Washington -- In a broad crackdown on allegedly fraudulent
entertainment-business ventures, federal officials last week charged two cable networks
with bilking investors and illegally diverting funds.
In a civil complaint filed with the U.S. District Court for
the Central District of California, the Federal Trade Commission said a service intended
to provide "educational, nonviolent" children's programming, called
Children's Cable Network, used telemarketers to induce 1,200 consumers to invest in
$10,000 increments.
Except for $2.3 million that was set aside for capital
investment, most of the $16.5 million that was raised was disbursed to company officers
and the telemarketers, the FTC alleged.
The agency named Michael Marcovsky, former CCN president
and president of the affiliate My Pet TV network, and Sheldon Altfeld, vice president of
My Pet TV, as defendants.
When the network failed to get off the ground, the FTC
charged, the defendants then illegally diverted the leftover money -- $650,000 -- to My
Pet TV. The FTC also said the defendants lied to investors, falsely claiming that the
network was broadcasting on Oasis TV.
The court has appointed a corporate receiver and issued a
temporary restraining order, freezing the defendants' assets.
The complaint against Marcovsky and My Pet TV was one of 60
that the FTC filed against entertainment businesses last week, according to the Securities
and Exchange Commission and the North American Securities Administrators Association.
A preliminary injunction hearing in the My Pet TV case is
set for today (Aug. 17) in Los Angeles.
Neither Altfeld nor Marcovsky could be reached for comment
last week.
States News Service
