A federal judge has frozen the assets of 10 Kansas City-area companies that allegedly ran phony sweepstakes contests, preying mainly on the elderly.
U.S. District Judge Greg Kays on Tuesday also ordered the appointment of a temporary receiver to take charge of the businesses and imposed conditions on their operation.
The order came in response to a lawsuit filed by the Federal Trade Commission and the state of Missouri alleging the companies falsely represented to consumers that they had won, or were likely to win, cash prizes of as much as $2 million. To obtain the prizes, though, consumers had to cough up fees ranging from $9 to $139.99.
Those who paid the fees – sometimes several times over before they realized the operations were a sham – did not receive any of the promised cash prizes, the FTC and the state alleged.
The suit, filed in February, said that the businesses have taken in more than $110 million since 2013.
Kays found there was “good cause” to believe the companies had engaged in deceptive behavior and ordered the defendants to show cause why he shouldn’t make his temporary restraining order permanent.
Named in the lawsuit were Next-Gen, Inc.; Westport Enterprises, Inc.; Opportunities Unlimited Publications, Inc.; Opportunities Management Co.; Summit Management Team, LLC; Contest America Publishers, Inc.; Reveal Publications, LLC; AOSR Corporation; Lighthouse FLA Enterprises, LLC; and Gamer Designs, LLC.
Also named were the owners of the businesses, Kevin R. Brandes and William J. Graham.
Among other things, Kays’ sweeping order bars the defendants from misrepresenting that consumers have won or are likely to win a prize. It also orders the defendants to conspicuously disclose that, in order to win a substantial cash prize, consumers have to pay a fee.
Mary Compton, a spokeswoman for the Missouri Attorney General’s office, said in an email that her office was “pleased” with the issuance of the temporary restraining order.
“Protecting Missouri consumers is a top priority of this office,” she said.
Attorneys for the defendants did not return calls seeking comment.
Missouri Attorney General Josh Hawley, in filing the lawsuit, described the sweepstakes operation as “one of the largest direct mail schemes in the country.” He said the defendants had targeted elderly victims for years.
The companies operated under a variety of names, including Award Notification Services, Cash Claim Advisors, Central Award Distribution, International Award Services, National Award Commission, Prize Notification Services Foundation and Security Dispatch, Ltd.
Dan Margolies is a senior reporter and editor at KCUR. You can reach him on Twitter @DanMargolies
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