Consumers who signed up for online trading courses that netted them little or nothing will be eligible for more than $10 million in refunds under the terms of a settlement with the Federal Trade Commission.
Online Trading Academy will be required to offer debt forgiveness to thousands of consumers who purchased its “training programs,” while the company’s founder and other individuals will together pay between $5 and $9.1 million and turn over their personal assets.
In February, the FTC brought a lawsuit alleging that OTA, led by Eyal Shachar, had deceived consumers for years with claims that purchasers of OTA’s investment training were likely to generate significant income. OTA claimed that anyone could learn to use its strategy, and filled its sales pitch with testimonials and hypothetical trades showing significant profits.
The FTC alleged that OTA had no evidence that purchasers were likely to realize the advertised profits, and that the company’s own surveys and third party trading data showed that most purchasers made little to no money.
OTA also claimed that its instructors and salespeople were active, successful traders, pointing consumers to their supposed success as evidence the strategy worked. But the FTC alleged those claims were false or unsubstantiated, and that several high-profile OTA pitchmen admitted they did not make significant money trading.
Finally, the FTC charged that when consumers realized the truth and asked for their money back, OTA illegally used form contracts to prevent them from telling the government or other consumers about OTA’s deception.
“OTA pitched a get-rich-quick investment strategy using fake or unrepresentative testimonials, depictions of wealth, and implied promises of profits,” said Andrew Smith, the Director of the FTC’s Bureau of Consumer Protection. “OTA had no support for its lavish earnings claims, and that’s illegal.”
The settlement includes a monetary judgment of $362 million, which is partially suspended due to the defendants’ inability to pay. If the defendants are found to have misrepresented their financial status, the full amount of the judgment would become due immediately.
The settlement requires Eyal Shachar to pay $8.3 million and surrender a number of vehicles to the Commission, including a Cessna 400 airplane, a 2006 Bentley Mulsanne, a luxury motor home, a Cadillac Escalade, and six minivans. Darren Kimoto must pay $736,300 and surrender a 2017 Land Rover, and Samuel R. Seiden must pay $158,000. The cash and the proceeds of the vehicle sales will be used to provide refunds to affected consumers.