Asserting Fifth Amendment rights cost an accused fraudster $17.3 million in sanctions for violating an 18-year-old federal injunction against ripping off consumers.
U.S. District Judge Gloria Navarro last month ordered Glen E. Burke to pay the fine as a penalty for violating a 1998 injunction prohibiting him from misleading consumers in a sweepstakes scheme.
“The court finds that full restitution, or making as many deceived consumers as whole as possible, is appropriate here because Burke disregarded the core provisions of the order not to mislead consumers,” Navarro wrote in the 18-page ruling. “Burke violated the order’s prohibition on material misrepresentations, and his misrepresentations cost at least $17,389,232 in consumer harm.”
In her finding of facts and conclusions of law, the judge said Burke managed a direct-mail sweepstakes that offered cash prizes and payouts claiming to be worth potentially millions of dollars.
The marketing materials claimed respondents had access to a portion of more than $2 million in “lost” funds that became available to them.
To obtain the money, recipients had to pay administrative fees, and Navarro said the font, graphics and wording of the letters made it appear the offer came from government agencies and financial institutions.
Emails indicate Burke worked directly with copywriters and graphic designers to draft the marketing materials.
Although Burke admitted he consulted on the mailers’ content, he asserted his Fifth Amendment rights during his deposition and refused to answer questions about the sweepstake operation’s marketing materials, according to court records.
Navarro said Burke compiled consumer mailing lists from information obtained from list brokers, including a list of consumers who responded to a prior mailer by sending money, and sent up to 40 mailers to each consumer on that list.
Burke admitted he used a Las Vegas company to print and mail the final marketing materials, and Navarro said he set up a network of mail boxes in several states, plus Mexico and the Netherlands, to receive consumer replies, manage the people who collected consumer responses, and arrange to send money orders for less than $2 to consumers who complained they did not receive their money.
When asked about his activities during his deposition, Burke invoked his Fifth Amendment rights, meaning he could not contest the Federal Trade Commission’s latest accusations for which it sought sanctions.
“When a defendant in a civil case refuses to answer questions based upon his Fifth Amendment privilege against self-incrimination, the court may draw an adverse inference regarding any point on which he refused to testify,” Navarro wrote.
The FTC says Burke has run afoul of federal law several times for his involvement in several fraudulent schemes and has been subject to enforcement actions by other federal agencies.
To settle a 1997 FTC complaint over telemarketing activities, Burke agreed in 1998 to the stipulation, which permanently enjoined him and other defendants from making or helping others to make misrepresentations, and prevented Burke from disclosing material facts in order to influence consumers into making purchasing decisions.
The court defined helping others as providing customer service, arranging telemarketing sales scripts and creating marketing materials, compiling lists of potential customers, or providing any kind of marketing services.