A Polk County judge has shut down several Quad-City-based advertising companies accused of defrauding businesses across the nation with a promotional-item scam.
District Judge Robert B. Hansen has granted a temporary injunction sought by Iowa Attorney General Tom Miller against owner Alphonso Barnum of Davenport, several of his associates, and 10 companies. The injunction bars the defendants from conducting any business activity involving telemarketing and the sale of advertising and promotional items.
In December, Miller filed a lawsuit against Barnum, his wife and mother, and several limited liability corporations, including City Wide Promotions, Top Faith Solutions and New Start Media. The lawsuit alleges the defendants violated the Iowa Consumer Fraud Act, Lynn Hicks, communications director for the attorney general's office, said Tuesday.
Miller alleges the fraud took different forms. Sometimes, the corporation, which changed names often, approached business owners about advertising on a poster, saying the corporation was working with a school district to produce the calendars and the business could pay to have its name listed on them.
The corporation told customers the products would be distributed.
"They (the corporations) were not affiliated with a school at all," Hicks said. Businesses sometimes received samples of a promotional item, but the items were not distributed, even though the businesses paid for the advertising, Hicks said.
"It got to the point they (the businesses) were calling the Better Business Bureau," Hicks said.
The corporation(s) also claimed to develop city information guides, Hicks said.
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Sometimes a representative of the corporation, which operated in both Iowa and Illinois under various names, would call a business, tell the owners they had ordered a product, items had been printed and distributed, and the business account would be sent to a collection agency unless part of the "cost" was paid that day. Sometimes the businesses gave the defendants a credit card or bank account number.
When the defendants changed business names allegedly to avoid detection, Miller added new defendants and requested the injunction in February.
Defendants also made unauthorized charges against the victims’ accounts, including creating checks that were run through victims' bank accounts, the judge found. One business owner in Michigan had more than $80,000 in checks remotely created by defendants run through her account, and another in Illinois had more than $47,000 taken.
The Attorney General’s Office presented evidence from business owners in Iowa, Illinois, Missouri, Wisconsin, Texas, Idaho and Michigan, all of which reported the defendants used deceptive practices.
The temporary injunction applies to all “persons, corporations and business entities acting in concert or participating with the defendants.” Defendants include Barnum; his wife, LaFayia Kay Barnum; his mother, Willie C. Nance; employees Kelsey J. Patterson and Henry Alexander Clark; and CW Promotions LLC, Top Faith Solutions LLC, City Wide Promotions LLC, New Start Media LLC, TFS LLC, Alumni Sports LLC, New Start Marketing, Xpreshion Multimedia, Xpreshion Multimedia LLC and Greater Solutions LLC.
A web search shows customers throughout the country complained about some of Barnum's entities. New Start Media has an “F” rating from the Better Business Bureau.
The state seeks penalties against the defendants for up to $40,000 for each violation, in addition to reimbursing the victims.
Miller reminds consumers never to give bank-account information or credit-card numbers to telemarketers or others over the phone.