A federal judge has imposed a nine-year prison sentence on a Canada-based con artist who was charged by the U.S. Attorney for the Central District of California with defrauding elderly consumers using phony claims about non-existent prizes and investments. In the sentencing hearing, the judge called the scheme “cold, calculating, callous behavior.”
In addition to imposing the prison sentence, the judge ordered the defendant, John Raymond Bezeredi, to pay $4.6 million in restitution for the 4,500 consumers he defrauded.
The U.S. Attorney’s criminal case followed a civil lawsuit filed by the Federal Trade Commission. In 2007, the FTC obtained a court order against Bezeredi requiring him to pay $4.76 million for consumer redress and barring him from fraudulent telemarketing. The FTC’s Criminal Liaison Unit, a special branch of the agency set up to ensure that appropriate consumer scams are referred for criminal prosecution, then sent the case to the U.S. Attorney for criminal prosecution. In September 2009, Bezeredi pleaded guilty to one criminal count of mail fraud and admitted that he had targeted elderly victims with the telemarketing scheme.
The 2005 FTC case dealt in part with fraudulent bonds that Bezeredi sold to mostly elderly seniors. He falsely promised consumers that after buying the bonds, they would be entered into monthly drawings and that they were very likely to receive substantial cash winnings or receive regular cash payments.
Few, if any, consumers ever received such payments after buying the “bonds,” leading the FTC to charge Bezeredi with violating the FTC Act and the Telemarketing Sales Rule (TSR).
How it worked
The FTC said in 2005 that Bezeredi, through his Canadian telemarketing operation, contacted mostly elderly U.S. consumers, offering them the chance to invest in European bonds involving monthly cash prize drawings.
Telemarketers allegedly told consumers they were highly likely to receive regular cash winnings of at least $50 if they bought the bonds over the phone. At times, telemarketers called consumers more than once in an attempt to persuade them to send multiple payments for additional bonds.
Consumers who bought the “bonds” received a variety of documents on letterhead bearing a Hungarian address. The documents included a cover letter congratulating them for participating in the bond program and explaining the “value” of their membership program.
Consumers also received an information sheet stating that their bond purchase is registered with the “European Central Union Bank.”
Unfortunately, for the consumers who bought the “bonds,” there is no European Central Union Bank, and the European Central Bank, which sets monetary policy in the 12 European countries that use the Euro as legal tender, does not operate a prize bond program.
According to the FTC, consumers paid Bezeredi between $400 and $5,950 each to buy the foreign “bonds” his telemarketers were pitching. Most consumers who sent money received nothing of value in return.