FOREIGN NATIONAL INDICTED RELATED TO IDENTITY THEFT OF UNIVERSITY OF PITTSBURGH MEDICAL CENTER EMPLOYEES

FROM:  U.S. JUSTICE DEPARTMENT
Friday, June 26, 2015
Indictment In UPMC Stolen Identity Scheme

On Wednesday, a federal grand jury in Pittsburgh returned a multi-count indictment against Yoandy Perez Llanes, a foreign national residing outside of the United States.  Llanes was charged in a 21-count indictment with a scheme to defraud the Internal Revenue Service (IRS), and the U.S. Treasury, using the stolen identities of employees of the University of Pittsburgh Medical Center (UPMC) to file false federal income tax returns in order to obtain unlawful tax refunds.  Llanes and unnamed conspirators converted the unlawful tax refunds to Amazon.com gift cards, which were used to buy merchandise which was shipped internationally.  All of these acts occurred generally between January and April 2014.  Llanes is charged with conspiracy to defraud the United States, wire fraud, money laundering and aggravated identity theft.

Early in 2014, thousands of employees of UPMC had their personal information compromised by hackers, who intruded into a UPMC computerized database stealing names, social security numbers, dates of birth and other personal identifying information.  This data was then used to file false 2013 federal tax returns.  Investigators learned that names and other identifiers were used by Llanes and other conspirators to file 935 false tax returns in which unlawful refunds were requested in the form of Amazon.com gift cards.  Quick action by the IRS, UPMC and Amazon.com frustrated the efforts of the fraudsters to file additional false returns and obtain further fraudulent proceeds.  While the perpetrators sought approximately $2.2 million in fraudulent refunds, only $1.4 million was actually disbursed as refunds.  Stolen Identity Refund Fraud, such as that alleged to have been perpetrated by Llanes, costs United States taxpayers billions of dollars.

This criminal scheme was complex and crossed national borders.  Llanes and the conspirators used anonymous and encrypted email to disguise their identities and proxy computers to file returns.  Using the fraudulently obtained Amazon.com gift cards, Llanes purchased hundreds of thousands of dollars in electronic merchandise for shipment through reshipping services in Miami, Florida, with instructions for delivery to “drop” locations outside the United States.  Llanes and others then retrieved the merchandise and advertised it for sale on online auction websites overseas.

Though Llanes and the conspirators attempted to conceal their whereabouts and their identities through the use of encrypted email and proxy services, investigators were able to uncover the sophisticated plot and identify Llanes.

The law provides for a sentence of imprisonment, a fine of $5.5 million or both.  Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.

Assistant U.S. Attorney Gregory C. Melucci is prosecuting this case on behalf of the government.

The IRS-CI, the U.S. Secret Service and the U.S. Postal Inspection Service, conducted the investigation leading to the indictment in this case.

An indictment is an accusation.  A defendant is presumed innocent unless and until proven guilty.

ROBOCALL/TEXT SPAM NETWORK RECEIVES ADDITIONAL CRAMMING CHARGE FROM FTC

FROM:  FEDERAL TRADE COMMISSION 

FTC Adds Mobile Cramming to Charges Against Text Spam and Robocall Network

Amended Complaint Charges Unwanted Cell Phone Billing and Adds Five Defendants

The Federal Trade Commission added new charges of mobile cramming to a complaint the agency previously filed against a group of scammers who allegedly sent millions of unwanted text messages and robocalls to consumers.

The amended complaint adds the mobile cramming charges to the Commission’s original complaint allegations that the operation used text messages promising free $1,000 gift cards and iPads as a way to deceive consumers into signing up for costly subscriptions and giving up personal information.

When consumers followed links in the spam text messages, they were prompted to enter personal information, including their mobile phone number.  The defendants told consumers that the personal information was necessary to ship them the free prize.  However, the defendants used the personal information for several other purposes, including placing robocalls to consumers.   Many consumers who entered their personal information allegedly were then prompted to “confirm” their mobile phone number and were then sent a text message telling them to enter a PIN number on the defendants’ website in order to “claim their prize.”

The amended complaint alleges that, in fact, by confirming their mobile phone number and entering the provided PIN, consumers were being signed up for unwanted premium text messaging services, resulting in a charge of $9.99 per month on their mobile phone bill. According to the FTC’s amended complaint, consumers were not given adequate notice that confirming their number would lead to monthly charges – this notice appeared only in small print at the bottom of the screen or in a separate hyperlinked page.

Two defendants, Burton Katz, also doing business as Polling Associates, Inc. and Boomerang International, LLC, and Jonathan Smyth, also doing business as Polling Associates, Inc., are accused of overseeing the mobile cramming operation along with the creators of the websites.

In addition to adding the defendants involved in the mobile cramming, the amended complaint also adds three new defendants to the case who were believed to be responsible for sending millions of spam text messages and operating the websites to which those messages would direct consumers. The additional defendants are Scott Modist, Joshua Greenberg and Gregory Van Horn. All three are named individually and as officers of Acquinity Interactive, LLC; Modist and Greenberg are also named as officers of 7657030 Canada, Inc.

The Commission vote to file the amended complaint was 5-0. The complaint was filed in the U.S. District Court for the Southern District of Florida.

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.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

FALSE PROMISES SPAMMERS SETTLE CHARGES WITH FEDERAL TRADE COMMISSION

FROM:  FEDERAL TRADE COMMISSION 

Scammers Settle FTC Charges They Sent Millions of Spam Text Messages

Deceptive Messages Promised “Free” $1,000 Gift Cards to Major Retailers

Two affiliate-marketing scammers and their company have agreed to settle Federal Trade Commission charges that they sent millions of unwanted text messages to consumers across the U.S. with false promises of $1,000 gift cards to retailers like Best Buy, Target and Walmart.

Under the terms of their settlement with the FTC, Scott A. Dalrymple of Pennsylvania and Robert Jerrold Wence of Texas, who operated a company called Advert Marketing, Inc., will be permanently banned from sending unwanted or unsolicited commercial text messages or assisting others in doing so. In addition, the two will also be prohibited from misrepresenting to consumers whether a product is “free,” whether they have won a prize or been selected for a gift, or other behavior related to the nature of the scam.

Dalrymple, Wence and Advert Marketing were among the defendants named in the FTC’s 2013 enforcement sweep against text message spammers and affiliate marketers who used false promises of free gift cards to draw consumers into websites that asked them to provide credit card information to sign up for trial offers.

The settlement contains a monetary judgment for $4.2 million, which is partially suspended due to the defendants’ inability to pay. Under the terms of the settlement, Dalrymple and Wence will be required to pay $15,000 each to the Commission, and will be required to destroy any consumer data they may have collected while conducting the text message spam operation.

The Commission vote approving the proposed stipulated final judgment was 5-0. The FTC filed the proposed stipulated final judgment in the U.S. District Court for the Southern District of Texas, Houston Division, and the Court entered the stipulated final judgment on June 10, 2014.

NOTE: Stipulated final judgments have the force of law when approved and signed by the District Court judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.

PHONY SPAM "GIFT CARD" GROUP SETTLES FTC COMPLAINT

FROM:  FEDERAL TRADE COMMISSION 
Another Group of Marketers Behind Phony 'Gift Card' Text Spam Settles FTC Complaint
Defendants Paid Affiliates to Send Illegal Text Messages Promoting “Free” Gift Cards from Wal-Mart, Best Buy

A group of affiliate marketers has agreed to settle Federal Trade Commission charges that they took part in a scheme that bombarded consumers with tens of millions of spam text messages that lured consumers with phony gift card offers, and then directed recipients to deceptive websites.

The Chicago-based defendants in the case, operating through two companies called CPA Tank, Inc. and Eagle Web Assets, Inc., are the latest to settle FTC charges as a result of the agency’s crackdown on deceptive affiliate marketing on the Internet.

In its complaint, the FTC charged that CPA and Eagle paid affiliates to send out the spam text messages promoting supposedly “free” merchandise, such as $1,000 gift cards for Wal-Mart and Best Buy.

“Sending illegal text messages will get you in hot water with the FTC,” said Jessica Rich, Director of the Federal Trade Commission’s Bureau of Consumer Protection. “You can’t avoid responsibility by hiring a third-party to send them for you.”

People who clicked on the links in the text message did not receive the promised items, the FTC charged. Instead, they were taken to websites that requested they provide personal information and sign up for numerous additional offers – often involving other purchases or paid subscriptions.

Earlier this month, the operators behind one of these websites agreed to pay $2.5 million to settle FTC charges. Another website operator was sued by the FTC in July 2013. In addition, the FTC sued a number of affiliates responsible for many of the underlying text messages in a sweep of enforcement cases in March 2013.

The FTC alleged the defendants’ deceptive and unfair practices violated the FTC Act. The final order against CPA Tank, Eagle Web Assets, and their respective principals, Vito Glazers and Ryan Eagle, prohibits them from making misrepresentations in marketing any good or service, including misrepresentations that a product or service is "free" or without cost or obligation.

It also requires defendants, if they offer products or services in the future, to disclose all material terms and conditions of such offers, and prohibits them from making, or initiating the transmission of, unauthorized or unsolicited commercial electronic text messages to mobile telephones or other wireless devices.

The settlement imposes a $200,000 judgment against the defendants, most of which is suspended, due to their inability to pay. It requires them to turn over $30,000 in cash plus the proceeds from the sale of Glazers’ 2007 Bentley automobile and Eagle’s 2006 Range Rover.

Information for Consumers and Business

The FTC has a new blog post for consumers, advising them how to recognize and avoid text-messaging scams, as well as information for businesses on this issue.

The Commission’s vote authorizing staff to file the stipulated final order was 4-0. The FTC filed the stipulated final order for permanent injunction in the U.S. District Court for the Northern District of Illinois, Eastern Division, and it was entered on February 26, 2014.

NOTE: Stipulated orders have the force of law when signed and approved by the District Court judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.

IPHONE SPAMMER SETTLES FTC CHARGES

FROM:  FEDERAL TRADE COMMISSION 
'Free iPhone' Text Message Spammer Settles FTC Charges

An Internet marketer has agreed to settle Federal Trade Commission allegations that he blasted consumers with millions of deceptive spam text messages.

Henry Nolan Kelly was the subject of one of a series of FTC complaints filed in March against those responsible for sending millions of spam text messages to consumers with false promises of free gift cards or expensive electronic devices.

The complaint against Kelly alleged that he sent more than 20 million unwanted text messages to consumers across the country, offering supposedly free iPhones and iPads to those who clicked on links in the messages. Those who clicked were instead taken to sites that requested substantial personal information and required an elaborate process – often involving other purchases or paid subscriptions – to be eligible for the “free” devices.

The stipulated final order against Kelly prohibits him from having any involvement with the sending of unsolicited or unwanted text messages to consumers. In addition, Kelly will be prohibited from misleading consumers about whether they have won gifts or prizes, whether a product is “free,” and from using text messages to do the same.

The order against Kelly also imposes a monetary judgment of $60,950, which is all of the money that he received in connection with the text message spamming scam. The financial judgment is suspended due to Kelly’s inability to pay. Kelly must also cooperate with the FTC in any future investigations.

The Commission vote approving each of the stipulated final orders was 4-0. The stipulated judgment was entered by the U.S. District Court for the Northern District of Georgia on July 17, 2013.

NOTE: Stipulated orders have the force of law when signed and approved by the District Court judge. (FTC File No. X130041; the staff contact is Robin Rock, 404-656-1368.)

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.