PhotoWe've all seen or heard about the letters and emails that claim the recipient has won a huge prize and needs only pay a few hundred dollars to collect their winnings.

These are all scams, of course. You can't win a lottery you didn't enter and there's no logical reason you would have to pay a fee to collect your supposed winnings. But the schemes are profitable even if only a tiny percentage of consumers fall for them.

That's why the U.S. Justice Department and other agencies have launched an effort to attack the schemes with criminal charges and lawsuits aimed at scam artists in the U.S. and abroad.

“Every year, fraudulent mail schemes target millions of Americans with false promises of wealth and riches, swindling hundreds of thousands of our fellow citizens,” said U.S. Attorney General Loretta E.  Lynch. “Today’s actions send a clear message that the Department of Justice is determined to hold the perpetrators of these harmful schemes accountable. And they make unmistakably clear that we are committed to protecting our people from exploitation – especially our older citizens, who are so often the focus of these shameful ruses."

In a series of actions today, criminal and civil cases have been opened against multiple “direct mailers” who, collectively, are responsible for dozens of schemes involving tens of millions of dollars every year. In addition, today’s actions also seek to shut down several other actors who work with the mailers, including:

  • an India-based printer that manufactures the solicitations and arranges for bulk shipment to U.S. victims;
  • list brokers who buy, sell, or rent "sucker lists" of victims from one mailer to another so that once a victim has fallen prey to one scheme, others are able to target this victim; and
  • a Canadian payment processor that, for more than 20 years, has helped dozens of international fraudsters gain access to U.S. banks and take money from victims.

“The defendants targeted the elderly and vulnerable by selling false promises of cash and lavish prizes,” said U.S. Attorney Robert L. Capers for the Eastern District of New York.  “Not surprisingly, the only good fortune befell the defendants. We will employ every available means, including educating consumers, to protect the public from these schemes.”

Canadian payment processor

PacNet Services Ltd. (PacNet), an international payments processor and money services business based in Vancouver, Canada, today was named a "significant transnational criminal organization (TCO)," along with a global network of 12 individuals and 24 entities across 18 countries. 

According to court filings made public today, PacNet has a 20-year history of engaging in money laundering and mail fraud, by knowingly processing payments on behalf of a wide range of mail fraud schemes that target victims in the United States and throughout the world. According to these records, in 2016 alone, PacNet has processed payments for the perpetrators of more than 100 different mail fraud campaigns, collectively involving tens of millions of dollars. 

Turkish direct mailer

In a criminal complaint filed in the U.S. District Court for the Eastern District of New York, the government charged Ercan Barka, 34, a resident of Turkey, with conspiracy to commit mail fraud. According to the criminal complaint, Barka arranged for fraudulent solicitations to be mass-mailed to victims across the United States, telling recipients they had won cash awards or lavish prize items and needed to pay a “fee” to claim their winnings.Victims allegedly received nothing in return for their fees.

Barka was arrested by U.S. Postal Inspectors at JFK International Airport in New York on Sept. 3, as he was about to board a plane bound for Turkey.

Swiss/Singaporean direct mailer, Indian printer, and Connecticut “list broker”

In a separate civil action, the United States brought suit to shut down entities and individuals, some of whom have engaged in numerous predatory mail fraud schemes for more than a decade, targeting primarily the elderly and vulnerable. 

Among them is BDK Mailing GmbH, which allegedly acts as a “direct mailer” responsible for mailing millions of multi-piece solicitations to potential victims throughout the United States that profess to come from financial entities, scholars, and world-renowned psychics, with contrived names like “Harrison Institute,” “Dr. Grant,” “Finkelstein & Partner,” and “Marie de Fortune,” among others. 

The solicitations are written to give the impression that they are personalized and inform recipients that they will receive large sums of money, guaranteed money-making methods, and/or powerful talismans in return for payment of a fee of $50 to $55. In reality, the complaint alleges, the purported senders and the promised winnings are fictitious. Although victims send in the requested fees by cash, check, or credit card, they receive nothing in return. 

The complaint alleges that tens of thousands of victims send approximately $50 to $60 million annually in response to the defendants’ fraudulent solicitation packets.

Iowa actions 

In separate but related actions, Iowa Attorney General Tom Miller filed consumer fraud lawsuits against two out-of-state mailing operations that Miller alleges are predatory businesses that use deceptive mailings to profit from the elderly and other vulnerable Iowans.

Miller also announced the settlement of a third case involving a New Jersey list broker company that markets consumer lead lists—including so-called “sucker” lists—to mass mailers.

“Our civil enforcement actions here in Iowa exemplify our ongoing efforts to pursue operations that we allege prey upon older Iowans and vulnerable Iowans,” Miller said. “Fighting this kind of consumer fraud is one of our highest priorities. We’re very pleased to work with our federal partners in this unprecedented attack on mail fraud to help protect people from this kind of financial exploitation.”

Miller filed a consumer fraud lawsuit in Polk County District Court against Waverly Direct Inc. and company owner and president, Gordon F. Shearer, both of Lynbrook, New York.

The lawsuit alleges that the company sends Iowans a congratulatory letter from the fictitious “Gerald St. John,” supposed director of the Numerological Resource Center, which, according to the lawsuit, is also a sham. The letter claims that the recipient has been specially selected to receive “life-changing” benefits, which would begin upon payment of a $20 “service/handling fee.”

“These solicitations, which we allege used a variety of falsehoods to take money from elderly Iowans, was bad enough,” Miller said. “But we further allege that one of the main functions of this deceptive mailing was to locate vulnerable people whose names could be sold to other scammers.”

The second lawsuit names Nicholas Valenti and three of his companies, WB Co., TL Distribution, and Southwest Publishing, all of Las Vegas.

The lawsuit alleges the defendants send deceptive mailings to Iowans promising to reveal – for a price – methods for consistently winning large sums of money in lotteries and other forms of gambling. The lawsuit also alleges that Valenti sells the rights to use his deceptive mailers to other would-be scammers.

“Both of these lawsuits allege wrongdoing on two levels,” Miller said. “In both suits we allege that the defendants not only sent deceptive mailings to Iowans, but also make money by selling the tools for others to pursue similarly predatory fraud-by-mail.”

In a separate case, Miller today reached an agreement with Macromark Incorporated, of Danbury, Connecticut, over Miller’s concerns that the company engaged in consumer fraud through its role in providing consumer lists to other companies, or list brokering.

“In our view, Macromark’s own files showed that the company knew it was helping scammers defraud vulnerable consumers – often the elderly,” Miller said. “We make every effort to deprive scammers of the support systems they need to prey on consumers, particularly the elderly, and we alleged that Macromark provided exactly that kind of support.”

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