QC-based telemarketing operation ordered to pay $820,000 for defrauding small business owners in 13 states

Local News

A Scott County judge has ordered a Quad Cities-based telemarketing operation to pay a judgment of more than $820,000 for defrauding small business owners in at least 13 states.

District Judge Mark Fowler found in the ruling that Misty Barnes, Paul Michael Barnes and their businesses had committed 19 violations of the Iowa Consumer Fraud Act.

In February 2020, Iowa Attorney General Tom Miller sued the Barneses and their companies, PM Specialties and Milestone Consulting. The allegations included a range of violations, including cold-calling consumers and falsely saying they had past-due bills that needed immediate payment; selling non-existent services; and making unauthorized charges to customers’ credit-card accounts.

Fowler ordered the couple to pay the maximum civil penalties of $40,000 per violation, or $760,000, to the state.

In addition, the Barneses must pay restitution of $60,144 to 15 consumers who provided affidavits and assisted the Iowa Attorney General’s Office in the investigation. The consumers live in Wisconsin, Idaho, North Dakota, Nebraska, North Carolina, Ohio, Utah, Indiana, Illinois, Texas, Tennessee, Arizona and Minnesota.

One consumer, the owner of a fabric store in Ohio, reported that she lost at least $23,044 to PM Specialties and Milestone Consulting.

Fowler also issued a permanent injunction against the Barneses and their businesses, ordering they cease engaging in a long list of activities, including telemarketing; selling internet, search engine or marketing boosting services; consulting services involving marketing and telemarketing; and the sale of advertising or promotional items.

The Barneses, who have lived and conducted operations in Davenport and Bettendorf, are believed to have moved their operations to Illinois after Miller sued them in Iowa. PM Specialties continues to operate an active website. Fowler’s ruling said the site contains multiple false statements.

The couple formerly worked with Alphonso W. Barnum of Davenport, who was sued by Miller in December 2018 for similar practices. In February 2020, a Polk County judge ordered Barnum and his associates to pay nearly $2.6 million and permanently banned them from doing business after finding the operation had defrauded small businesses across the nation. Between January 2016 and January 2019, Barnum and his fellow defendants received more than $1.94 million taken from defrauded customers, according to the ruling.

During the Attorney General’s fraud lawsuit against Barnum, Miller’s office began investigating Paul and Misty Barnes and PM Specialties after determining they had branched out on their own and started their own fraudulent telemarketing business. The AG’s office alleged that beginning in 2018, Paul and Misty Barnes launched PM Specialties and solicited business from customers of Barnum as well as from Universal AdCom. The Barneses also previously worked for Universal AdCom, an Arlington, Texas-based telemarketer with a call center in Davenport. The Better Business Bureau has given Universal AdCom an “F” rating based on consumer complaints.

Fowler’s ruling found that the Barneses’ violations included:

  • Calling consumers and falsely telling them they had past-due bills owed for advertising or internet-related services, which they must pay immediately, even though the consumer had never ordered anything.
  • Selling consumers digital advertising or “internet boosting” services, which they promised would result in increased traffic to businesses’ websites. The Barneses, however, never delivered the services. When pressed by consumers for some proof that services were provided, the defendants provided consumers with false reports, by verbally and by telephone, purporting to explain how the internet boosting was working.
  • Informing consumers that defendants are selling ads for the consumer’s local government and that the consumer’s advertisement will appear in local government publications, which was false.
    Telling consumers who had done business with Universal AdCom in the past that PM Specialties could obtain refunds for consumers from Universal AdCom by adding them to a nonexistent lawsuit against that company.
  • Making unauthorized credit card charges on consumers’ accounts. When customers complained, the Barneses claimed that another company was using its name and making the unauthorized charges.
    Falsely telling consumers that their company’s “human resources department” or “art department” will get back to the consumer, “attempting to create the perception of a large legitimate company, not a scam run out of some cheap motel room,” the order said.

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