Flashcast Convicted of False Advertising

Business owner Carl Ken Carranza and his Universal City-based company Flashcast were convicted last week on 10 counts of false advertising and could face a total of $60,000 in fees and up to five years of jail time. Sentencing will take place on June 19.

Deputy city attorney Mark Lambert of L.A.'s city consumer protection unit filed charges in August. The trial, which began on Apr. 26 and wrapped up last week, examined two separate violations. However, half the case against Flashcast was thrown out by Judge Michael Kellogg. Both sides, therefore, are claiming victory.

Flashcast, located at 3575 Cahuenga Blvd. West, describes itself as a "computer advertising service," specializing in children under age 5. For a $495 start-up fee and a $100-a-month processing fee, the company submits children's photos to casting directors. The company does not hire children, nor does it act as an agent or manager. It merely limits its scope to submissions, it says.

Lambert originally charged the company with being a "job-listing service" that was not in compliance with the law. The law defines a job-listing service as a company that does any of the following for a fee: matching job seekers with job opportunities, providing job seekers with lists of employment, or preparing resumés or lists of job seekers for distribution to potential employers.

The law requires all job-listing services to post a $10,000 bond, provide a fee schedule, include a right-to-cancel provision in their contracts, and provide a refund if the client does not get work.

Judge Kellogg, however, asked that this part of the case be thrown out. "At the end of the people's case," said Lambert, "the defense can make a motion to dismiss if there is not enough evidence to go to the jury, and the judge determined in this situation that that was the case. We have no right to appeal that."

"We're actually very pleased with the outcome of the trial," said Carranza. "We're not a job-listing service and Judge Michael Kellogg agreed. He said that was a misapplication of this law. And as far as we were concerned, after that, we had won the case."

Yet the judge did permit Lambert to add three new counts of false advertising. Carranza was convicted on 10 out of the final 11 counts. The false advertising charges included a number of separate issues.

The company had advertised in the Penny Saver, on its website, and by setting up a table at Babies R Us locations. Explained Carranza, "There were a couple of different ads that said 'Casting children' or 'Looking for kids for commercials, modeling, music videos.' The jury did agree that the advertising was misleading from 1998 because the word 'casting' was in there and we didn't use the word 'service.' "

Flashcast does not hire kids; rather, it submits their photos. Carranza, however, argued that the word "casting" did not necessarily mean casting for a job. "A lot of companies in our industry use the word 'casting,' " said Carranza. "It doesn't mean that you are casting for a specific job, it just means that you're having a casting to see people, whether it's for a service, or an agent seeking out a casting call, or you could have a casting for a job. We don't do casting. We are an advertising service that sends out pictures. We are a service to the casting industry."

The ads also did not mention that the company charged a fee for its services. "There is no legal requirement for a business to put a fee in the ad," said Carranza. "Many businesses don't."

Another issue that came up in the trial was that Flashcast's contracts and promotional materials said that the company was "licensed, bonded, and fully insured."

"We used to have a bond," said Carranza. "We canceled it. But we had thousands of these contracts left. Nobody had ever asked us if we were bonded. So we decided, let's just use the contracts until they are up. Lambert argued that that was misleading, and I admitted that we did have the word on there when we no longer had a bond."

In what way is Flashcast licensed? Not as an agent or manager, said Carranza, adding that their contracts do inform clients that they are not an agency.

"We have a city of L.A. business license," said Carranza. "Mark tried arguing that it's a tax certificate and that it's not a business license as I use the term. A guy from the city testified it was a tax permit. But he said in layman's terms people know it as a business license."

"It's not a business license," countered Lambert. "It's a tax I.D. number. On the back of every one of them it says, 'This is not a permit.' When you tell someone that you're licensed and you're bonded, especially in the talent business, that gives him a protected feeling. They feel that it's an industry that's regulated in some way. But this is not a license in that sense."

Asked what he thought the broader implications of this outcome were, Lambert responded, "The broader implications are that the jury is serving notice on businesses selling services in the talent industry that they better be upfront and honest with respect to what their costs are and how they are operating. The city attorney's office is going to continue to pursue criminal cases against those businesses who ignore what this jury has to say."

Carranza had a different view of the implications. "The biggest part of their case was that we were a job-listing service. But these types of business are not job listing services. We look it as a very, very big victory."

Moreover, Carranza plans to appeal the false advertising decision. "About a year down the road we think we're going to win on appeal because the jury did not follow the jury instructions," said Carranza. "They were giving their opinion on what they thought, and they were supposed to rule on what the victims thought. Lambert argued that they thought they were coming down for a job. None of those people thought that."

"As far as an appeal goes," said Lambert, "the false advertising statute doesn't require that everybody who saw an ad relied on that ad. The issue is whether it's false or misleading. The witnesses clearly testified that they were misled by the practices. They testified that had they known there were fees, that would have made a difference in how they acted."

Before Flashcast is sentenced, Lambert will already be onto the next trial as early as June 1, involving Malibu Talent, which has been charged with theft, false advertising, conspiracy to defraud, violating the advanced-fee talent service law, and violating the Civil Code's employment counseling statute.