FTC SAYS CONSUMERS LOST MONEY IN INTERNATIONAL SWEEPSTAKES SCAM

FROM:  U.S. FEDERAL TRADE COMMISSION
Consumers Lost Millions of Dollars Despite ‘Guarantee’ of Prize Money

At the request of the Federal Trade Commission, a federal court has temporarily halted a sweepstakes operation based in Fort Lauderdale that took more than $28 million from consumers throughout the United States and other countries, including Australia, Canada, France, Germany, Japan, and the United Kingdom. The FTC seeks to permanently end the allegedly illegal practices and return money to victims.

“This outfit promised people huge prizes and collected millions in fees but never paid out a dime,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “If someone says you have to pay to claim a sweepstakes prize, assume it’s a scam.”

According to the FTC’s complaint and other court filings, the defendants mailed personalized letters falsely telling consumers that they had won large cash prizes, typically more than $2 million. The prizes are “guaranteed,” the letters stated, but to collect the money, consumers had to mail the defendants a $20-$30 fee by cash, check or money order. To create a false sense of urgency, they set a deadline, typically 10 days, and warned consumers they would forfeit their winnings if they didn’t pay on time.

In reality, consumers had not won anything. The defendants have no connection to any sweepstakes and cannot award or pay anyone the promised prizes. “Only in dense, confusing language, at the bottom or on the back of the letters,” the FTC explains, do they admit that the only service they provide is compiling “reports” about sweepstakes and contests offered by other parties that are open to the public. By design, the defendants’ disclaimers are unclear and inconspicuous, and fail to alert consumers to the truth, and most consumers don’t even receive the “reports” and would never have agreed to pay $20-$30 for them.

The defendants are Mail Tree Inc.; Michael McKay Co.; Spin Mail Inc.; MCP Marketing Activities LLC, also doing business as Magellan Mail and Magellan Marketing; Trans National Concepts Inc.; Romeria Global LLC, also d/b/a Lowenstein Varick and Nagel; Supreme Media LLC; Vernier Holdings Inc.; Awards Research Consultant LLC;  Mailpro Americas Corp.; Masterpiece Marketing LLC, also d/b/a Affiliated Opportunities Group (AOG), Corporate Accounting Authority (CAA), Dispatch Notification Services (DNS), Information Reporting Group (IRG), National Directory Center (NDC), and Priority Information Exchange (PIE); Matthew Pisoni; Marcus Pradel; John Leon; and Victor Ramirez. The court issued an order that temporarily stopped the illegal conduct, froze the defendants’ assets, and appointed a receiver to control the operation while the FTC pursues the case.

The Office of the United States Attorney for the Southern District of Florida arrested Matthew Pisoni, Marcus Pradel, John Leon and Victor Ramirez in connection with the sweepstakes operation.

“No one is permitted to steal hard-earned money from members of our community,” U.S. Attorney Wifredo A. Ferrer said. “This office will work with international, national and local law enforcement agencies to prevent these types of sweepstake fraud schemes, and we will bring those who commit these crimes to justice.”

The FTC would like to thank the United States Postal Inspection Service, the United States Department of Treasury - Internal Revenue Service - Criminal Investigation, the Vancouver Police Department, the Windsor (Ontario) Police Service, and the Metropolitan Police in the United Kingdom for their assistance in this case.

The Commission vote authorizing the staff to file the complaint in the U.S. District Court for the Southern District of Florida was 5-0. The court entered a temporary restraining order against the defendants on May 19, 2015.

To learn how to avoid these kinds of scams, read the FTC's Prize Scams.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

SWEEPSTAKES PROMOTER TO PAY $9.5 MILLION UNDER SETTLEMENT WITH FTC

FROM:  U.S. FEDERAL TRADE COMMISSION
FTC Obtains $9.5 Million Judgment Against Sweepstakes Promoter for Contempt
Violated Court Order Banning Her from Prize Promotions

A sweepstakes operator is permanently banned from direct mail marketing and is liable for a $9.5 million judgment under a settlement with the Federal Trade Commission, which charged her with violating a previous court order by running a sweepstakes scam.

“There’s a price to pay to violating a court order in an FTC case,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “In this case, that’s $9.5 million and a permanent ban on direct mail marketing.”

In April 2007, Crystal Ewing and other defendants were banned from prize promotions to settle FTC charges that they deceptively enticed consumers in the U.S., Canada and the United Kingdom to send money to collect large cash prizes that, in fact, did not exist.

Ewing now admits to violating the 2007 court order through her work with another FTC defendant, Glen Burke, and a prize promotions company, Puzzles Unlimited LLC, that duped consumers with the illusory promise of sweepstakes winnings in exchange for processing fees.

Using direct mail ads, Puzzles Unlimited enticed consumers to enter promotions by using terms like “Notice of Grand Prize Payout” and “Grand Prize Guaranteed,” which led consumers to believe they had already won thousands of dollars and just needed to fill out a form containing a simple puzzle and submit a “processing fee” of $10 to $15.

But the vast majority of consumers received no “Grand Prize Payout” – or any other payout whatsoever. Instead, the consumers who submitted “processing fees” continued to receive additional rounds of puzzles that they were told they must complete correctly in order to claim the prize money. With each round of mailers, consumers were misled with promises of bonus winnings in exchange for additional fees. At each step of the way, consumers were told they were tied for first place in the promotion regardless of whether or not this was true.

In addition to the $9,513,084 judgment, which represents the amount of consumer harm attributable to Ewing’s work with Puzzles Unlimited, and the ban on any direct mail marketing imposed against her, she is prohibited from making material misrepresentations about goods and services, and from profiting from, and failing to properly dispose of, customers’ personal information.

The Commission vote authorizing the staff to file the stipulated final judgment and order was 5-0. The document was filed in the U.S. District Court for the District of Nevada. Judge James Mahan entered the stipulated judgment on February 3, 2015.

TWO CHARGED, ONE PLEADS GUILTY IN COSTA RICAN TELEMARKETING SCHEME

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, October 23, 2014

Two Individuals Charged, Third Pleads Guilty For Roles In Costa Rican Telemarketing Schemes Targeting U.S. Residents

A California woman pleaded guilty today for her role in a half-million-dollar “sweepstakes fraud” scheme that was run from Costa Rica and targeted U.S. residents.  A Costa Rican national and an Ohio resident were also indicted for their roles in separate but similar schemes earlier this week.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Anne M. Tompkins of the Western District of North Carolina made the announcement.

Patricia Diane Clark, 56, of Sacramento, California, pleaded guilty today before U.S. Magistrate Judge David S. Cayer of the Western District of North Carolina to conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering, all in connection with a Costa Rican telemarketing fraud scheme that targeted U.S. residents.

According to Clark’s plea agreement, from approximately 2007 through February 2013, her co-conspirators called U.S. residents from Costa Rican call centers, falsely informing them that they had won a substantial cash prize in a “sweepstakes.”  The victims, many of whom were elderly, were told that in order to receive the prize, they had to send money for a purported “refundable insurance fee.”  Clark admitted that she picked up money from the victims and sent it to her co-conspirators in Costa Rica.  Clark also admitted that she managed others who picked up money from the victims in the United States and that she kept a portion of the victims’ payments.

Also according to Clark’s plea agreement, once the victims sent money, Clark’s co-conspirators contacted the individuals again and falsely informed them that the prize amount had increased, either because of a clerical error or because another prize winner was disqualified.  The victims then had to send additional money to pay for new purported fees to receive the now larger sweepstakes prize.  The attempts to collect additional money from the victims continued until an individual either ran out of money or discovered the fraudulent nature of the scheme.

Clark admitted that, along with her co-conspirators, she was responsible for approximately $640,000 in losses to hundreds of U.S. citizens.  

Additionally, earlier this week, Marco Vinicio Fallas Hernandez, 41, a Costa Rican citizen, was charged in a superseding indictment in the Western District of North Carolina with one count of conspiracy to commit wire fraud, ten counts of wire fraud, one count of conspiracy to commit money laundering, and nine counts of international money laundering in connection with a similar telemarketing scheme.  According to the indictment, Hernandez and his co-conspirators were responsible for causing approximately $10,000,000 in losses to hundreds of U.S. citizens, many of whom are elderly.  Eight individuals, including Hernandez, are charged in the superseding indictment.

Separately, Paul Ronald Toth Jrj., 38, a resident of Bloomingdale, Ohio, was indicted in the Western District of North Carolina this week on one count of conspiracy to commit money laundering and six counts of international money laundering.  According to the indictment, between November 2009 and November 2010, Toth and others he supervised received money from victims of a Costa Rican telemarketing scheme.  Toth allegedly kept some of the proceeds and wired the remainder to Costa Rica using numerous persons as senders and recipients, all in a manner designed to conceal and disguise the fraudulent source and nature of the transactions.  Toth is alleged to have received more than $300,000 of illegal proceeds during the scheme.

The charges contained in an indictment are merely accusations, and a defendant is presumed innocent unless and until proven guilty.

These cases were investigated by the U.S. Postal Inspection Service, FBI, Internal Revenue Service, Federal Trade Commission, and Department of Homeland Security.  These cases are being prosecuted by Senior Litigation Counsel Patrick Donley and Trial Attorneys William Bowne and Anna Kaminska of the Criminal Division’s Fraud Section.

OFFSHORE SWEEPSTAKES SCHEMERS PLEAD GUILTY TO DEFRAUDING HUNDREDS OF ELDERLY AMERICANS

FROM:  U.S. JUSTICE DEPARTMENT 

Monday, August 4, 2014

Two North Carolina Residents Plead Guilty to Defrauding Elderly Through Offshore Sweepstakes Scheme

A North Carolina couple pleaded guilty for leading a Costa Rican sweepstakes fraud scheme that defrauded hundreds of elderly Americans.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Anne M. Tompkins of the Western District of North Carolina made the announcement.

Jessica Anne Brown, 39, of Greensboro, North Carolina, pleaded today in federal court in Charlotte, North Carolina.   Her husband, Jason Dean Brown, 41, formerly of Burleson, Texas, pleaded guilty on July 30, 2014.   The Browns pleaded guilty to wire fraud, conspiracy to commit wire fraud and conspiracy to commit money laundering.

According to the plea agreement, from November 2004 through March 2013, Jessica and Jason Brown owned, operated and worked in sweepstakes call centers located in Costa Rica.   The Browns and their co-conspirators placed telephone calls to U.S. residents, many of whom were elderly, and falsely informed them that they had won a substantial cash prize in a sweepstakes.   The victims were told that in order to receive the prize, they had to send money to Costa Rica for a purported refundable insurance fee.   After receiving the fee, the Browns and their co-conspirators contacted the victims again, and falsely informed them that the prize amount had increased, either because of a clerical error or because another prize winner was disqualified, and therefore the victims had to send additional money to pay for new purported fees, duties and insurance to receive the now larger sweepstakes prize.   The attempts to collect additional money from the victims continued until a victim either ran out of money or discovered the fraudulent nature of the scheme.   To mask that they were calling from Costa Rica, the Browns and their co-conspirators utilized VoIP phones that displayed a (202) area code, giving victims the false impression that the calls were coming from Washington, D.C.   The Browns often falsely claimed that they were calling on behalf of a U.S. federal agency to lure victims into a false sense of security.

The defendants admitted that, along with their co-conspirators, they were responsible for causing more than $840,000 in losses to hundreds of United States citizens.

Jason and Jessica Browns were indicted by a federal grand jury on Nov. 15, 2012.   Sentencing will be scheduled at a later date.

The case was investigated by the U.S. Postal Inspection Service, the FBI, the Internal Revenue Service Criminal Investigation Division, the Federal Trade Commission and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations Miami Office.  This case is being prosecuted by Senior Litigation Counsel Patrick Donley and Trial Attorney William Bowne of the Criminal Division’s Fraud Section.

FTC ANNOUNCES SHUTDOWN OF PAY TO OBTAIN PRIZE SWEEPSTAKES SCAM

FROM:  FEDERAL TRADE COMMISSION

At the request of the Federal Trade Commission, a federal court has halted a massive sweepstakes scam that has taken more than $11 million from consumers throughout the United States and dozens of other countries throughout the world, including Canada, the United Kingdom, France, and Japan. The FTC seeks to permanently end the allegedly illegal practices that have continued for seven years and return money to victims.

According to the FTC’s complaint, Liam O. Moran, a resident of Ventura, California, and his companies, mass mail personalized letters to millions of consumers telling them that they have won a large cash prize, typically more than $2 million with bold, large-type statements such as “Over TWO MILLION DOLLARS in sweepstakes has been reserved for you.” Consumers are told that they can collect the prize by sending in a small fee of approximately $20 to $30. The letters often indicate that recipients are “guaranteed” to receive the prize money if they pay the fee, and they create a sense of urgency by stating that it is a limited-time offer.

In “dense, confusing language,” often on the back of the letters, there are statements in direct conflict with the bold claims of major winnings. A very careful reader might learn that they in fact have not won, and that the defendants do not sponsor sweepstakes but instead claim only to provide consumers with a list of available sweepstakes. Consumers frequently fail to see or understand this language and send money to the defendants. The FTC alleges that this language does not appear designed to correct deceptive statements, but exists mainly as an attempt to provide a defense to law enforcement action. Consumers get nothing of value in exchange for their payment.

The defendants have sent more than 3.7 million letters during the past two years, including nearly 800,000 letters to people in 156 countries in the first half of 2013. They have collected more than $11 million from consumers since 2009. The vast majority of the victims of this scam appear to be over 65.

The court order temporarily stops the illegal conduct, freezes the operation’s assets, and appoints a receiver over the corporate defendants while the FTC moves forward with the case.

Moran’s co-defendants are Applied Marketing Sciences LLC; Standard Registration Corporation, also doing business as Consolidated Research Authority and CRA; and Worldwide Information Systems Incorporated, also doing business as Specific Monitoring Service, SMS, Specific Reporting Service, SRS, Universal Information Services, UIS, Compendium Sampler Services, and CSS.

The FTC would like to thank the United States Postal Inspection Service, the Vancouver Police Department, the Metropolitan Police in the United Kingdom, the National Fraud Intelligence Bureau, and the Australian Competition & Consumer Commission for their assistance in this case.

To learn how to avoid these kinds of scams, read the FTC's Prize Offers: You Don't Have to Pay to Play.

The Commission vote authorizing the staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Central District of California.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.