DEFENDANTS SETTLE FTC CHARGES OF REMOTELY DEBITING SENIORS' BANK ACCOUNTS

FROM:  FEDERAL TRADE COMMISSION  

Two Defendants in Cross-Border Telemarketing Scheme Settle FTC Charges
Scheme Used Remotely Created Checks to Debit Money from Seniors’ Bank Accounts

Two defendants who participated in an alleged multi-million dollar telemarketing fraud that targeted U.S. seniors and withdrew money from their accounts without authorization have agreed to settle Federal Trade Commission charges. The settlement orders bar them from using remotely created checks drawn on consumers’ bank accounts, require them to obtain consumers’ consent before debiting their accounts, and prohibit them from misrepresenting any goods or services.

The individuals Marc Ferry and Robert Barczai, also will turn over the proceeds of the scheme from their personal and corporate accounts. The FTC has filed for default judgments against the corporate defendants, and summary judgment against the leading individual defendant in the scheme, which took in nearly $11 million between 2010 and March 2014.

“Scammers thought they could cover their tracks by operating across borders, but law enforcement caught up with them,” said Jessica Rich, Director of the Bureau of Consumer Protection. “We’ve shut down their scheme of lying to older people and stealing their money.”

According to the FTC’s March 2014 complaint, defendant Ari Tietolman and his associates established a network of U.S. and Canadian entities to carry out their scam. The defendants used a telemarketing boiler room in Canada, where Tietolman lives, to cold-call seniors claiming to sell fraud protection, legal protection, and pharmaceutical benefit services for $187 to $397.

In some instances, the telemarketers convinced consumers they were affiliated with banks or government entities, leading consumers to disclose their bank account information. The defendants then used that information to create checks drawn on the consumers’ bank accounts. They deposited these “remotely created checks” into corporate accounts set up by defendants Ferry and Barczai in the United States. The U.S.-based defendants then transferred the money to accounts in Canada, the FTC alleged.

The FTC charged the corporate and individual defendants with violating the FTC Act and the agency’s Telemarketing Sales Rule. A U.S. district court temporarily shut down the operation in late March 2014, pending the resolution of the FTC’s action.

Two defendants in the case, Ferry and Barczai, have now agreed to stipulated orders settling the FTC’s charges against them. The order against Ferry bans him from using remotely creating checks and payment orders, requires him to get consumers’ authorization before charging their financial accounts, and prohibits him from making misrepresentations regarding any goods or services. It imposes a judgment of $325,449 against him, which will be partially suspended after he pays the FTC $68,412.

The order against Barczai contains the same conduct provisions as the order against Ferry, and imposes a judgment of $9,655,638, which will be partially suspended after he pays the FTC $21,367.

The Commission vote approving the two proposed stipulated final orders was 5-0. They were filed in the U.S. District Court for the Eastern District of Pennsylvania.

The FTC subsequently filed a memorandum seeking default judgments against the following corporate defendants on January 13: First Consumers LLC; PowerPlay Industries LLC; Standard American Marketing, Inc.; 1166519075 Quebec Inc., doing business as (d/b/a) Landshark Holdings Inc; and 1164047236 Quebec, Inc. d/b/a Madicom, Inc.

Finally, on January 13, the FTC filed a memorandum seeking summary judgment against Tietolman, who ran the operation and collected money funneled into Canada. The FTC alleges that Tietolman controlled the deceptive scheme, and therefore is seeking to permanently bar him from the conduct alleged in the complaint and hold him liable for the $10.7 million in harm he caused defrauded consumers.

The FTC received valuable help throughout this case from the U.S. Postal Inspection Service and the Royal Canadian Mounted Police.

NOTE: Stipulated orders 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.

COURT HALTS TELEMARKETERS WHO CLAIM TO BE WITH MEDICARE

FROM:  U.S. FEDERAL TRADE COMMISSION 

FTC Halts Fake Medicare Scheme that Took Money from Seniors’ Bank Accounts

At the Federal Trade Commission’s request, a federal court halted a telemarketing scheme that tricked senior citizens  by pretending to be part of Medicare, and took millions of dollars from consumers’ bank accounts without their consent. As part of its ongoing work to protect every community from fraud, the FTC seeks to permanently end the operation and return victims’ money.

According to a complaint filed by the FTC, the defendants called consumers – including many whose numbers were listed on the National Do Not Call Registry – and said they were providing a new Medicare card or information about Medicare benefits.

The defendants allegedly misrepresented that they were working on behalf of Medicare, and said they needed to verify consumers’ identities using personal information that included their bank account numbers. The defendants allegedly assured consumers that the information would not be used to debit their bank accounts, and that there was no charge for the new Medicare card or information about Medicare benefits.

However, within a few weeks, consumers learned their bank accounts had been debited either $399 or $448 via remotely created checks (RCCs), the complaint alleges. Despite these charges, consumers did not receive any kind of product or service from the defendants. In some instances, the defendants debited the accounts of consumers they had not even contacted.

The FTC charged the defendants with violating the FTC Act and the FTC’s Telemarketing Sales Rule. The defendants are Sun Bright Ventures LLC, Citadel ID Pro LLC, and Benjamin Todd Workman. The FTC named Trident Consulting Partners LLC and Glenn Erickson as relief defendants who profited from the scheme.

The Commission vote authorizing the staff to file the complaint was 5-0. The FTC filed the complaint, under seal, in the U.S. District Court for the Middle District of Florida. On September 4, 2014, the court entered a temporary restraining order halting the defendants’ deceptive scheme and freezing the defendants’ and relief defendants’ assets. The defendants and relief defendants agreed to preliminary injunctions, which the court entered on September 18, 2014. The preliminary injunctions continue the conduct prohibitions and asset freezes set forth in the temporary restraining order.

WOMAN SENTENCED TO PRISON FOR ROLE IN LOTTERY SCHEME TARGETING THE ELDERLY

FROM:  U.S. JUSTICE DEPARTMENT

Tuesday, April 29, 2014

Florida Resident Sentenced in Connection with International Lottery Scheme That Defrauded Elderly Americans

Charmaine Anne King was sentenced in connection with her role in a fraudulent international lottery scheme that targeted U.S. citizens, the Justice Department announced.  King was sentenced by U.S. District Court Judge K. Michael Moore in Miami to serve 57 months in prison and 5 years supervised release.  A hearing on restitution has been scheduled for June 5, 2014.  King was convicted by a federal jury in Miami on Feb. 5, 2014, of one count of conspiracy, three counts of mail fraud, and two counts of wire fraud.

King’s prosecution is part of the Department of Justice’s effort, working with federal and local law enforcement, to combat international lottery fraud schemes preying on American citizens.  According to the U.S. Postal Inspection Service, Americans have lost tens of millions of dollars to fraudulent foreign lotteries.

“The Justice Department will continue to hold criminals accountable for fraudulent lottery schemes,” said Stuart F. Delery, Assistant Attorney General for the Justice Department’s Civil Division.  “This illegal conduct creates significant financial harm to people throughout the country, and we will continue to investigate and prosecute such crime, and bring those responsible to justice.”

A federal grand jury in Miami returned an indictment against King and co-conspirator Althea Angela Peart on Oct. 31, 2013.  Judge Moore adopted a report and recommendation accepting Peart’s guilty plea on Feb. 4, 2014, and on March 20, 2014, he sentenced Peart to 33 months’ incarceration.  As part of her plea agreement, Peart acknowledged that a co-conspirator, believed to be located in Canada, mailed letters to elderly victims in the United States falsely informing the victims that they had won more than a million dollars in a lottery.  These letters purported to be from an actual sweepstakes company in the United States.

“International lottery fraudsters have cheated Americans out of tens of millions of dollars,” said Wifredo Ferrer, U.S. Attorney for the Southern District of Florida.  “In this particular scheme, the fraudsters convinced the victims to deposit counterfeit checks into their bank accounts in order to pay fees to collect their purported lottery winnings.  After the victims sent the money to King, the counterfeit cashier’s checks bounced and they lost their money.  Such fraud will not be tolerated.  Together with federal and local law enforcement, we are working to put an end to this type of scheme.”

The evidence at King’s trial showed that a co-conspirator sent fraudulent lottery letters to the victims and included counterfeit cashier’s checks made out to the victims for thousands of dollars.  These letters instructed victims to call “claims agents” who were actually co-conspirators, and when the victims called the purported claims agents, the agents informed the victims that they had to pay several thousand dollars in fees in order to collect their purported lottery winnings.  The claims agents told the victims to deposit the cashier’s checks in the victims’ bank accounts in order to purportedly cover the money they had to pay.  The co-conspirators instructed the victims on how to send and wire this money to King and others.  The cashier’s checks that victims received from the fraudulent lottery had no value.  The evidence demonstrated that after the victims sent money to King, the counterfeit cashier’s checks bounced.  Victims never received any lottery winnings.

Evidence presented at trial showed that King kept a percentage of the money she received from victims and sent the rest of the money to a co-conspirator.  King continued to participate in this scheme even after the U.S. Postal Inspection Service verbally informed her that she was participating in unlawful activity, and after she later signed a Cease and Desist Order requiring that she stop receiving money from victims of fraud.  The order that King signed described the lottery related activity that the U.S. Postal Inspection Service explained was unlawful.

Assistant Attorney General Delery commended the investigative efforts of the U.S. Postal Inspection Service, Homeland Security Investigations, and the U.S. Marshals Service.  The case is being prosecuted by Assistant Director Jeffrey Steger and Trial Attorney Kathryn Drenning with the Department of Justice’s Civil Division, Consumer Protection Branch.