Lottery/Sweepstakes Scams • Fraudsters Masquerading as Well Known Companies • Yahoo! Sues Fake Lottery Scammers • Canadian Lottery Scam Resurfaces • Consumers Continue To Fall For Phony Lottery Scam • Postal Inspectors Seize Billions in Fake Checks • Lottery Scam Victim: "No One Cares" • Consumers Falling For Lottery Scams In Increasing Numbers • FTC: Older Americans Hit Hard by Consumer fraud, ID Theft • Florida Warns of Pay-to-Claim Sweepstakes Scams • Texas Sues Sweepstakes Operator • Iowa Busts Sweepstakes Scheme • Crackdowns in 9 states • Feds seek court order • Feds sue Australian scam operators • American Home Products • Reader's Digest Pays $6 Million to Settle Sweepstakes Complaints --- • Atlantic Lottery • Australian Lottery • European International Lotto • How to spot a scam

WASHINGTON, July 13, 2000 -- The Federal Trade Commission and other law enforcement officials have put the gloves back on to knock out the latest round of prize promotion fraud. In a recent law enforcement effort - "Project Prize Fighter" - the FTC, the U.S. Postal Inspection Service, State Attorneys General and others have joined forces to combat these scams. "Project Prize Fighter" has resulted in 24 law enforcement actions against more than 40 defendants in 9 states.

The cases have a slightly different twist to the classic "You Have Won" sales pitch. The bogus prize promoters target consumers who have previously entered sweepstakes and tell them that they have won but must first pay a fee in order to receive their prize.

"Project Prize Fighter" targeted bogus prize promoters who used telemarketers and the U.S. mail to tell consumers they had won a significant cash prize, ask for and pocket consumers' money in advance of delivering the prize, and deliver nothing.

"These scam artists lied," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "They lured consumers into their schemes with the promise of a prize, then asked them to pay for it. These fraudsters added illegality to insult and injury by failing to deliver the prize. That's when law enforcement got into the ring and stopped the action."

"These criminals victimize consumers hoping to strike it rich by winning a valuable prize," Chief Postal Inspector Ken Weaver said. "If someone says YOU must pay money in order to receive a prize you supposedly have won, then you really haven't won. Consumers across the country lose millions of dollars every year to fraudulent prize promotions. To be a real winner, protect yourself from get rich quick claims. Remember, a prize is won, not bought."

In each of the FTC's cases announced today, the defendants were charged with violating the FTC Act by falsely representing that consumers would receive a prize. In fact, none of the consumers received the "prize" that the defendants promised. In two of the cases, the defendants also were charged with violating the Telemarketing Sales Rule ("TSR") by misrepresenting that consumers had won a prize and that consumers would receive their prize if they made a payment to the defendants. In addition, in numerous instances, the defendants falsely represented that consumers' bank accounts would not be debited until after they received their prizes. In fact, defendants immediately debited the accounts of consumers and never forwarded any prizes.

The FTC filed complaints against: Cecilia M. Castillo, Ian Anthony Suite, Global Network Enterprises, Inc., Republic Enterprises, Inc.; Cory Banks, doing business as National Network Services, New World Services, Inc., d/b/a Services for the New World; and Jeffrey L. Landers d/b/a Adpro, Inc. Two of the complaints were filed under seal and the seals have now been lifted.

GLOBAL NETWORK ENTERPRISES

Global Network, headquartered in Costa Mesa, California, using the assumed name TCM, contacts consumers nationwide by telephone, and tells them that they have won $5,000 or more in sweepstakes money. Consumers are told that in order to receive the monetary prize, they must pay $289 in state sales or gift taxes. Consumers are then asked for their checking, savings or other bank account information, and in some cases, even their social security numbers. In many cases consumers are assured that no money will be withdrawn from their account until they actually receive the prize money. However, the complaint alleges, within a few days of the initial call, all of the consumers' accounts are debited. None of the consumers contacted by the FTC received the promised prize winnings.

NEW WORLD SERVICES

New World Services, located in Long Beach, California, contacts consumers nationwide by telephone, informing them that they have won either $5,000 or $10,000 from a sweepstakes they recently entered. In order to receive the prize, the consumers are told, they must pay a "fee" for income taxes, state taxes or shipping and handling owed on the prize. The fees vary from $250 to $270. The defendants tell consumers that they will have to pay the fees only after their prizes are received, and then ask the consumers for their checking account numbers--either to facilitate payment by direct debiting or to "verify" that the consumer has a valid checking account. The defendants then immediately use the checking account information to debit consumers' accounts. None of the consumers receive the promised prize winnings. According to the FTC, most of the consumers who receive these calls have participated in sweepstakes contests before and are easily led to believe that the company's representatives are calling from sweepstakes they had actually entered.

JEFFREY LANDERS, d/b/a ADPRO, Inc.

Jeffrey Landers resides in Marietta, Georgia, and uses a P.O. Box in Birmingham, Alabama for Adpro Inc. Consumers are sent a certified letter postmarked by a mailing processing facility in Dallas, Texas, stating that the defendant is holding prize winnings for the consumer. In order for the consumer to obtain the winnings, they are told that they must pay a $89 assessed fee for research, reporting, confirmation and document delivery. Consumers who send in their money receive nothing. When consumers tried to recover their money, they were unable to do so because Adpro provided no telephone number or customer service address for consumers to contact.

The FTC has sought and obtained temporary restraining orders and asset freezes against the corporate and individual defendants in each of these cases. The FTC has obtained a preliminary injunction from the federal district court in the Global Network Enterprises case and is also seeking permanent injunctions and redress for consumers. Consumer investigators from Ohio Attorney General Betty D. Montgomery's office assisted the Long Beach Police Department in executing a search warrant on New World Services.

The FTC would like to acknowledge the assistance provided by the following entities in the preparation of its cases: U.S. Postal Inspection Service; County of Orange Boiler Room Apprehension (COBRA) Task Force in Santa Ana, California; the Attorneys General in the States of North Carolina and Ohio; the Long Beach Police Department; the Los Angeles District Attorney's office; and various Better Business Bureaus.