Iowa Busts Big Sweepstakes Scheme

September 8, 2004
The state of Iowa has taken action to shut down what it says is a bogus sweepstakes operation that deceives elderly residents into thinking they had won a big prize while setting them up for future scams.

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Attorney General Tom Miller said his office obtained a court order to impound or seize mail coming to a commercial mail-drop in Des Moines, effectively interrupting the scheme.

"Last week a Brooklyn, Iowa, consumer provided us with two mass-mailing prize solicitations we allege are illegal," Miller said. "But what really caught our eye was that both mailings ask the consumer to send $29.95 to a mail-box business in Beaverdale. It turns out that the mail actually was then shipped to businesses based in Vancouver, Canada."

Miller said the mailings could deceive some consumers into believing they had won huge sweepstakes prizes.

"Even worse, anyone who replies and sends in $29.95 essentially identifies himself or herself as likely to be vulnerable to other prize schemes. Mail coming to this box would make a very hot list for telemarketing fraud or other scams," Miller said.

An Iowa Judge issued an "Order to Impound" certain mail coming to a commercial mail business, "The UPS Store" at 2643 Beaver Ave. Mail subject to the impound is addressed to "Provincial Prize Reporting Associates" (PPRA) or "Gold Coast Publishing" (GCP). Both are entities of MCA Marketing Concepts of America L.L.C., with a business address of 205-636 West Broadway, Vancouver, B.C., Canada.

The President and secretary of MCA is Peter DiCarlo, believed to be a resident of Vancouver. The U.S. Postal Inspection Service informed the Attorney General's Consumer Protection Division last week that in May 2003 DiCarlo had arranged to receive mail at Mail Boxes Etc. in Beaverdale (now The UPS Store). The UPS Store is a subject of the consumer fraud investigation.

Miller said mail coming to the Des Moines commercial mail box site is from consumers around the country in response to prize-oriented mail solicitations sent to them by MCA. "We speculate that using an Iowa address just might be to give the solicitations more credibility in the eyes of some consumers," he said.

The recent mailing from "Provincial Prize Reporting Associates" touts a prize of $1,225,000. It asks recipients to return an "Identification and Processing Verification Certificate" - with a required "Authorization Fee" of $29.95. The "Gold Coast Publishing" mailing touts a prize of $800,000 and also requires a $29.95 payment be sent to the Des Moines address.

"We allege the mailings are illegal -- and that they are used to identify elderly consumers who are vulnerable to big-ticket telephone scams from Canada and the U.S," Miller said.

"The mailings violate our consumer fraud laws and especially our Prize Promotions law, which has many specific requirements aimed at protecting people from deceptive prize solicitations by mail," he said.

"If people respond to a mailing, we believe their names go on lists of consumers who are vulnerable to larger-scale fraud," he said. "We believe all these schemes tend to target older consumers."

Miller said most "boiler-room" big-ticket phony prize schemes now operate from outside the U.S., especially from Canada. The "undercover telephone sting" pioneered by the Iowa Attorney General's Office during the 1990s, and then employed by U.S. agencies and other states all over the country, largely has driven large, organized, big-loss telemarketing operations out of the U.S.

"Unfortunately, they are flourishing in Canada - and calling our people in the U.S.," he said.

A typical big-ticket telemarketing scam from Canada would involve a call to a vulnerable older Iowan, a pitch that the Iowan had won millions of dollars in a lottery or sweepstakes or prize promotion - and a requirement that the Iowan pay $1,000, $3,000, $5,000 or even more to collect the prize. (The scammers use many ruses to justify the payment the victim must make to get the millions in prize money - paying taxes in advance, customs fees, etc.)

Last December, the Attorney General's Consumer Protection Division obtained a similar impound order for mail going to a commercial mail drop in Clive. That action ultimately involved seizing about 22,000 pieces of mail that were headed to the defendant in a consumer fraud lawsuit, Richard Panas of Rock Hill, SC. In April, Panas was completely banned from doing direct mail or telemarketing in Iowa. Panas also was ordered to immediately remove all Iowa names and addresses from the "lead" or "prospect" lists he sells.

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