Amateur inventors who dreamed of big profits when they paid Davison & Associates Inc. to research and promote their ideas are receiving checks this week — but only for about 6 percent of what they invested.
The Federal Trade Commission mailed out about 34,000 checks last week to people who tried to license their inventions through O'Hara-based Davison before March 17, 2006.
That's the date U.S. District Judge Gary L. Lancaster in Pittsburgh ordered the company to turn over $26 million to be paid to clients the FTC said were misled by Davison with claims about its success rate in getting new products to market. Davison appealed, and the case was settled last summer for $10.7 million.
About $7 million in cash that the company turned over was used to make a first round of payments, FTC attorney Michael Milgrom said Tuesday. A second round will go out once a court-appointed receiver liquidates stock, property and other assets that were worth around $3 million at the time of the settlement, Milgrom said, though their values may have dropped.
Davison representatives couldn't be reached for comment.
Reaction from clients ranged from anger over failing to recoup most of their money to gratitude that they're getting something back, at least.
Melissa Corsaro said she and her husband, Kevin, paid Davison almost $12,000 to promote their idea for a high-tech tape measure. She hasn't received a check yet, but 6 percent of her family's investment is around $720.
"They took my life's savings. My kids could have gone to college on that," said the Greensburg resident, whose commercial cleaning business has been hurt by the recession.
Davison "should have to pay everybody back in full. Let them hurt the way they hurt other people," Corsaro said.
Scott Miller of Albertlea, Minn., received his share of the settlement this week, based on the $685 he paid Davison for product research on his idea for a leveler tool with a light.
"It took them nine years to get me $42?" he said, calling the lawsuit's outcome a ripoff.
Patricia Nice of Tamaqua, Schuylkill County, said she paid Davison $10,000 to try to license her idea for a decorative plate and got a check for $622.37.
"It's only a fraction, but hey, thank God for small miracles," she said.
CEO George Davison said in a statement after the settlement was approved that he was happy to put the legal dispute with the FTC behind him and focus on his company and clients.
The court ordered the Davison company to disclose how many clients actually made money on their ideas and to set rules for how it markets its services. Milgrom said the FTC will monitor the company's compliance.
The FTC's lawsuit against Davison dates to 1997 and was part of the "Project Mousetrap" crackdown on what the agency termed invention promotion fraud. Most of the cases against other companies were settled years ago.
"The business of invention promotion is not illegal. The question is, are they doing it within the law?" Milgrom said.
Court-appointed trustee Baker Young Corp., Downtown, will liquidate George Davison's stock in Gateway Bank, an interest in the Huntley & Huntley Partnerships, which holds oil and gas leases, and three properties including two homes, Milgrom said. Property locations were blacked out in court documents.
Proceeds will go to the FTC to be distributed by Analytics Inc., a redress firm in Chanhassen, Minn. Milgrom said the Davison company provided a customer list that was used to issue the current round of checks.
Darrell Kaufman of Kittanning still is waiting for his check for part of the $13,000 he invested for his auto mirror idea. "I'm not too happy," he said when told of the percentage he could receive, "but there's not much I can do. They are still in business."
