and the companies' owner, Robert Mitchell Lindsey.

Court documents filed by the attorney general requested an asset freeze, which was granted by a Harris County district judge. The state sought the asset freeze because investigators believe the defendants are improperly withholding $500,000 in customers' payments that should have been applied to debt relief services.

Through various Web sites--including www.thecreditcardsolution.com--the defendants claimed they could eliminate credit card and other debts by helping customers fight credit reporting agencies, dispute debts and sue debt collectors. The defendants also promised access to legal services, which they claimed could yield monetary damages from lawsuits against debt collectors.

Marketing materials obtained by state investigators shows the defendants claimed their "debt invalidation" program can eliminate customers' debt in as little as 12 to 18 months by relying upon federal consumer protection laws. In videos on the defendants' Web site, Lindsey claims that TCCS has "gotten rid of $150 million of credit card debt."

According to the state's enforcement action, the defendants are unlawfully operating an unregistered credit services organization (CSO). Under the Texas Credit Services Organization Act, CSOs must register with the Secretary of State and obtain a surety bond or surety account. The defendants have done neither.

TCCS also offers an Affiliate Information Package online, which gives interested individuals the opportunity to market and sell the defendants' services. However, court documents filed by the state indicate the defendants' affiliate program is subject to the Texas Business Opportunity Act, which requires vendors to register with the Secretary of State and obtain surety bonds or surety accounts. The states enforcement action charges TCCS with failing to comply with those requirements.

The states enforcement action also charges the defendants with multiple Texas Deceptive Trade Practices Act (DTPA) violations, including not providing services as advertised and withholding information about goods or services when entering into a transaction.

The state seeks penalties of up to $20,000 per violation of the DTPA, restitution for Texans harmed by the defendants' business practices, and attorneys' fees.

Knee replacement surgeries have increased rapidly as the population has aged, creating backlogs, in some cases, at orthopedic clinics. But soon many of these surgeries might not be necessary.

Investigators from Hospital for Special Surgery say they have shown that a biodegradable scaffold or plug can be used to treat patients with damaged knee cartilage. The study is unique in that it used serial magnetic resonance imaging (MRI) and newer quantitative T2 mapping to examine how the plug incorporated itself into the knee.

"The data has been encouraging to support further evaluation of this synthetic scaffold as a cartilage repair technique," said Asheesh Bedi, M.D., a fellow in sports medicine and shoulder surgery at Hospital for Special Surgery who was involved with the study.

Bedi performed analysis of MRI scans of patients primarily treated by Riley Williams, M.D., director of the Institute for Cartilage Repair at Hospital for Special Surgery.

"The Trufit plug has been designed to have mechanical properties that are similar to cartilage and bone," Bedi said.

Damage to so-called articular cartilage can occur in various ways, ranging from direct trauma in a motor vehicle accident to a non-contact, pivoting event on the soccer field.

"Articular cartilage lacks the intrinsic properties of healingyou are essentially born with the articular cartilage that you have," Bedi said.

Bedi and other surgeons at Hospital for Special Surgery are involved in ongoing studies to investigate the efficacy of the TruFit plug in treating primary cartilage defects as well.

"What is unique about this study is that we have serial MRI with T2 mapping at various time points after surgery which allows us to really examine the natural history of plug incorporation," Bedi said.

By Lisa Wade McCormick
ConsumerAffairs.com

July 9, 2009
Federal authorities today charged five Missouri men for their involvement in illegal dogfighting ventures and seized more than 150 Pit Bull Terriers in what the Humane Society of the United States (HSUS) calls the "largest simultaneous raid of multiple dogfighting operations" in the country's history.

The action comes on the heels of an investigation triggered by the Humane Society of Missouri, which worked closely with several federal and state law enforcement agencies.

HSUS officials said today's unprecedented raids and arrests in Missouri, Illinois, Iowa, Texas, Oklahoma and Arkansas put a dent in the vicious blood sport of dogfighting--an illegal industry that "thrives off the pain and suffering of dogs."

"This intervention is a momentous victory in our ongoing battle to end the cruel, criminal dogfighting industry," said Wayne Pacelle, president and CEO of the HSUS. "With each raid we get one step closer to ending this cruel blood sport."

Today's indictment--filed in the Eastern District Court of Missouri--charges the following five defendants:

• Michael Morgan, a/k/a Missouri Mike, 38, Hannibal, Missouri, with two felony counts of conspiracy to commit federal offenses and one felony count of prohibitions against animal fighting ventures;

• Robert Hackman, 55, Foley, Missouri, with two felony counts of conspiracy to commit federal offenses and two felony counts of prohibitions against animal fighting ventures;

• Teddy Kiriakidis, a/k/a Teddy Bogart, 50, Leasburg, Missouri, with one felony count of conspiracy to commit federal offenses;

• Ronald Creach, 34, Leslie, Missouri, with one felony count of conspiracy to commit federal offenses;

• Jack Ruppel, 35, Eldon, Missouri, with two felony counts of conspiracy to commit federal offenses and two felony counts of prohibitions against animal fighting ventures.

According to the indictment, the defendants established and ran various kennel operations to purchase, breed, train, condition, and develop Pit Bull Terriers for participation in illegal dogfighting competitions. Specifically, authorities allege that Hackman operated "Shake Rattle and Roll Kennel," Jack Ruppel operated "Ozark Hillbillys Kennel," Michael Morgan a/k/a "Missouri Mike" operated "Cannibal Kennel," and Ronald Creach operated "Hard Goodbye Kennel."

The indictment also alleges that between January 2008 and June 2009 the defendants routinely and inhumanely abandoned, destroyed, and otherwise disposed of Pit Bull Terriers that lost fighting competitions, did not perform aggressively enough, or became injured, wounded, or disabled during these illegal contests.

"Forcing a dog to fight to its death is not a sport," said John V. Gillies, Special Agent in Charge of the St. Louis office of the Federal Bureau of Investigation (FBI). "There is nothing respectable about encouraging two animals to torture and dismember each other. Individuals who participate in dog fighting claim to care for the animals, but they don't hesitate to electrocute their helpless dog once it loses a fight and can no longer provide any financial benefit."

If convicted, the defendants face a maximum penalty of five years in prison and/or fines of up to $250,000 for each count.

Federal authorities also filed motions seeking legal ownership of the dogs rescued and placing the animals in the care and custody of the Humane Society of Missouri.

"The Humane Society of Missouri provided initial information that led to this investigation," said Acting United States Attorney Michael Reap. "During the course of the investigation they also cared for animals involved when possible, and they are presently designated to provide continuing care for the seized dogs."

Animal behavior experts with the Humane Society of Missouri and other organizations will also evaluate each of the dogs rescued to see if they can be adopted.

Organized dogfighting is now a felony in all 50 states, according to the HSUS. But an estimated 40,000 people, HSUS officials said, still follow the barbaric dogfighting circuits across the U.S.--and an additional 100,000 meet on neighborhood streets, alleys, and hideaways.

Among the disturbing statistics reported by the HSUS about dogfights, which the organization calls a "sadistic contest:"

• More than 250,000 dogs are placed in dogfighting pits each year;

• Young children are sometimes present at these events, which can promote insensitivity to animal suffering, enthusiasm for violence, and a lack of respect for the law;

• Illegal gambling is the norm at dogfights. Dog owners and spectators wager thousands of dollars on their favorites animals;

• Authorities have found firearms and other weapons at dogfights because of the large amounts of cash present;

• Dogfighting has been connected to other types of violence, including homicides. A Chicago Police Department study also showed that 65 percent of people charged with animal abuse crime--including dogfighting --were also charged with violent crimes against people.

• Illegal drugs are often sold and used at dogfights.

The HSUS now offers up to $5,000 for information leading to the arrest and conviction of anyone involved in animal fighting.

More about pets ...

The Food and Drug Administration (FDA) has approved Alimta (pemetrexed), the first drug available for maintenance therapy of advanced or metastatic lung cancer.

Patients with cancer often receive maintenance therapy to prevent the disease from progressing after their tumor has shrunk or the disease has stabilized in response to chemotherapy. Alimta disrupts metabolic processes that are dependent on the B-vitamin folate, a necessary ingredient for cell reproduction.

"This drug represents a new approach in the treatment of advanced non-small cell lung cancer," said Richard Pazdur, M.D., director, Office of Oncology Drug Products in the FDA's Center for Drug Evaluation and Research. "Typically, patients whose tumors respond to chemotherapy do not receive further treatment after four-to-six chemotherapy cycles. This study demonstrates an advantage in overall survival in certain patients who received Alimta for maintenance therapy.

Non-small cell lung cancer has several subtypes, including squamous cell, large cell, adenocarcinoma and mixed histology cancers. In a 600-patient clinical trial, people with predominantly squamous cell cancer did not benefit from Alimta.

But those with other subtypes of non-small lung cancer survived an average 15.5 months following treatment compared with 10.3 months for patients who received an inactive substance (placebo). All patients in the study received standard medical care.

Reported adverse events included damage to blood cells, fatigue, nausea, loss of appetite, tingling or numbness in the hands and feet, and skin rash.

Alimta initially was approved in 2004 for the treatment of patients with mesothelioma, a cancer frequently related to asbestos exposure. It was later approved for the treatment of patients with non-small cell lung cancer whose disease worsened on prior chemotherapy drugs and also as an initial therapy for advanced non-small cell lung cancer.

Alimta is manufactured by Eli Lilly & Co. of Indianapolis.

Even before President Obama had signed the "cash for clunkers" bill, car dealers were jubilantly proclaiming the measure amounted to "cash on the hood" and consumer advocates were warning potential car buyers not to be taken in by fast-talking car salesmen -- or slickly-designed, official-looking Websites, which were already sprouting like weeds.

Alarmed by the profusion of sites designed to collect consumers' identity and/or cash, the National Highway Traffic Safety Administration (NHTSA) issued a warning that consumers should not be deceived by official-seeming sites such as "Cash For Clunkers Headquarters," which claim to offer information on how to trade in your car. Sites that ask for personal information or offer a pre-registration opportunity should not be trusted, the agency said.

"There's only one official site for the government, and that's NHTSA's CARS.gov website," said NHTSA press officer Eric Bolton. "Folks should go there and not rely on "cash for clunkers" sites on the internet as they are not official."

This did not set well with the proprietors of CashForClunkersHeadquarters.com, whose publicists were soon burning up the phone lines, basically insisting that NHTSA must be mistaken.

"For some reason, consumer affairs (sic) published that our website may be one of these 'scam' sites and that is absolutely incorrect," emailed Erin Miller, an employee of HL Group, a New York public relations firm. Miller had been told before submitting the statement that a NHTSA spokesman had used the site her firm represents as an example of sites that consumers should be wary of -- and that that was the reason the site was named in the story.

"Were seeing a lot of 'cash for clunkers' sites sprouting up around the WWW," said NHTSA's Bolton in a June 23 email to ConsumerAffairs.com. "Some want a lot of personal information, and talk about consumers being able to pre-register. Check out www.cashforclunkdersheadquarters.com, for example. See the pre-register button."

One entire column of the CashForClunkersHeadquarters site home page is devoted to gathering consumers' personal information.

Generally-accepted practice in the publishing industry is to identify advertising and marketing content as such. While the "clunkers" site notes that it is not affiliated with the federal government, it presents itself as a site that works on behalf of consumers, when its apparent purpose is to gather, and presumably sell, "leads" to car dealers.

In her statement and an earlier telephone conversation, Miller insisted that the "headquarters" site was working in conjunction with NHTSA and was a "legitimate consumer site."

"Our organization contacted the NHTSA weeks before the launch of their website to offer our assistance to help inform the visitors of our website about where they can go to get more information. When the NHTSA launched their website we directed our visitors there to get more information. Since then we have continued to inform the public about new developments and we help them connect with retailers who can give them pricing information over the internet," she said.

The CashForClunkersHeadquarters.com site is operated by Level 5 Advertising, an advertising agency located in Dulles, Va. The agency's Web site consists of a single page and provides no further information about the company.

The official site, Car Allowance Rebate System (CARS) is the latest iteration of the plan to stimulate the auto industry through convincing buyers to trade in their Humvees for eco-friendly models. The Congressional Budget Office (CBO) has said the bill could jumpstart sales of up to 150,000 cars.

In the latest attempt to rein in Ticketmaster, Illinois Attorney General Lisa Madigan has reached an agreement with TicketsNow, a Ticketmaster subsidiary, to curb deceptive tactics.

The agreement is the result of Madigans investigation into TicketsNows marketing practices after receiving dozens of complaints about the high prices ticket brokers charged for Hannah Montana and Bruce Springsteen concerts and other popular events. Madigans investigation revealed that TicketsNows brokers were in the practice of creating customized Web sites where they resold tickets they had pre-purchased for high-profile events at prices significantly higher than face value while consumers believed they were buying face value tickets from the actual event operators.

As part of the agreement, TicketsNow will cease operating any Web sites that have misleading domain names and will refrain from affiliating with any Web sites that use similarly deceptive tactics. As a result of Madigans investigation, TicketsNow has already disabled more than 100 suspect Web sites.

Our investigation revealed that consumers who purchased concert tickets at TicketsNow Web sites often believed they were purchasing tickets from the actual event operators for their original value, Madigan said. This agreement will substantially impact how the TicketsNow online brokers market popular event tickets so that consumers clearly understand that they are making purchases from a ticket reseller at marked-up rates.

In the course of the investigation, Madigans office determined that TicketsNow, which is based in Rolling Meadows, Ill., was operating hundreds of affiliated ticket resale Web sites with misleading domain names that incorporated into the Web site URLs unique names of local venues, sports teams or performers. The TicketsNow-affiliated Web sites failed to clearly state that they were ticket resellers and had obtained tickets from secondary sources, such as season ticket holders, event promoters and venue operators, in advance of the public sale. As a result, consumers did not realize that they were ordering marked-up tickets from a TicketsNow-affiliated reseller.

The agreement with Madigans office also requires TicketsNow resellers to clearly and conspicuously identify themselves as ticket brokers and to expressly state that they are not affiliated with the venue and may sell tickets at above-face value. In addition, TicketsNow will no longer sell tickets to non-sporting events on any of its Web sites until after Ticketmaster makes the tickets available at face value to the general public, which will help curtail speculative ticket sales prior to the actual sale date set by Ticketmaster.

It's the latest in a series of lawsuits and enforcement actions against Ticketmaster, its affiliates and other online ticket sellers. In February Ticketmaster settled a suit accusing it of redirecting consumers to its partner TicketsNow.com in an effort to drive up prices. In May, TicketsNow was accused of ripping off loyal customers.

In the February settlement, thousands of consumers who tried to buy tickets to a show at the New Jersey Meadowlands by either Bruce Springsteen or the E Street Band were redirected to TicketsNow.com, where they were charged prices as high as four times the actual face value of the tickets. This in spite of the fact that original tickets were still available on Ticketmaster's own site.

Ticketmaster bought TicketsNow in January 2008 for $265 million. The purchase was designed to move Ticketmaster, already an industry giant, into the vaunted secondary ticket market. Companies like Ticketmaster are primary ticket sellers, meaning that they sell the original ticket.

Secondary ticket companies essentially act as online scalpers, where people who bought tickets on Ticketmaster can go and resell them for more than their actual worth. Depending on the event's popularity, ticketholders can make a handsome sum; a recent Garth Brooks event allowed some to turn an eight-fold profit. At the time of the acquisition, TicketsNow was the second largest secondary ticketer, behind only StubHub!, and Ticketmaster was already the number one primary ticketing company.

Looking at Ticketmasters's website, one would think that the partnership between the two companies is a roaring success and great news for consumers. The site proclaims that, The partnership between Ticketmaster and TicketsNow allows fans the greatest choice and access to live entertainment while ensuring reliability of service, convenience, and security.

The online ticket market has proved problematic several times over the past year.

In March, Pennsylvania Attorney General Tom Corbett announced a settlement with the fan website of child star Miley Cyrus, which offered $30 memberships in a fan club with the incentive of early access to ticket sales. The website, however, failed to inform fan club members that sales went public within fifteen minutes of first being offered to members. The site also offered pre-sale codes for early access to tickets, when in fact all tickets were already sold out. Under the settlement, 996 consumers got their membership extended by four months.

Additionally, Ticketmaster faces yet another suit regarding the bait-and-switch implicated in the February case. Phish fan John O'Hurley filed suit in federal court in Massachusetts. The suit says that consumers who log onto Ticketmaster are told that tickets are sold out and immediately rerouted to TicketsNow O'Hurley's confirmation e-mail said he had purchased nine tickets for a total of $2,064; the face value of the tickets, however, was $60.

In the last two weeks credit card customers--from Chase to Bank of America to Capital One--have complained loudly about sudden changes in terms. Some have seen interest rates go from eight percent to 18 percent and higher. Others have been told their minimum monthly payments will more than double.

Much of this is occurring in advance of the effective date of the Credit Card Holders Bill of Rights, signed into law in May. This legislation, aimed at curbing long-standing abuses, appears to be the catalyst for sudden credit industry changes, according to both consumer groups and banking industry insiders.

"You've seen a lot of credit card companies already starting to raise their interest rates," said Ken Lin, founder and CEO of Credit Karma, a provider of credit reports and scores. "With default rates over 10 percent, credit card companies are trying to get ahead of the curve before the Credit Card Act takes effect."

Lin says credit card companies likely would have eventually taken a number of these steps to protect themselves in the new economic environment, but the Credit Card Act prompted them to act more quickly. He points to a number of what he calls "unintended consequences."

Under the new law, creditors can't raise interest rates on an existing balance unless a person is more than 60 days late on a payment. Creditors can only increase your APR on purchases made after that. But, he says, theres an unintended consequence.

"Since there isn't a limit on interest rates, creditors can quadruple your existing APR for the future purchases if they notify you in advance about a change to the account terms," Lin told ConsumerAffairs.com.

Also under the new law, credit companies cannot issue credit cards to people under the age of 21 unless they can prove that they have the means to repay the debt, or can get a co-signer.

So people under 21, Lin says, will use prepaid cards or secured credit cards to buy things. In the short term that might be healthy, he says, but over time it will reduce their ability to build a credit history.

The Credit Card Holders' Bill of Rights also requires creditors to provide a grace period for payments even if the person takes advantage of a promotional rate balance or deferred interest rate balance. The unintended result, he says is that consumers could see higher annual fees and increased minimum payments.

Over the years consumers have complained bitterly about "universal default," the practice of credit card companies raising a consumer's rate--not because they are late paying their credit card bill--but late on another, totally unrelated bill.

Consumers said that was unfair and Congress agreed, basically outlawing universal default. Lin calls that the Act's biggest, most far-reaching impact.

"People with marginal credit simply arent going to get access to credit any more and everyone else is going to be paying a little bit more," Lin said. "I know people are annoyed by this, but statistics bear out that if youre defaulting on one credit card, youll probably be defaulting on another one soon."

Even people with good credit often feel like they are being jerked around by their credit card company. Many a complaint to ConsumerAffairs.com begins with the words "I have never been late on a payment..." Lin says if you have a low interest rate, having good credit and a clean payment record might not matter.

"There's a segment of consumers whose rates are being raised simply because of the environment we're in," he said. "Credit card companies are looking at an average default rate of 10 and a half percent. If you've got an interest rate lower than 10 percent, and just the average defaulted, that whole portfolio would be losing money for the credit card company."

What's a credit card customer to do in this new environment? Lin says pain is likely to be felt at every level for a while, but that there are some things consumers can do to put themselves in a better position.

"Practically speaking, we've always urged consumers to have several cards--not a lot, but three or four," Lin said. "When particular credit card companies are closing lines and doubling fees, its good to have options."

In the new environment, credit may be a lot more important but harder to come by. Lin says consumers need to diversify now more than ever.

"I really feel credit cards are going to be drying up, I think annual fees will be back and consumers with a credit score below 700 are going to be in trouble, because the lenders that have survived are going to be raising their lending standards," Lin said.

Consumers can also protect the cards they have now by keeping them active. Use the card for a purchase every month or two and pay off the balance. Credit card companies are going to be closing inactive accounts because they are a liability," he says.

While lenders are already changing their terms, Lin believes consumers will continue to change their habits as well, and the era of every family having maxed out credit cards could become a thing of the past.

"I don't have a crystal ball that says people wont be revolving on their credit cards in the near future but there have been some really interesting growth trends," Lin said. "Debit and pre-paid credit cards are the fasting growing segment of the financial services industry. That, along with higher savings rates, may be suggestive of consumers going to more of a pay as you go system in the future, rather than carrying balances."

A Michigan business owner has pleaded guilty in federal court to playing a part in a conspiracy to fraudulently market dietary supplements over the Internet with illegal claims that the products could prevent, treat or cure a number of diseases.

Several Web sites were used to sell nearly $12 million worth of the products in 2005 and 2006, according to Matt J. Whitworth, Acting United States Attorney for the Western District of Missouri.

Tony T. Pham, 40, of Grand Rapids, Mich., pleaded guilty before U.S. District Judge Richard E. Dorr to charges contained in an April 2, 2009, superseding indictment. Pham owned and operated Techmedica Health, Inc., located in Grand Rapids.

He admitted that he used Techmedica to repackage, sell, market, and distribute unapproved new drugs and misbranded drugs over the Internet. In addition to the conspiracy, Pham pleaded guilty to one count of wire fraud related to payments in the form of a wire transfers to a bank account.

Pham also admitted that since April 6, 2004, he participated in a conspiracy to buy and sell unapproved new drugs and misbranded drugs and to defraud the United States by impeding the lawful functions of the Food and Drug Administration to prevent the introduction of unapproved new drugs and misbranded drugs in interstate commerce.

Under federal law, a dietary supplement may not claim to treat, cure or prevent a specific disease or class of diseases. Pham claimed that six products that he sold over the Internet had been proven reliable through clinical testing for the treatment and prevention of diabetes, irritable bowel syndrome, gout, high cholesterol, high blood pressure, heartburn and diarrhea. In reality, no clinical testing had been performed.

None of the dietary supplements are generally recognized, among experts qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, as safe and effective for use under any of the conditions recommended in their labeling.

Therefore, each of these dietary supplements is a new drug. None were approved by the FDA, and their labels do not bear adequate directions for use; therefore, they are also categorized as unapproved drugs and misbranded drugs.

The dietary supplements that were marketed as unapproved new drugs and misbranded drugs included Diabeticine (later renamed Diamaxol, and also known as Glucolex), Digestrol (also known as Digesticine), Uricinex (also known as Uricaid), Cholestasys Rx (later renamed Cholestasys), Hyperexol and Prolipamy.

Pham sold $11,954,648 worth of those products in 2005 and 2006, using several different Web sites. Web sites used by Techmedica contained materially false testimonials, product information, and identification of medical professionals.

Techmedica fabricated fraudulent customer identities using photographs purchased from Istockphoto.com, the complaint said. Testimonials attributed to these fraudulent identities touted the effectiveness of the unapproved new drugs and misbranded drugs.

Techmedica also posted one of the Istockphoto.com photographs on their Web sites to fabricate a non-existent physician, Dr. Judy Hamilton, for the purpose of lending authenticity to and endorsing product claims about Diabeticine for customers with Type I and Type II diabetes.

The person identified as Dr. Hamilton was in fact a model from California. This same model's photograph was also used by Pham on another Web site to fabricate a non-existent nurse, Bethany Hunt, RN, to tout the effectiveness of the unapproved new drugs and misbranded drugs.

Techmedica, through Pham, in an effort to defraud the United States by impeding, obstructing, and defeating the lawful functions of the FDA, operated several Web sites using mirror image technology. The use of this technology assured that when each of these Web sites was accessed from an FDA network computer, they displayed a sanitized version of the Web site containing medical claims that attempted to comply with the federal Food, Drug, and Cosmetic Act (FDCA).

However, when each of these Web sites was accessed from a computer whose IP address could not be traced to the FDA, they displayed claims that the dietary supplements could cure, mitigate, treat, and prevent diseases, so that these supplements were sold as unapproved new drugs and misbranded drugs.

By pleading guilty, Pham also agreed to forfeit to the government $11,954,648, which was derived from the proceeds of the offenses, for which he and his co-defendants are jointly and severally liable.

Under federal statutes, Pham is subject to a sentence of up to 25 years in federal prison without parole, plus a fine up to $500,000 or twice the gross gain.

Users of a recalled cold medicine have filed a pair of class action lawsuits, alleging that, instead of easing their sniffles, the medication permanently impaired their sense of smell.

On June 15, the Food and Drug Administration (FDA) warned consumers to stop using two types of Zicam cold medicine, after receiving over 130 complaints from consumers whose sense of smell was wiped out or severely diminished from having taken the medication. The side effect was blamed on Zicam's use of zinc gluconate, which can damage intranasal tissue.

In a press release, the FDA warned that the loss of smell known in medical circles as asomnia may be long-lasting or permanent. The release also stressed that asomnia can occur after taking just one dose of the medicine; indeed, many of the complaints received by the FDA were from first-time users. The FDA's Dr. Janet Woodcock warned that, Loss of sense of smell is a serious risk for people who use these products for relief from cold symptoms. Maatrix Initiatives, Inc., which manufactures Zicam, began a recall on June 24.

While losing one's smell has obvious effects on the quality of life, it can also lead to more serious and even life-threatening problems. Those with asomnia are unable to detect dangerous odors such as smoke or gasoline. Sense of taste, closely related as it is to smell, can also be affected.

The suits were filed in federal court in California and state court in Missouri. The California suit, led by plaintiff Barbara Sample, was brought on behalf of anyone who bought Zicam while in California, or from a manufacturer or other source in California, within the four years preceding June 23, 2009. The Missouri suit defines a class of all St. Louis County residents who bought the product in the year preceding the FDA bulletin, and is led by plaintiff Gwendoly West.

The California suit alleges that Maatrix concealed or omitted material information regarding the safety of the nasal gel products.

The class actions may be just the tip of the iceberg for Maatrix. The company also faces Zicam-related actions in Arizona, Illinois, Florida, Texas, Minnesota, and Wisconsin. The FDA also says that Maatrix never handed over 800 internal complaints from consumers who suffered asomnia after using Zicam.

The recall covered both the gel and swab versions of Zicam. In a filing with the Securities and Exchange Commission (SEC), Maatrix said that it intends to vigorously defend each of the recently filed lawsuits. The corporation is barred from marketing the product until it proves to the FDA that Zicam is safe and effective.

A statement on Zicam's website advises customers with remaining Zicam to either dispose of these two nasal Cold Remedy products [gel or swab], or return them through Zicam for one of our Cold Remedy oral products. The statement noted that [t]he other 17 Zicam-branded products (including our Oral cold remedy ) are all safe and effective and will remain on retailer shelves.

The recalled products are:

Zicam Cold Remedy Nasal Gel

Zicam Cold Remedy Nasal Swabs

Zicam Cold Remedy Swabs, Kids Size, a discontinued product

July 7, 2009
Charles David is recalling women's shoes sold at Nordstrom and Nordstrom Rack. The heel of the shoes can detach, posing a fall hazard to consumers.

The firm has received one report of a heel detaching, resulting in minor bruising.

The recall involves various colors and styles of Charles by Charles David brand (item #SAMPCHSHOE) and Charles David of California brand (item #SAMPCDSHOE) women's sample shoes. The shoes were sold in women's sizes 7 and 9. The item number can be located on the original receipt.

The shoes were sold at Nordstrom stores in California and Nordstrom Rack stores nationwide from April 2009 through June 2009 for between $22 and $80. They were made in China, Spain, and Italy.

Consumers should stop wearing the recalled shoes immediately and return them to any Nordstrom or Nordstrom Rack store for a full refund.

For additional information, call Nordstrom at (800) 804-0806 between 7 a.m. and 1 a.m. ET Monday through Friday, e-mail Nordstrom at contact@nordstrom.com, or visit www.nordstrom.com.

The recall is being conducted in cooperation with the U.S. Consumer Product Safety Commission (CPSC).