Two Oregon-based companies that promoted the sale of pay telephone investments to Rhode Island residents have been ordered to refund the investments made by those residents, totaling close to $960,000. The settlement represents the largest administrative penalty in a pay telephone case nationwide and one of the largest refund offers ever arranged by the Department of Business Regulation (DBR).
Under the terms of the Consent order Alpha Telecom Inc. and ATC Inc. are also required to pay DBR $50,000. DBR Director Marilyn Shannon McConaghy said in a statement that the consent order is the result of an investigation begun in February of 2000 and based up alleged illegal and fraudulent offer and sale of securities primarily to senior citizens in Rhode Island.
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As part of the scheme, investors were offered the opportunity to invest in private pay telephones with promises of steady profits and low risk. However, BDR charged that the promoters and several representatives in the state failed to disclose that the risk of losing money was substantial.
