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President of Telemarketing Fraud Business Pleads Guilty

October 31, 2009 By Paul (Founder, WorkAtHomeTruth) Leave a Comment

10/30/2009 Department of Justice Press Release via the FBI Website:

PHILADELPHIA—Neal D. Saferstein, 36, of Mount Laurel, NJ, pleaded guilty today to four counts of an indictment stemming from a multi-million dollar telemarketing scam that defrauded as many as 400,000 small businesses out of as much as $75 million, announced U.S. Attorney Michael L. Levy. Saferstein was the President and Chief Executive Officer of  GoInternet.net, Inc. (“GoInternet”), which did business at 20 N. Third Street, and 6 Strawberry Street, in Philadelphia. GoInternet allegedly derived more than $75 million in gross revenues from a fraudulent telemarketing scheme that lasted from 2001 to 2004. Co-defendant Tyrone L. Barr, 35, of Philadelphia, was Vice President of Customer Service and Regulatory Affairs. Co-defendant Billy D. Light, 41, of Voorhees, NJ, was Chief Information Officer. Saferstein pleaded guilty today to one count of wire fraud, one count of mail fraud, and two counts of filing false tax returns. Sentencing is scheduled for February 2010.

According to the indictment, the entire GoInternet business model was designed to defraud customers and potential customers into making monthly $29.00 payments for Internet-related services without their knowledge or authorization. GoInternet’s telemarketers duped customers into receiving a welcome packet without disclosing that the mailing would trigger monthly bills unless the customer called to cancel. The packets were then designed to look like bulk business mail to prompt it to be disregarded or thrown away. GoInternet engaged in “cramming.” It would place monthly charges on its customers’ local telephone bills, without authorization, which customers routinely paid without noticing. By approximately 2003, GoInternet employed over 1,000 telemarketers and was signing on approximately 7,500 new customers every week. By the end of 2003, GoInternet’s customer base included more than 350,000 businesses.

Saferstein prevented customers from receiving notices disclosing the cost of services, and delayed and prevented refunds from going to customers that had been defrauded and were promised refunds. Barr created fake sales-verification tapes which were purported to contain the telemarketer’s call to the customer and the customer’s consent. Barr pleaded guilty to wire fraud and is awaiting sentencing.

In 2003, the Federal Trade Commission brought a civil proceeding regarding GoInternet’s practice of billing consumers for services without their authorization, which resulted in a $58 million judgment being imposed against Saferstein and GoInternet. Light admitted that Saferstein directed him to testify falsely before the federal district court in Philadelphia during the FTC proceedings. Light pleaded guilty to conspiracy to commit perjury and is awaiting sentencing.

Saferstein also used GoInternet corporate funds as if they were in his personal bank account, paying for significant personal expenses. He also failed to report income from the years 2000 to 2003 allegedly exceeding $1.7 million. In addition, the indictment charges defendant Saferstein with failing to pay over to the Internal Revenue Service more than $2.8 million in payroll taxes while he ran GoInternet.

Saferstein faces a maximum penalty of 46 years’ imprisonment with a maximum fine of  $1 million.

Barr faces a maximum penalty of 20 years’ imprisonment with a maximum fine of $250,000.

Light faces a maximum penalty five years’ imprisonment with a maximum fine of $250,000.

The case was investigated by the Federal Bureau of Investigation, the Federal Trade Commission, the Federal Bureau of Investigation, the Internal Revenue Service and the U.S. Postal Inspection Service. It is being prosecuted by Assistant United States Attorneys Jennifer Arbittier Williams and Jason P. Bologna, and by FTC Special Assistant United States Attorney Larissa L. Bungo.

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FTC Urges Consumers to Cash Restitution Checks Mailed by Wachovia Bank

January 26, 2009 By Paul (Founder, WorkAtHomeTruth) 3 Comments

1/13/2009 FTC Press Release:

Checks Sent to More Than 740,000 Telemarketing Fraud Victims

Wachovia Bank, N.A., has mailed out over $150 million in restitution checks to more than 740,000 consumers who were victims of telemarketing fraud.

On December 11, 2008, the Office of the Comptroller of the Currency (OCC) announced that it had entered into an amended settlement agreement with Wachovia that directed the bank to issue these checks directly to victims. The checks reimburse consumers for funds deducted from their accounts by three payment processors that maintained accounts at Wachovia. See http://www.occ.treas.gov/ftp/release/2008-143.htm and http://www.usdoj.gov/usao/pae/News/Pr/2008/dec/wachoviapayoutrelease.pdf. In addition to the checks, consumers are receiving a claim form they may use to recover bank fees incurred as a result of the allegedly unauthorized debits to their accounts. See http://www.langergrogan.com/WachoviaRestitution.htm. The Wachovia restitution checks are legitimate, and the Federal Trade Commission urges consumers to cash them.

The OCC/Wachovia settlement addresses the use by the payment processors of remotely created checks, or “demand drafts,” processed through Wachovia on behalf of allegedly fraudulent telemarketers. The FTC previously sued two of the three payment processors (Your Money Access, LLC, and FTN Promotions, Inc., dba Suntasia Marketing, Inc. (Suntasia)), and the U.S. Department of Justice sued the third (Payment Processing Center, LLC). The FTC also has sued many of the telemarketers who worked with the three processors, including the following cases: 1) FTC v. Universal Premium Services, Civ. No. CV06-0849 (C.D. Cal.); 2) FTC v. Sun Spectrum Communications Organization, Inc., Civ. No. 03-81105 (S.D. Fla.); 3) FTC v. Xtel Marketing, Inc., Civ. No. 04C7238 (N.D. Ill.); 4) FTC v. 120194 Canada, Ltd., Civ. No. 1:04-cv-07204 (N.D. Ill.); 5) FTC v. Oleg Oks, Civ. No. 05C5389 (N.D. Ill.); and 6) FTC v. Frankly Speaking, Inc., Civ. No. 1:05-cv-60 (M.D. Ga.). The FTC’s press release on the Your Money Access complaint can be found at http://www.ftc.gov/opa/2007/12/yma.shtm, and the release on the Suntasia complaint can be found at http://www.ftc.gov/opa/2007/07/suntasia.shtm.

Wachovia mailed restitution checks to consumers whose accounts the processors debited with Wachovia’s assistance. The OCC/Wachovia agreement does not cover consumers whose accounts the processors debited using banks other than Wachovia. Consumers whose accounts Suntasia debited through other banks, however, will receive restitution as part of the FTC’s settlement with Suntasia (see press release at http://www.ftc.gov/opa/2009/01/suntasia.shtm).

The DOJ, OCC, and private class action counsel have set up a Web site and toll-free phone number to address any concerns and questions consumers may have, including questions regarding the validity of the checks they receive from Wachovia Bank. The Web site address is: http://www.restitutionpayment.com and the toll-free number is 1-866-680-6659. Consumers seeking more information can contact the Claims Administrator at: U.S. Court Settlement Administrator, P.O. Box 37765, Philadelphia, PA 19101-7765.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

MEDIA CONTACT:
Mitchell J. Katz,
Office of Public Affairs
202-326-2161
STAFF CONTACT:
Michelle Chua
Bureau of Consumer Protection
202-326-3248 (Your Money Access)

Bob Schoshinski,
Bureau of Consumer Protection
202-326-3219 (Your Money Access)

Todd Kossow or Rozina C. Bhimani,
FTC Midwest Region, Chicago
312-960-5634 (Suntasia)

(Wachovia.final.wpd)

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“Operation Tele-PHONEY” Defendant Settles Commission Charges

December 16, 2008 By Paul (Founder, WorkAtHomeTruth) Leave a Comment

Advance-Fee Telemarketer Prohibited from Misrepresenting Material Facts to Consumers

The Federal Trade Commission has successfully settled the second of 13 complaints brought as part of the multi-agency “Operation Tele-PHONEY” law enforcement sweep in May 2008 against deceptive telemarketers and the companies they operated throughout the United States.

In the settlement announced today, defendant Robert James Fischbach, who allegedly deceptively marketed advance-fee credit cards to consumers nationwide, has been prohibited from making the misrepresentations alleged in the complaint, and more broadly from violating the FTC Act and Telemarketing Sales Rule (TSR). The order also imposes a monetary judgment of more than $2.4 million, most of which has been suspended due to his inability to pay.

The FTC sued Fischbach and his two companies, Integrity Financial Enterprises, LLC, also doing business as (d/b/a) Infinite Financial and National Benefit Exchange; and National Benefit Exchange, Inc. According to the Commission’s complaint, defendant Fischbach and his companies, all based in Florida, used telemarketing to sell an advance-fee “credit card” that they claimed could be used like a Visa or MasterCard, but which actually could be used only to buy products from the defendants’ Web site or catalog. The defendants charged consumers who accepted the cards an up-front fee of between $200 and $300, and promised them they would receive a credit card with a credit limit of $2,500 to $7,500, as well as a $1,000 cash advance limit. The defendants also misled consumers into believing that they would honor consumers’ requests to cancel or change their orders to avoid the debiting of the advance fee from their bank accounts, but they never did so.

The court granted the Commission’s request for a temporary restraining order and asset freeze against Fischbach and the corporate defendants on May 13, 2008. The court also entered a stipulated preliminary injunction order against Fischbach and the corporate defendants on May 28, 2008.

The final court order entered against Fischbach contains both conduct and monetary relief. First, it permanently prohibits him from making any of the misrepresentations alleged in the complaint, including that consumers are being provided with a general-purpose credit card, that they can cancel their orders before their accounts are debited, and that such cancellation requests will be honored. More generally, the order prohibits Fischbach from making misrepresentations about any good or service, prohibits him from violating the TSR, prohibits him from selling any of his customer lists, requires him to cooperate with the FTC, and includes monitoring provisions to ensure his compliance with the terms of the order.

The order also contains a $2,461,574 judgment against Fischbach, representing the total amount of harm his illegal conduct caused consumers. Almost all of the judgment has been suspended based on his inability to pay, but Fischbach must surrender his rights to several thousand dollars of assets already frozen by the court. In addition, the full amount of the judgment will become due if Fischbach is later found to have misrepresented his or his companies’ financial condition to the FTC.

The Commission vote authorizing the staff to file the stipulated final judgment and order for permanent injunction against defendant Robert James Fischbach was 4-0. The documents were filed in the U.S. District Court for the Middle District of Florida, Tampa Division, on December 4, 2008, and approved by the Court on December 5, 2008.

The court action announced today settles the FTC’s charges against defendant Fischbach. On October 20, 2008, the court entered a default judgment against Fischbach’s companies. The default judgment requires the corporate defendants to pay $2,461,574 and to forfeit all of their assets, which total $15,895.94.

Combined with actions brought by other enforcement agencies, the “Tele-PHONEY” sweep encompassed more than 180 cases that included both civil and criminal actions in the United States and Canada. The FTC’s first settlement resulting from a “Tele-PHONEY” complaint came in September, when the agency secured a court order requiring another advance-fee telemarketer to turn over $1 million for consumer redress (see press release at http://www.ftc.gov/opa/2008/05/telephoney.shtm).

NOTE: Stipulated final judgments and orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the stipulated final judgment are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

MEDIA CONTACT:
Mitchell J. Katz,
Office of Public Affairs
202-326-2161
STAFF CONTACT:
Leonard L. Gordon, Director
Ann F. Weintraub or Robin Eichen, Attorneys
FTC Northeast Region, New York
212-607-2829
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