WASHINGTON-Following the Nov. 29 filing of a Federal Trade Commission civil lawsuit at the U.S. District Court of the Eastern District of New York, communications brokers Republic Communications Corp. and its subsidiary, Falcon Crest Communications Inc., have been shut down pending further court action. The Syosset, N.Y., companies’ assets also have been frozen.
The companies, their principals and two salesmen have been charged with “selling bogus brokerage services to consumers holding federal paging and mobile radio licenses.” Besides the injunction already in place, the FTC is seeking equitable relief for licensees who have been duped by the companies; consumer losses could total $2 million, the FTC said.
According to the FTC, Joel H. Cohen, president of Falcon Crest, and a secretary/director of Republic; Jordan Drew, a Falcon Crest manager; Gary Perry, Falcon Crest operations manager; and Nicholas Vasti, a Falcon Crest sales representative; “falsely represented that they are highly successful in procuring lucrative offers for their clients.”
Calls to Republic for comment were not returned.
“We’re pleased at the judge’s preliminary decision. This is the kind of scam that targets people who already have been victims of investment schemes,” said Jodie Bernstein, director of the FTC’s Bureau of Consumer Protection. “Consumers who have lost money investing in high-tech enterprises should be very skeptical about companies that promise to turn their losses into winnings.” The FTC currently is seeking out any licensee who had dealings with Republic and/or Falcon Crest.
Falcon Crest, with offices in the New York and Tampa Bay, Fla., areas, allegedly preyed on new mobile communications investors who had little experience in building or managing paging or private radio systems. The company promised, for a $495 upfront fee, to shop unconstructed licenses around to the likes of AT&T Corp., Nextel Communications Inc., Dial Page Inc. and Motorola Inc., telling licensees that its success rate in finding buyers or lessees was 99 percent. Salesmen promised licensees a quick turnaround for cash, claiming that the only profit would be from a 9 percent commission charged on the sale or lease of a license.
Following its purchase by Republic in May, Falcon Crest and Republic tried to negotiate with licensee customers to build and manage their wireless systems, with the option to acquire the licenses within five years of system construction. Since that time, those licensees who agreed to Republic’s/Falcon Crest’s terms have received nothing, and their construction time, as mandated by the FCC, is running out. Many licenses already have been forfeited, with more to follow, said the FTC.
According to the FTC’s complaint, Falcon Crest “has not been highly successful at procuring lucrative sale or lease offers, within a short period of time, for licenses held by its customers.” The agency also said Falcon Crest had no relationship with any large mobile communications carrier.
No trial date has been set.
