142

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The Car Wash Guys

142. FTC v. The Car Wash Guys International, Inc., et al. Civil Action No. 00-8197 abc (RNBx) (C.D. Cal. filed July 31, 2000)

Defendants: The Car Wash Guys Intl., Inc.,Wash Guy.com, Inc., Lance Winslow, III, Michelle Portney, A/k/a Michelle Winslow

Type: Investment Scam

The FTC alleged that defendants misrepresented their mobile car wash franchise opportunities to consumers through www.carwashguys.com and www.washguy.com, promotional videos, CDs, and in-person and telephonic sales presentations. The FTC alleged that defendants misrepresented that their franchises were "turn-key" operations and that consumers could reasonably expect to earn profits of $4000 to$10,000 per month per unit. The FTC also charged defendants with violating the Franchise Rule by making earnings claims without handing out a required earnings claim document and by contradicting their own disclaimers.

The FTC filed suit on July 31, 2000 under seal, and the Court granted the FTC’s ex parte motion for a temporary restraining order and an asset freeze. In August, the parties entered into a Stipulated Preliminary Injunction that prohibited further misrepresentations and violations of the Franchise Rule and maintained a freeze on most of defendants assets.

The stipulated final order for permanent injunction, which was approved by the court on February 28, 2001, prohibits the defendants from making the types of misrepresentations alleged in the complaint and from misrepresenting the size of their business operation or the number or identities of their purchasers. The settlement also prohibits the defendants from making any representation concerning any franchise or business venture unless they have a reasonable basis for making such representation and possess written substantiation. In addition, the defendants are prohibited from violating the Franchise Rule in the future. The settlement further prohibits the defendants from taking any legal actions to enforce franchise agreements executed before the start of the Commission's enforcement action and from collecting on promissory notes signed by franchisees.

The settlement contains a "right to reopen" provision that would trigger a monetary judgment of at least $320,000 if the FTC finds that the defendants misrepresented their financial condition. Finally, the settlement contains various recordkeeeping provisions to assist the FTC in monitoring the defendants' compliance.

The Commission vote to authorize staff to file a stipulated final order for permanent injunction was 5-0. The settlement was filed in the U.S. District Court, Central District of California, Western Division, in Los Angeles, on February 26, 2001.

http://www.ftc.gov/opa/2000/08/car-wash.htm (press release - complaint & TRO)

http://www.ftc.gov/opa/2001/03/carwash2.htm (press release - stipulated final order)

This page was last modified on July 22, 2007.

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