Online Trading Academy deceived customers for years with phony stories of how its costly training programs could lead to lavish rewards, according to the Federal Trade Commission.
The agency sued the provider of investment training services in February, alleging it used false or unfounded claims over how much people could earn in pitching programs that cost as much as $50,000. OTA, as the company is known, generated revenue of $370 million over the last six years, the FTC said Tuesday in announcing a settlement.
The company falsely claimed its instructors and salespeople were active, successful traders and pointed consumers to their supposed success as evidence the training worked, the FTC stated.
"OTA pitched a get-rich-quick investment strategy using fake or unrepresentative testimonials, depictions of wealth, and implied promises of profits," Andrew Smith, the Director of the FTC's Bureau of Consumer Protection, said in a statement. "OTA had no support for its lavish earnings claims, and that's illegal."
The FTC also alleges the company required customers who requested a refund to sign contracts barring them from posting negative comments about OTA or its personnel, and specifically from reporting wrongdoing to law enforcement agencies.
Customers could get their money back
Under the settlement, OTA founder Eyal Shachar and others at the company will also pay a fine of between $5 million and $9.1 million and turn over assets. The accord is expected to lead to more than $10 million in reparations for affected consumers, the FTC said.
The settlement includes a monetary judgment of $362 million, which is partially suspended due to the defendants' inability to pay, according to the FTC. The agreement requires Shachar to pay $8.3 million and turn over vehicles including a Cessna 400 airplane, 2006 Bentley Mulsanne, luxury motor home, Cadillac Escalade and six minivans.
The FTC said consumers might be entitled to a refund or have their debt forgiven for any loans they obtained to pay for OTA's programs. Customers have 45 days to tell the company they want their money back, according to the agency (More information is available on the FTC's website.)