Business briefs for June 13, 2002

Thursday, June 13, 2002 | 11:07 a.m.

Vegas company accused of victimizing consumers

The Federal Trade Commission sued the owners of a Las Vegas vending machine company, alleging they are running a business opportunity scam that has victimized thousands of consumers.

The FTC sued Curt and Johan Briguglio also known as Curt and Jo Briggs, owners of Vendco LLC, 3620 N. Ranch Drive, Suite 107, in U.S. District Court on Wednesday, alleging violations of the FTC Act and federal franchise regulations.

The defendants, who allegedly advertised their vending machine business venture on the Internet and through the classified ads, were accused of making sales pitches that claim consumers will make substantial income if they bought Vendco's "turnkey" business venture.

"Vendco claimed each employee of a business will spend an average of $3 per week at the Vendco vending machine that charges 65 cents per vend," the suit said. "Thus, if the consumer purchases the eight machine package that defendants recommend, and each location has 60 employees, the consumer will gross about $81,000 a year and have a $50,000 net income."

The suit, which said many consumers "don't even recover their initial investment, let alone make any money," said the defendants also reneged on alleged promises to find profitable, high-volume locations and perform warranty work on the vending machines.

The FTC said the defendants violated the Franchise Rule -- which requires a franchisor to provide prospective franchisees with complete and accurate basic disclosure documents to enable them to assess the risks involved in the purchase of the franchise -- when they allegedly failed to provide the consumers with basic disclosure documents and earnings claim documents to substantiate their earnings claims.

Mr. Briggs said he has not read the lawsuit and could not comment on the FTC's allegations.

Sales, prices fall

WASHINGTON -- Wholesale prices fell by 0.4 percent in May, the biggest decline in five months, largely reflecting lower costs for gasoline and other energy products. But that didn't motivate consumers: retail sales fell.

The decline in the Producer Price Index, which measures inflation pressures before they reach store shelves, reported by the Labor Department today, was a surprise to many analysts. They were forecasting a tiny 0.1 percent advance in the index.

In another report, sales at the nation's retailers fell 0.9 percent in May, the biggest drop in six months, the Commerce Department said. Consumers trimmed spending on cars and clothes. Lower gasoline prices also were a big factor in last month's decline.

Retail sales in May were weaker than many analysts expected and followed a strong 1.2 percent advance in April.

Stock jumps on news of IPO

EXETER, N.H. -- Shares of Tyco International Ltd. rose as much as 29 percent today, a day after the conglomerate won regulatory approval for an initial public offering of its CIT Group Inc. finance unit.

The shares rose $2.65 to $12.80 in early trading. They had fallen 80 percent this year amid questions about the company's accounting and its ability to weather a cash crunch.

The sale of CIT is crucial because Tyco must pay more than $8 billion in debt through February. CIT may raise as much as $5.8 billion. Shares of Tyco, the largest maker of undersea fiber-optic cable and electrical connectors, were upgraded by analysts at Merrill Lynch & Co. and J.P. Morgan Securities Inc.

CIT has been in the business of commercial lending and leasing since 1908 and is valued at $11.3 billion by Tyco, which bought the company for $9.5 billion last year.

Tyco also is under formal SEC investigation into the misuse of loans by ousted Chief Executive Officer Dennis Kozlowski, who was indicted for tax evasion last week.

The SEC's Division of Enforcement has also re-opened a 1999-2000 probe into the company's acquisition accounting practices, according to a person familiar with the inquiry.

Publisher named for Las Vegas Weekly

Pat Kelly has been appointed publisher of Las Vegas Weekly, an alternative newspaper published by the Greenspun Media Group. Kelly was previously publisher of Seattle Homes and Lifestyles magazine and has more than 20 years experience at newspapers and magazines.

The Greenspun Media Group is owned by the Greenspun family, owner of the Las Vegas Sun.