PRESS RELEASE
State Securities Department Targets Kansas Promoter of Business Opportunities Selling Trade-Named Toyes, Trinkets Oklahoma Action is Part of FTC/State Crackdown: Project Trade Name Games
 
For Immediate Release
Tuesday, August 05, 1997 
 
Contact: Irving L. Faught, Administrator
  Oklahoma Department of Securities
  405-280-7700
 
 
Oklahoma City/////  Irving Faught, Administrator of the Oklahoma Department of Securities, has targeted a Kansas-based firm that markets business opportunities to own and service in-store carousel racks that display Disney trade-named plush toys, t-shirts and trinkets, using false claims about the earnings investors can make.

The case is part of "Project Trade Name Games," a federal-state crackdown announced today on swindlers who conjure up images of high profits through ownership of carousels displaying products licensed by sports leagues and well-known companies like Disney, Warner Brothers, Coca-Cola, Pepsi-Co and NASCAR. Most of the time, these well-known companies are not affiliated with the businesses who promote the carousels. Federal authorities estimate that consumers have lost at least $50 million to these scams during the last two to three years.

"These types of business opportunities often fail because the promoters are working to put money in their own pockets, instead of offering a legitimate business opportunity," said Faught. "The promoters claim investors can make $100,000.00 a year or more on investments of $10,000.00 or $20,000.00 and they promise hot merchandise that will fly off the display racks. However, the promotors provide out-of-date, leftover merchandise, sometimes at retail rather than wholesale prices and often charge large sales commissions, so that investors have a hard time marking up retail prices enough to recoup their costs. Because major chains can get up-to-date cartoon, beverage and sports-league related merchandise from the well-known companies on their own, the high-traffic locations that promoters said would yield several sales every day just aren't available. Instead, investors can only place the racks in low-traffic locations where they might get a sale or two a week. The result is that most, if not all, investors lose their shirts."

In the case announced today, the Oklahoma Department of Securities charged Parade of Toys, Inc., Parade's President, Robert E. Bouckhout, and Parade's agent, Edward Bergman, with making misrepresentations in the offer and sale of these business opportunities and failure to register the business opportunity for offer and sale in Oklahoma.

Additional Project Trade Name Games cases have been brought by numerous other states and the FTC. As part of the project, the states and the FTC released a series of consumer education materials with tips on checking out this type of business opportunity. Their top three tips:


-- Call the legal department of the company, such as Disney, that owns the trademark for the products and ask if the company is affiliated with the promoter and whether the company has ever threatened any trademark action against the promoter.
-- Insist that the promoter provide the names, addresses and phone numbers of at least 10 prior investors closest to your area. The FTC's Franchise Rule requires disclosure of this information, and any legitimate company will provide it whether or not they are covered by the Rule.

-- Don't settle for phone calls with a few selected purchasers who may be "singers" or "shills" paid to give a favorable testimonial. Make a point of visiting prior purchasers and their display racks to see the type of locations they have and whether the products are actually selling as well as the promoter claims.


The FTC consumer education materials, along with other information about Project Trade Names Games, are available free on the FTC's web site at www.ftc.gov , or by writing the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue N.W., Washington, D.C. 20580; or by calling the FTC at 202-326-2222; TTY for the hearing impaired 202-326-2502.
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This press release, and related information, is available on the Securities Commission's web site at securities.ok.gov, by phone at (405) 280-7700, or in writing at:  Oklahoma Securities Commission, 204 North Robinson, Suite 400, Oklahoma City, OK 73102.