Kansas City-based sweepstakes, mail-in games hit with asset freeze by federal judge

A federal judge has frozen the assets of a group of Kansas City area businesses and their owners involved in sweepstakes and other mail-in contests accused of duping consumers out of $110 million.

The Federal Trade Commission and Missouri Attorney General Josh Hawley had sought the freeze in their February lawsuit against Kevin Brandes and William Graham and their companies, Next-Gen Inc., Opportunities Unlimited Publications, Westport Enterprises and others.

Attorneys for the men and companies could not be reached immediately. A spokesman for the Federal Trade Commission declined to comment during the litigation.

Among their operations were mail-in sweepstakes that promoted million-dollar prizes that no one had ever won. and a skills contest with a final question that was virtually unsolvable. Charges filed in federal court in February said the companies had “tricked consumers out of tens of millions of dollars” through various sweepstakes and contests through the mail.

Attorneys for the men and companies had argued in court filings that the government was overreaching and acting on a thin supply of complaints given the millions of mailings the companies sent out over many years. Moreover, they challenged the government’s original request to seize their business and personal assets as critical to their ability to defend themselves against the charges.

In his order, U.S. District Chief Judge Greg Kays said he took the action because “there is good cause to believe” the companies and men will violate federal and state laws and that the state and federal governments are “likely to prevail on the merits of this action.”

Specifically, Kays wrote that prosecutors had “established a likelihood of success in showing” three key charges in their complaint.

First, that the men and companies had sent deceptive sweepstakes notices, games of skill and newsletter subscriptions through the mail. Second, that the mailings “gave consumers the false impression that they have won, or are likely to win” a prize and that consumers had to pay fees for the prizes. Third, that “immediate and irreparable harm” will come from continued violations.

Kays tuned control of the companies, the defendants’ assets and all records over to a temporary receiver. The order gives Eric L. Johnson control over operations in Lee’s Summit, North Kansas City, Overland Park and Bonner Springs along with an order to change the locks and alarm systems with the help of police or other law enforcement if necessary.

In contesting the government’s charges, the companies have said in court filings that they voluntarily stopped any new mailings but planned to continue to carry out contests and sweepstakes that already were in play.

Freezing the assets of the companies and their owners prevents anyone from accessing their bank accounts, from opening safe-deposit boxes, storage facilities and commercial mail boxes, from using credit or debit cards of the businesses or otherwise controlling the operations.

The order further bars the companies and men from deceptive representations and omissions, and from transferring, using or selling consumers’ information.

This story was originally published July 17, 2018 at 11:49 AM.