Last Defendant Named in a Gemstone Telemarketing Case Banned from Telemarketing Activities
February 1, 2000
Siri Ram Singh Khalsa, one of the individuals named in the Federal Trade Commission's case against several gemstone companies, has accepted a ban from selling any investment opportunity or collectible artifact and has accepted a ban from telemarketing to consumers. Khalsa's agreement settles charges the FTC brought against him for his activities as a gemstone salesman. This matter arose from an FTC civil action charging several gemstone companies doing business as "Windsor and White Trading Company," and "Pacific Wellington" with misrepresenting the market value, investment potential, liquidity and source of the gemstones they offered to consumers as investments. The Windsor and White case was part of "Project Field of Schemes" -- a law enforcement sweep targeted at investment-related fraud - in which the FTC alleged that the defendants made numerous misrepresentations when soliciting consumers to buy gemstones as investments. The settlement also prohibits Siri Ram Singh Khalsa from misrepresenting the risks, value and appreciation of any investments or collectible artifact.
In June 1997, the FTC filed charges against the following entities: Sweet Song Corporation, also doing business as Windsor & White Trading Co. and d/b/a Pacific Wellington Associates; Tsavorite Sword Corporation, d/b/a Pacific Wellington Associates; Ron Hudson, Inc., d/b/a Pacific Wellington Associates; Hari Jiwan Singh Khalsa, also known as Stephen Jon Oxenhandler, a/k/a Bob Thomas; and Siri Ram Singh Khalsa, a/k/a William Taylor, a/k/a Phillip Anderson, as part of "Project Field of Schemes." This law enforcement effort comprised of approximately 61 law-enforcement actions and a major consumer education component. In its complaint detailing the charges, the FTC alleged that the defendants routinely misrepresented the risk, value, appreciation and liquidity of the gemstones they sold and falsely claimed that consumers would realize tremendous profits. In addition, the defendants falsely pledged that they could and would easily liquidate consumers' gemstone portfolios after an 18-month holding period. In fact, according to the FTC, the defendants typically ceased all contact with consumers and refused to liquidate their gemstones after the 18-month period. Shortly after the complaint was filed, the court issued a temporary restraining order, froze the defendants' assets and appointed a temporary receiver over the corporate defendants. (A settlement with Hari Jiwan Singh Khalsa, and the corporate defendants was announced in August 1998.)
The FTC's proposed settlement, which requires the court's approval to become binding, prohibits Siri Ram Singh Khalsa from falsely representing, among other things:
- the degree of risk of any investment opportunity;
- that any investment opportunity sold to consumers has appreciated in value since the time of the purchase;
- the past appreciation, the future appreciation, the income potential and the origin of any investment opportunity;
- that a consumer can easily re-broker or liquidate a gemstone or any other investment opportunity; and
- any other fact material to a consumer's decision to purchase gemstones, coins, bullion or any other investment opportunity.
The settlement also prohibits the defendant from violating, or assisting others in violating, any provision of the FTC's Telemarketing Sales Rule.
In addition, the settlement bans the defendant from engaging in, or assisting others in, any investment opportunity or collectible artifact -- defining collectible artifacts as any good for which value is derived solely from rarity, uniqueness, condition, or historical quality -- and from engaging in or assisting others in telemarketing.
Finally, the settlement contains various reporting provisions that would assist the FTC in monitoring the defendant's compliance.
The Commission vote to authorize staff to file the proposed settlement was 5-0. The proposed stipulated final judgment was filed in the U.S. District Court for the Central District of California in Los Angeles, on January 20, 2000.
