Printed for the use of the Committee on Governmental Affairs

46-902 cc

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON: 1998

For sale by the U.S. Government Printing Office

Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-056508-1

SAM BROWNBACK, Kansas

SUSAN M. COLLINS, Maine, Chair

PETE V. DOMENICI, New Mexico
THAD COCHRAN, Mississippi
DON NICKLES, Oklahoma
ARLEN SPECTER, Pennsylvania
BOB SMITH, New Hampshire
ROBERT F. BENNETT, Utah

JOHN GLENN, Ohio

CARL LEVIN, Michigan

JOSEPH I. LIEBERMAN, Connecticut

DANIEL K. AKAKA, Hawaii

RICHARD J. DURBIN, Illinois

ROBERT G. TORRICELLI, New Jersey
MAX CLELAND, Georgia

TIMOTHY J. SHEA, Chief Counsel and Staff Director
MARY D. ROBERTSON, Chief Clerk

KF26

.6674

1998

Opening statements:

Senator Collins

Senator Glenn

CONTENTS

WITNESSES

TUESDAY, FEBRUARY 10, 1998

Susan Grant, Director, National Fraud Information Center, Vice President,

Public Policy, National Consumers League

Tatiana Gau, Vice President of Integrity Assurance, America Online, Inc.

Page

1

3

59

Barry D. Wise, Certified Public Accountant, Victim of Fortuna Alliance

Internet Pyramid Scheme, Matthews, North Carolina

24

Hon. Robert Pitofsky, Chairman, Federal Trade Commission, accompanied

by Jodie Bernstein, Director, Bureau of Consumer Protection

31

* May Be Found In The Files of the Subcommittee

1. Slide presentation of Tatiana Gau, Vice President of Integrity Assurance,

America Online, Inc.

2. Background material regarding Fortuna Alliance, including printout of

Fortuna Alliance Web Site as of January 1998, miscellaneous news

releases on Fortuna Alliance, and copy of FTC v. Fortuna Alliance,

et al., FTC Complaint, Temporary Restraining Order and Stipulated

Final Judgment

Page

240

267

300

3. Slide presentation of the Honorable Robert Pitofsky, Chairman, Federal

Trade Commission

4. Memoranda prepared by Rena M. Johnson, Counsel, and Dennis McCar-

thy, Investigator, Permanent Subcommittee on Investigations, dated

February 5, 1998, to Permanent Subcommittee on Investigations' Mem-

bership Liaisons regarding Internet Fraud

312

5. Supplemental Questions for the Record of The Honorable Robert

Pitofsky, Chairman, Federal Trade Commission

351

6. Supplemental Questions for the Record of Susan Grant, Director, Na-

tional Fraud Information Center

355