The Colorado Attorney General settled a consumer protection lawsuit against Joseph Benedetto and his company, Consolidated Medical Services.
The lawsuit alleged that Benedetoo defrauded thousands of consumers through an internet-based affiliate marketing program, said Attorney General John Suthers.
According to the suit, Consolidated Medical Services recruited individuals, many of whom are elderly, to market medical benefits programs that were advertised as valid substitutes for traditional health insurance. The company charged its recruits a startup fee of $35 to $345, as well as monthly maintenance and hosting fees of $29.95 to sell the programs online Recruits then paid thousands of dollars for additional marketing products.
“People were enticed to invest in Benedetto’s scheme and he collected hundreds and often thousands of dollars per person, all the while knowing the individual had virtually zero chance of recouping their investment,” Suthers said. “The health benefits plans themselves were fraudulent, frequently failing to pay patients’ claims as promised and for that and more, we went after him,” continued Suthers.
Consolidated Medical Services recruited 12,800 affiliates between 2008 – 2011. Of these victims, fewer than 3 percent made any money. The great majority of this 3 percent paid out more money than they earned.
Benedetto has shut down the CMS affiliate marketing program and returned more than $100,000 to affiliates. Under the final judgment approved by Denver District Court, Benedetto is permanently barred from, among other things, operating affiliate marketing programs related to medical benefits programs, insurance, or any other health-care related product or service. He must honor certain written guarantees given to affiliates, and he must pay a judgment of $250,000.