October 18, 2001

For Immediate Release

For More Information Contact:
Randy Romanski 608/266-1221

MADISON – Attorney General Jim Doyle announced today that his office, in conjunction with the Federal Trade Commission (FTC) and attorneys general from five other states, have launched a joint federal/state law enforcement sweep targeting fraudulent telemarketing and cold-calling operations.

"Fraudulent telemarketing continues to be one of the most common consumer complaints in the state of Wisconsin," Doyle said. "This cooperative effort sends a clear message to scam artists that the states and federal government will track them down and prosecute them if they rip off consumers."

As part of the interagency effort termed "Ditch the Pitch," the states and the FTC have filed nine law enforcement actions and six assurances of voluntary compliance against numerous companies and their employees to protect consumers nationwide from unscrupulous cold-callers and telemarketing fraud. Wisconsin, North Carolina, Virginia and the FTC filed a joint complaint in the U.S. District Court in the Eastern District of Virginia. Cases filed by the FTC in cooperation with other states against additional companies are pending in other jurisdictions.

Doyle said Wisconsin's case is against American Savings Discount Club (ASDC), also known as The Tungsten Group, Inc., Portsmouth, Virginia, and The Tungsten Group II, Inc., Largo, Florida. Also named in the complaint are Robert J. Demellweek, owner/officer of the Tungsten Groups, and David Vincent Jensen, officer of The Tungsten Group II.

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According to the complaint filed by the three states and the FTC, beginning in about 1999, the defendants began to offer advance-fee loans or other extensions of credit in Wisconsin, North Carolina and Virginia. The complaint alleges that ASDC violated state and federal consumer protection laws and rules by using telemarketing boiler rooms to operate their vast advance-fee loan scam that illegally debited consumers' bank accounts $100 in advance of loans they promised, but rarely delivered.

The complaint also alleges that some consumers who paid the advance fees for the loans received instead a packet of written materials describing consumers' membership in a buying club. According to the complaint, many consumers who tried to cancel were told by ASDC that $40 of the fee was non-refundable.

Doyle said that Wisconsin, North Carolina, Virginia and the FTC have been granted a temporary restraining order that has halted further telemarketing solicitations by the company. The court has also appointed a receiver to oversee the company's operations and has ordered a freeze of its assets. The states and the FTC are seeking to permanently ban ASDC from violating state and federal consumer laws and to recover penalties and refunds for consumers.

The FTC estimates that consumers lose more than $40 billion annually due to telemarketing fraud, with approximately one-third of all complaints received by the FTC in the first quarter of 2001 stemming from initial contact by phone.

In addition to Wisconsin, the states cooperating with the FTC in the sweep include Illinois, North Carolina, Oklahoma, Oregon and Virginia.