Authorities say the alleged scam revolved around magazine sales and netted the operators an estimated $300 million. The defendants were indicted on charges of conspiracy, mail fraud, wire fraud, and violating the Senior Citizens Against Marketing Scams Act of 1994 (the “SCAMS Act”).
“This case represents the largest elder fraud scheme in the nation,” said U.S. Attorney Erika MacDonald. “More than 150,000 elderly and vulnerable victims across the United States have been identified in what is essentially a criminal class action.”
The FBI and other regional law enforcement agencies took part in the investigation. FBI Minneapolis Special Agent in Charge Michael Paul said the operation consisted of using telemarketers to pitch magazine subscriptions over a 20-year period.
Magazine sales
According to court documents, the defendants “devised and carried out a telemarketing scheme” to defraud more than 150,000 victim-consumers through fraudulent magazine sales companies.
The companies operated telemarketing call centers from which their employees allegedly made calls using deceptive sales scripts designed to defraud victim consumers by inducing them -- “through a series of lies and misrepresentations” -- into making large or repeat payments to the companies.
The indictments further allege that the defendants used a variety of fraudulent and misleading sales scripts in their operation. The telemarketers are accused of falsely claiming to be calling from the victim’s existing magazine subscription company about an existing magazine subscription package.
Claimed they could reduce costs
The indictments claim the telemarketers often claimed to be able to reduce the monthly cost of an existing subscription. In reality, the U.S. Attorney’s Office says the company had no existing relationship with the victim and was actually fraudulently signing the victim up for expensive and entirely new magazine subscriptions.
The government says the effect was that a single consumer went from having one magazine subscription to, at times, more than a dozen, all with different fraudulent magazine companies, each “sold” under the auspices of “reducing” the consumer’s monthly rate.
“Unfortunately, we live in a world where fraudsters are willing to take advantage of seniors, who are often trusting and polite,” said MacDonald. “It’s my hope that this prosecution is a call for vigilance and caution.”