Corporate layoffs over the past five years have boosted the ranks of would-be entrepreneurs. They also sparked new opportunities for scam artists.
The "business opportunity" swindle has become a pervasive type of rip-off, law enforcement authorities say. Often featured at trade shows, the deals typically offer vending machines, greeting cards, pay telephones, amusement games, computer software or other prepackaged businesses to people who want to be their own bosses.
Many of the offers are legitimate. But some deliver less than promised or violate disclosure regulations.
Federal and state law enforcement officials have cracked down on 90 operations across the country in the past two weeks, including four that did business in Maryland.
"This is a particularly vicious scam because it preys on the hopes of people who are looking for work or extra income," said Maryland Attorney General J. Joseph Curran Jr. "Business opportunity swindles are, unfortunately, a booming business these days."
Mr. Curran's office issued cease-and-desist orders against four companies that allegedly violated the Maryland Business Opportunities Sales Act. They are: Koser Business Enterprises Inc., of Midland, Texas; Las Vegas Partners in Travel, of Las Vegas; Advanced Innovations Inc., of Baltimore; and Panoramic Multimedia Inc., of Littleton, Colo.
A woman who answered the phone at Advanced Innovations said the owner declined to comment. The other three companies could not be reached.
Koser, Las Vegas Partners and Advanced Innovations solicited buyers at a franchise and business opportunities trade show in April at the Baltimore Convention Center, officials said. The companies made unlawful claims, the attorney general's office said, about the amount of money buyers could expect to make.
Some of the companies misrepresented products and sales programs, while others failed to provide prospective buyers with prospectuses or disclosure statements required by law, officials said.
Panoramic Multimedia sold a Maryland resident 800 CD ROM software programs, saying the disks would "sell like crazy" for $24.95 each, the attorney general's office said. Panoramic's brochures said buyers could make between $2,520 and $8,820 per month on an initial investment of $11,575, Mr. Curran's office said. Instead, the buyer discovered that the products would not sell, state officials said.