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December 7, 2018

Iowa A.G. sues Davenport business over alleged national advertising scam

Small businesses were defrauded over high school sports posters, other items, lawsuit alleges

DES MOINES — The Iowa Attorney General’s Office has sued a Davenport resident, alleging that his businesses promised to create and distribute promotional items — including posters promoting high school sports teams — but instead defrauded small businesses across the country.

In the civil lawsuit filed this week in Polk County District Court, the state named Alphonso Barnum; his wife, LaFayia Kay Barnum; his mother, Willie Nance, and several limited liability corporations, including City Wide Promotions, Top Faith Solutions, and New Start Media. The lawsuit alleges the defendants violated the Iowa Consumer Fraud Act.

The state alleges that the businesses started by selling advertising space on posters and calendars that promote high school sports teams, and then expanded to direct mail advertisements, city information guides, magnets, and brochures. The advertisements, which range in cost from a few hundred dollars to more than a thousand dollars, are sold to real estate and insurance agents and other small business people.

The Barnums’ companies often promise to make up to 5,000 of the promotional items and distribute them throughout the community, including mailing to all households and sending to supermarkets or other popular locations.  They also falsely claim they are working with local schools to distribute the items, the lawsuit alleges.

The companies sometimes create mock-up ads or produce a few samples for customers. But often that is the only product that gets made or distributed, the lawsuit alleges. The defendants charge the customers’ credit card or bank account and ignore complaints from customers or delay responding until after the money is gone and the victims cannot get the money back.

When the defendants get too many complaints, they create new LLCs and switch credit card processors and banks, the lawsuit alleges.

The lawsuit says the defendants also use confusion and high-pressure sales tactics to convince consumers that they have previously agreed to purchase advertising and that the amounts are past due. They threaten to turn consumers over to a collection agency if they refuse to pay the fictitious debt immediately.

The Iowa Attorney General’s investigation and news stories indicate that consumers have complained about the defendants’ practices across the country, including in New York, Idaho, Michigan, Texas, Massachusetts, California, Florida, Georgia, and Missouri, as well as Iowa. New Start Media has an “F” rating from the Better Business Bureau.

The Barnums have refused to respond fully to the Iowa Attorney General’s investigative efforts. “Defendants have exhibited a complete indifference to the investigative efforts of the Iowa Attorney General,” the lawsuit alleges.

The state seeks penalties against the defendants for up to $40,000 for each violation, in addition to reimbursing victims for all money wrongfully obtained. The Attorney General’s Office also asks a judge to permanently dissolve each of Barnum’s limited liability companies and prohibit the Barnums from operating any business in Iowa involving advertising or selling of promotional items.

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