Nine months after a raid on the American Savings Discount Club, company officials agreed to pay nearly three million to settle a three state and federal investigation.
Last October, federal agents seized company records from a Portsmouth shopping center office where ASDC tele-marketers worked. Agents also seized records from the home of company president Robert Demellweek and investigated businessman David Vincent Jensen.
ASDC was accused of telemarketing fraud. Investigators said the company approved low-interest loans in exchange for an advance payment from people with credit problems.
Those consumers put $100 in a so-called membership fee and then paid $30 in monthly dues. In return, they received forms that qualified them for certain rebates. In other words, they'd have to buy something to get money back and they'd only get a loan if they were in good standing with the club after 90 days.
The Federal Trade Commission and Attorneys General in Virginia, North Carolina and Wisconsin questioned the company's practices.
ASDC is now out of business.
The settlement provides for the corporations' assets, and certain personal assets of the individual defendants, to be liquidated and used for refunds to consumers. "ASDC victimized consumers across the country. I am pleased we were able to close this operation, recover funds for consumer victims, and bar the defendants from running this type of scheme in the future," said Va. Attorney General Jerry Kilgore. "This settlement should send a strong message to fraudulent telemarketers who prey on consumers: we will pursue you and we will shut you down."
In addition to being permanently banned from telemarketing loans, Demellweek and Jensen are banned for three years from any other telemarketing and from all lending services.
After three years, they will have to post a $500,000 bond before engaging in these activities.
Refunds could take several months, since there is commercial and residential real estate to be sold along with other assets.
Consumers who want to notification of the refund process can send their name, address and telephone number to:
Antitrust and Consumer Litigation Section
Office of the Attorney General of Virginia
900 East Main Street
Richmond, Virginia 23219
You can also and put ASDC in the subject line.