After hearing an ad calling inventors to action and a toll-free number (something like 1-800-GET-RICH), in the spirit of investigative reporting, I decided to give the invention marketing company a call. I told the voice on the other end of the line that my idea was for a way to keep individual strands of spaghetti fresh. My invention was a clear plastic tube capped off at both ends. “No pasta lover will be able live without it,” I bragged.

“Terrific. Lots of potential,” I was assured in a voice reminiscent of a carnival barker. All I had to do was pay $400 for an initial assessment. As he explained it, my investment gradually increased into the many thousands of dollars if I bought into various stages of the company’s patenting and marketing program. Having had worms for breakfast, I obviously didn’t go for the one on that hook.

The minute someone starts asking you for money, it’s time to run for the hills. Money talks, and if you give it to these kinds of companies, you’ll hear it tell you “Good-bye.”

Most invention promotion firms claim—falsely—that they can turn almost any idea into cash. Here’s how to follow up if you hear the following lines from these unblushing liars:

“We think your idea has great market potential.” If a company fails to disclose that investing in your idea is a high-risk venture, and that most ideas never make any money, you cannot hang up fast enough.

“Our company has licensed a lot of invention ideas successfully.” Ask for a list of its successful clients and their phone numbers. If the company refuses, it means they’ve not had any success. A reputable company would brag about its good fortunes.

“You need to hurry and patent your idea before someone else does.” Be wary of high-pressure sales tactics. Simply patenting an idea does not mean you’ll ever make any money from it. This is just an attempt to drain you of industry and seize your treasure.

“Congratulations! We’ve done a patent search on your idea, and we have some great news—there’s nothing like it out there!” Patent searches by fraudulent invention-promotion firms usually are incomplete, incompetent, conducted in the wrong categories, or unaccompanied by competent legal opinion on the results of the search from a patent attorney. Because unprincipled firms promote virtually any concept without regard to its patentability or efficacy, they may sign an idea for which someone already has a valid, unexpired patent. In that case, you may be the subject of a patent infringement lawsuit—even if the promotional efforts on your invention are successful.

“Our research department, engineers, and patent attorneys have evaluated your idea. We definitely want to move forward.” Hogwash. This is claptrap. Many questionable firms do not perform any evaluation. In fact, many do not have the “professional” staff they claim to employ.

“Our company has evaluated your idea and now wants to prepare a more in-depth research report. It’ll cost you several hundred dollars.” If the company’s initial evaluation is positive, ask why the company isn’t willing to cover the cost of researching your idea further. Run for the hills.

“Our company makes most of its money from the royalties. Of course, we need some money from you before we get started.” If a firm tells you this but asks you to pay a fee up front of any amount or to agree to make credit payments, ask why they’re not willing to help you on a contingency basis.

Speaking of which, now is a good time to revisit Davison ….

I spoke to Elizabeth Tucci, senior trial attorney, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission (FTC), about Davison after finding its website and its claim to be in compliance with the American Inventor’s Protection Act of 1999 35 U.S.C. § 297. Here’s a story not told on the company’s current website (www.davison.com):

In July 2008, the FTC reached a settlement with Davison Design and Development, Inc., formerly known as Davison & Associates, Inc., and related defendants, requiring them to pay $10 million to settle charges that they deceived consumers nationwide, charging consumers up to $12,000 each to evaluate and promote their inventions. The defendants enticed consumers with false claims about their selectivity in choosing products to promote, their track record in turning inventions into profitable products, and their relationships with manufacturers. They also deceptively claimed that their income was derived from sharing royalties with inventors rather than from the fees the inventors paid to Davison.

The Davison settlement, entered as a federal court order, followed a trial in the U.S. District Court for the Western District of Pennsylvania in which the court found defendants had defrauded consumers and violated the FTC Act.

If you want all the details, I refer you to FTC v. Davison & Associates, Inc., et al., Case No. 2:97-cv-01278-GLL, Civil Action No. 97-1278 [W.D. Pa.].

Did I mention that on the day I visited Davison’s website, this quote from the company’s founder appeared at the top of the website’s main page: “When you want the best for your invention, we’re the company that partners with you to protect, produce, and promote your idea into the marketplace.”

I asked Attorney Tucci if she could give me other examples of invention scams that the FTC had taken to court.

In 2007, following a successful civil contempt action by the FTC, a federal judge ordered Patent and Trademark Institute, Julian Gumpel, and related defendants to pay $60 million for violating a 1998 court order and operating what a judge called “one grand con game to take money away from consumers.” The judge also shut down the business and banned Gumpel and other individual defendants from working in invention promotion.

In a press release issued at the time, Lydia Parnes, director of the FTC’s Bureau of Consumer Protection, said, “By changing the name of their company, these individuals thought they could continue to make false promises and take inventors’ money, but they didn’t get away with it. This scam should also remind inventors to question the assurances of promotion firms. No one can guarantee an invention’s commercial success.”

Under the 1998 order, Julian Gumpel, Darrell Mormando, Michael Fleisher, and Greg Wilson were barred from misrepresenting the services they offered to inventors, but they revived their scam under a new name, the Patent and Trademark Institute (PTI). For a fee of $895 to $1,295, PTI promised to evaluate marketability and patentability of inventors’ ideas, but its evaluations were almost always positive and were not meaningful, according to the FTC. For a fee of anywhere from $5,000 to $45,000, PTI’s clients were offered legal protection and assistance to obtain commercial licenses for their inventions. They also were told that PTI would help them earn substantial royalties from their inventions. But PTI did not help consumers license their inventions, and clients did not earn royalties.

In January 2007, the FTC charged the defendants with civil contempt and obtained a temporary asset freeze against PTI and its owner, Gumpel, and the appointment of a receiver over PTI. In March, the FTC added Fleisher, Mormando, and Wilson as contempt defendants, alleging that they had participated in the order violations as managers and salesmen.

On May 3, 2007, after a 4-day hearing, U.S. District Court Judge Gerald Bruce Lee held the defendants in contempt, finding, among other things, that PTI had failed to disclose to consumers that none of its clients had successfully marketed an invention. The judge concluded that consumers were defrauded of $61 million through “lies and misstatements.”

On July 12, 2007, the court permanently banned Gumpel, Mormando, and Wilson from engaging, in any way, in the marketing of invention-promotion services. The court did not enter a ban against Fleisher because he had not signed the original order, although the court found that he had known about it and was subject to it. On August 27, 2007, the court entered an order holding PTI and Gumpel jointly liable for a $61 million judgment, and holding Fleisher, Mormando, and Wilson jointly and severally liable for the judgment to the extent of $59,682,958.

PTI operated through several corporate entities, including original defendants Azure Communications, Inc., and London Communications, Inc., and through United Licensing Corp.; International Patent Advisors, Inc.; Datatech Consulting, Inc.; International Product Marketing, Inc.; and Unicorp Consulting, Inc. These companies also were held in contempt and ordered to pay $61 million.

The FTC is in the process of seeking to collect on the judgment and hopes to conduct partial redress to consumers soon.

In 2008, the FTC brought a separate action against Michael Fleisher, who operated as second-in-command at PTI, seeking to ban him from the invention promotion business as well. In the 1997 contempt action, Fleisher had been held jointly and severally liable for $59,682,958 in damages, but he was not subject to ban because he was not a signatory to the original 1998 order.

As a result of the 2008 action against Fleisher, he entered into a federal court order that permanently bans him from marketing invention-promotion services and required him to dismiss his appeal of the prior contempt judgment and stipulate that his $59 million liability from the contempt action cannot be voided through bankruptcy.

If these examples are not enough to put you on guard, consider Googling American Inventors Corporation (AIC). Its management was indicted for mail fraud, money laundering, and tax evasion for allegedly bilking more than 34,000 inventors out of nearly $60 million.

These companies “morph” from one entity into another. For example, AIC had already set up the American Institute for Research and Development when the hammer came down on it. Furthermore, in Florida in late 1994, these guys had something called Washington Financial Group ready to go in case they had to close their doors up north.

When I asked William M. Welch, an Assistant U.S. Attorney for the District of Massachusetts, whether AIC had ever licensed any inventor product, he told me a part of the scam that was totally new to me. AIC would go to a manufacturer, but rather than pitch the product as a royalty license, it would offer to give the so-called licensee X number of dollars that the licensee would pay back to the inventor as royalties. This way, AIC could defend itself if claims were made that its inventors were not making any royalties. An example he cited involved a night sight for a gun that was sold to a company. AIC gave the company $20,000 to channel back to the inventor. Unfortunately, the company went Chapter 11.

I cannot say it strongly enough: avoid invention marketing firms. Their principals get rich and buy big homes and fast cars on your money. They are slot machines that don’t pay off.