FOR RELEASE:  JUNE 27, 1991




   THREE TELEMARKETING SALES REPS AGREE TO SETTLE FTC CHARGES
                       BY PAYING $427,500


     Three telephone sales representatives, charged by the
Federal Trade Commission last year with making false claims about
the value and rarity of gemstones they were selling and about the
risk of investing in the stones, have agreed to settle the char-
ges under consent judgments that prohibit them from making future
misrepresentations in telephone sales, and require them to pay a
total of $427,500 for consumer redress.

     The settlements, approved by the court yesterday, stem from
an April 1990 case in which the FTC charged two California
companies and three individuals in connection with a telemarket-
ing scheme to sell gemstones as investments.  The FTC alleged
that the defendants made unsolicited telephone calls to consumers
and offered to sell them gemstones such as tourmalines, savor-
ites, tanzanites and spinels, by claiming that the gemstones were
excellent, low-risk investments.  According to the FTC, consumers
made purchases ranging from a few thousand dollars to many tens
of thousands of dollars.

     The FTC's complaint named Newport Gems, which does business
as Capital Assets International; RIME Inc., which does business
as First Capital Trading Company; Richard Harmon, individually
and doing business as Palm Gallery; Mark Zigner; and Paul R.
Sherman.  The FTC won an injunction halting the alleged deceptive
sales practices after filing its complaint in U.S. District Court
in April 1990.  The court also froze the defendants' assets.

                            - more -
(Newport/Capital Assets--06/27/91)



     The complaint was amended in November to add eight indivi-
duals, four of whom had been telephone sales representatives for
the companies, and the court granted the FTC's request for
injunctions and asset freezes against these defendants as well. 
The settlements announced today involve three of these defendants
-- Donald R. Cook, Garry M. Schaeffer, and Teresa L. Bowman --
and require them to pay $185,000, $162,500, and $80,000, respec-
tively, into a fund to be used for sending partial refunds to
injured consumers.

     The complaint alleges that the defendants made false repre-
sentations that their gemstones could be liquidated quickly and
easily through a market sale at prices close to those at which
they were being sold, that comparable gemstones had shown sub-
stantial price appreciation in the time just prior to the sale,
that the gemstones were a low-risk investment and that customers
could reasonably expect to resell the stones quickly at a sub-
stantial profit.  The complaint alleges that consumers have
suffered significant financial injury as a result of the false
representations.

     The judgments prohibit Cook, Schaeffer and Bowman from
making the alleged or other false representations about the
price, profit, rarity, appreciation, or risk of investing in
gemstones or any other investment offering in future telemarket-
ing sales.  In addition, the judgments require the defendants to
disclose clearly and conspicuously in promotional materials and
contracts that gemstones are a high-risk investment and are not
as easy to sell as many other investments.

     The Commission vote to accept the judgments was 4 to 1, with
Commissioner Andrew J. Strenio, Jr. dissenting.  Strenio said he
believes the amount of consumer redress is insufficient given the
amount of consumer injury caused by the alleged misrepresenta-
tions.

     The consent judgments were filed on June 24 in U.S. District
Court for the Central District of California, in Los Angeles.

NOTE:  Consent judgments are for settlement purposes only and do
not constitute an admission by the defendants of a law violation. 
Consent judgments have the force of law when signed by the judge.

Newport/Capital Assets--06/27/91)


     Copies of the settlements are available from the FTC's
Public Reference Branch, Room 130, 6th Street and Pennsylvania
Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY 202-326-
2502.

                              # # #

MEDIA CONTACT:      Bonnie Jansen, Office of Public Affairs
                    202-326-2161

STAFF CONTACT:      Michael McCarey, Bureau of Consumer
                    Protection, 202-326-3303


(Civil Action No. CV 90 2001 R)

(Newport)