FTC refunds hopeful inventors caught by promotion scam

Jorgen Wouters
FTC refunds hopeful inventors caught by promotion scam
FTC refunds hopeful inventors caught by promotion scam

The Federal Trade Commission is mailing more than 17,000 checks to amateur inventors swindled by an official-sounding group of promoters that promised to evaluate their ideas and help them strike it rich.

At FTC's request, in 2007 a federal court found Julian Gumpel, Darrell Mormando, Michael Fleisher, Greg Wilson, and the Patent & Trademark Institute in contempt for violating a 1998 court order prohibiting false claims for invention promotion services and ordered them to pay $60 million.

The Patent & Trademark Institute, which a judge called "one grand con game to take money away from consumers," was created after a first incarnation ran afoul of the law in 1998. For a fee of $895 to $1,295, PTI promised to evaluate the marketability and patentability of inventors' ideas, but its evaluations were almost always positive and meaningless, the FTC said.

For an additional $5,000 to $45,000, PTI's clients were also offered legal protection and assistance to secure commercial licenses for their inventions. Although PTI promised clients it would help them earn substantial royalties, no inventions were licensed and no royalties were paid.

"By changing the name of their company, these individuals thought they could continue to make false promises and take inventors' money, but they didn't get away with it," said Lydia Parnes, Director of the FTC's Bureau of Consumer Protection, in a 2007 statement. "This scam should also remind inventors to question the assurances of promotion firms. No one can guarantee an invention's commercial success."

Consumers who paid to have their ideas evaluated will receive $24.83; those who also paid for other services will receive $323.29. Consumers who receive checks should cash them on or before August 31, 2010. Consumers with questions should call the administrator at 1-877-678-0735.