Colorado AG announces $330M settlement with infomercial maker

By Bryan Cohen | Aug 1, 2013

DENVER (Legal Newsline) - Colorado Attorney General John Suthers announced Wednesday that his office and the Federal Trade Commission reached a $330 million settlement with an infomercial celebrity who allegedly defrauded consumers with promises of making money.

Russell Dalbey and Catherine Dalbey allegedly ran infomercials and other advertisements that promised consumers large returns by brokering seller-financed promissory notes or privately held mortgage loans. The infomercials, which would frequently use a celebrity endorser, allegedly made deceptive claims that consumers would make quick and easy money through the Dalbey Education Institute's three-step plan. The programs allegedly showed testimonials from consumers who made "$1.2 million in 30 days," and other atypical and sometimes false claims.

Consumers spent approximately $40 to $160 on the initial program and were later encouraged to spend hundreds or thousands of dollars on additional products.

Suthers and the FTC filed a lawsuit against the Dalbeys in May 2011 alleging that very few consumers made the money the Dalbeys promised. Russell Dalbey's three companies, DEI LLLP, Dalbey Eduction Institute LLC and IPME LLLP are jointly and severely liable along with the Dalbeys for the $330 million judgment.

"Using infomercials, print advertising, testimonials and telemarketing calls, the Dalbeys convinced nearly one million consumers to part with thousands of dollars and jump on board with their 'Winning in the Cash Flow Business' wealth-building scheme," Suthers said. "Together with the FTC, we have stopped the Dalbeys and their three companies from orchestrating their get-rich quick activities."

Under the terms of the settlement, the Dalbeys must disclose their assets in sworn financial statements, repatriate all foreign assets and completely cooperate as the FTC and Suthers' office determine how much of the agreed-upon $330 million judgment the Dalbeys can pay. The judgment will be suspended after the defendants surrender such assets. The settlement also bans the Dalbeys from marketing or selling business opportunities, telemarketing and distributing or producing infomercials.

The stipulated settlement order also prohibits the Dalbeys from making deceptive claims about the benefits, efficacy, availability or price of services, programs or products. The Dalbeys are barred from using deceptive endorsements or failing to disclose restrictions related to any services, programs or products.

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