Attorney General Lockyer Announces Win in Lawsuit Against First National Credit

Firm Used Deception To Sell Restricted ‘Gold Cards'

Friday, March 7, 2003
Contact: (916) 210-6000,

(LOS ANGELES) – Attorney General Bill Lockyer today announced his office has won a consumer protection lawsuit against First National Credit (FNC), obtaining a court judgment that requires the firm to pay refunds and $5 million in civil penalties for deceptively marketing credits cards that could not be used in stores.

Following a two-week trial, Los Angeles County Superior Court Judge John P. Shook also permanently prohibited FNC and its two principals, Steve Golgolab and Mahmoud Karkehabadi, from engaging in the marketing practices. The company's solicitations violated California's false advertising and unfair business practices laws.

"First National Credit reaped millions in unjust profits through chicanery," said Lockyer. "They misled consumers into buying a bogus ‘gold card' that could be used only to buy items from an FNC catalog, and then only on a restricted basis."

Customers paid FNC more than $20 million nationwide in fees for the "gold card" at issue in the case. The defendants sent out millions of solicitations telling recipients they were pre-approved for a "gold card" with a $15,000 credit limit, and no interest for the first year. Consumers who accepted the offer and sent in the fee of $37 (or $43 for "rush processing") found out only after paying the fee that the card could not be used in stores.

Unlike "gold cards" issued by other companies, FNC's card could be used only to buy items from FNC's own catalog. Even on the catalog purchases, FNC forced cardholders to pay 25 percent of the price with a check or money order – and charged previously undisclosed transaction fees. An audit of FNC's records showed the defendants made almost 99% of their income from the membership fees.

No later than March 10, the defendants must provide the Attorney General's Office the identities of consumers who purchased the "gold card," the amount they paid for the card, and the date of the purchase.

Consumers who believe they have been victimized by deceptive credit card solicitations can file a complaint with the Attorney General's Office. For information on how to file a complaint, visit the Attorney General's Website at

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