LV firm sued over alleged fraud

Jeffrey Libby

Thursday, Sept. 5, 2002 | 11:22 a.m.

The Federal Trade Commission announced today a lawsuit filed against Pioneer First, a national telemarketing firm that allegedly used deceptive trade practices to bilk consumers out of at least $2.7 million while operating out of Las Vegas Valley offices last year.

In the initial filing unsealed Aug. 26 in U.S. District Court in Seattle, the trade commission charges four corporate officers violated fair trade practices in TV ads and telephone sales pitches by falsely offering a major credit card with a $5,000 line of credit in exchange for an advance fee of $189.

The lawsuit is part of a federal sweep of 32 other companies involved in alleged credit-related frauds.

The trade commission based much of its investigation on documentation of Pioneer First's business practices as first reported in January by the Sun, said Eleanor Durham, a Seattle-based investigator for the trade commission.

"The court has issued an order to freeze their assets and to prevent them from operating their telemarketing operation," Durham said. "Where we stand right now, they could conceivably be facing a judgment for $2.7 million that could be enforced against all their future income and any inheritance they receive."

The suit names Robert Barr, president of Pioneer First, and Candace Rodriguez, Charles Schmidt and Wayne Wrath, three managers who hired and oversaw three shifts of telemarketers in offices in Las Vegas and Henderson at the peak of the company's operations last fall. Investigators have not been able to locate and serve notice of the lawsuit to Schmidt or Wrath.

Consumers contacted by the Sun said they never received what they paid for and former employees and several landlords claimed Pioneer First packed its bags for Utah owing thousands of dollars in unpaid wages and rent.

Many of the TV ads ran on late-night entertainment channels, targeting low-income people with bad credit or no credit.

It is against federal law for a bank to charge a customer an advance fee to open a credit account.

"So even if Pioneer First really did report to credit agencies as it claimed, and could conceivably provide some benefit for consumers' damaged credit, it would be smarter to put up a deposit for a secured credit card at a bank and make timely payments," Durham said.

The four business partners could face additional charges for violations of fair trade practices in Nevada, Arizona and Utah. Washington state filed charges in the federal case.

"What I can tell you is that our office worked closely with the Federal Trade Commission during its investigation," said Kathleen Delaney, a deputy attorney general for the Nevada Bureau of Consumer Protection, "and any suit would be filed here in a Nevada state court under Nevada state laws."

At least 14,000 consumers paid for the card and lost their money, giving telemarketers their bank routing number over the phone. Many more bought the card, but then managed to cancel their order, or had insufficient funds to begin with, Durham said.

Federal regulators caution, however, that in most cases assets are difficult to recover from companies like Pioneer First and defrauded consumers usually do not retrieve their losses. The initial court filing is initially sealed to increase the odds of recovering money.

Yvonne Rodgerson, a former telemarketer for Pioneer First who quit in November after phone lines became clogged with customer complaints, said the trade commission should be able to recover assets in this case.

"I never saw Charlie wear the same suit twice. And Wayne always wore silk shirts. They drove Hummers, new cars, everything," she said.

"Surely they have the money. I have no doubt. But they're bright enough to hide it. These are people who have no conscience. They shafted people left and right."