People who lost money to an investment training and education company called Online Trading Academy (OTA) will soon see refund checks for over $5.4 million.
The U.S. Federal Trade Commission said today that checks will be sent to 31,144 subscribers following the settlement agreement reached between the watchdog and OTA founder and CEO Eyal Shachar.
Online Trading Academy has also agreed to offer debt forgiveness to thousands of consumers who have purchased its training programs. As part of the settlement, Shachar and other employees will pay between $5 million and $9.1 million and hand over the assets.
The FTC added that it expects the total penalties to reach more than $10 million. However, the original settlement included a $362 million monetary judgment, which was partially stayed due to the defendants’ inability to pay.
The California-based entity, headed by former Israeli intelligence officer Eyal Shachar, has held training and interactive workshops on investing in the stock and forex markets.
In the FTC’s view, OTA-curated odds offer unnecessary knowledge for high fees, accusing it of fraudulently collecting millions of dollars from consumers over a six-year period.
Online Trading Academy was a provider of financial education, offering online courses under the guidance of over 120 instructors. The Irvine-based academy has come under fire after the FTC accused its agents of misrepresenting numerous facts about their business.
Specifically, retirement age students were told that OTA instructors would teach them how to invest like the Wall Street pros, regardless of their background and previous experience. Other claims included that they would learn to find “low risk, high potential investment opportunities” by applying a “patented strategy” to any asset class, including stocks, options, futures and currencies.
To entice consumers to pay up to $50,000 per course, OTA vendors have told their customers that signing up for OTA training and related services is likely to generate substantial revenue.
The FTC cited many other examples that show how the OTA Academy used deceptive advertising schemes. Although OTA does not track the business results of its clients, one of its promotional videos featured a retiree who allegedly earned “retirement income greater than his income while working,” including $40,000 in a single transaction.
The watchdog further alleges that OTA’s income statements made by its instructors were false or unsubstantiated.
The FTX added that in many cases, when disgruntled customers seek refunds from OTA, they are forced to sign agreements prohibiting them from posting negative reviews of its services. The form also prohibits buyers who requested the refund from notifying law enforcement and prohibits negative feedback on websites or social media pages.