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.

Litigation Release No. 20816 / November 20, 2008

Securities and Exchange Commission v. Jaisankar Marimuthu, Chockalingam Ramanathan and Thirugnanam Ramanathan, Civil Action No. 8:07CV94 (D. Neb.)

OFFSHORE HACKER PERMANTLY ENJOINED FROM FUTURE VIOLATIONS OF THE FEDERAL SECURITIES LAWS

The United States Securities and Exchange Commission today announced that on November 19, 2008 Thirugnanam Ramanathan, a native of Chennai, India, and legal resident of Malaysia, consented to the entry of a final judgment permanently enjoining him from violating Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In a related criminal action, Ramanathan was sentenced to a two year prison sentence followed by three years of supervised release and an order requiring him to pay $362,247 in restitution. Based on the sanctions imposed in the criminal proceedings, the defendant was not ordered to pay disgorgement or a civil penalty.

In January 2007, Ramanathan was indicted by a federal grand jury in Omaha along with his brother Chockalingam Ramanathan and Jaisankar Marimuthu, also residents of Chennai. Marimuthu and Chockalingam Ramanathan were charged with one count of conspiracy, eight counts of computer fraud, six counts of wire fraud, two counts of securities fraud and six counts of aggravated identity theft. On May 25, 2007, Thirugnanam Ramanathan was arrested in Hong Kong and extradited to the United States. On July 2, 2008, Ramanathan pleaded guilty to one count of conspiracy to commit wire fraud, securities fraud, computer fraud and aggravated identity theft. Marimuthu is currently being detained in a Hong Kong prison awaiting extradition to the U.S. following his conviction there on similar offenses but related instead to the Hong Kong stock market. Chockalingam Ramanathan remains at large.

On March 12, 2007, the SEC filed a complaint in the United States District Court for the District of Nebraska charging all three Indian nationals with participating in a fraudulent scheme to manipulate the prices of at least fourteen securities through the unauthorized use of other people's online brokerage accounts.

The Commission's complaint alleges that, between July and November 2006, Jaisankar Marimuthu, Chockalingam Ramanathan and Thirugnanam Ramanathan hijacked the online brokerage accounts of unwitting investors using stolen usernames and passwords. Prior to intruding into these accounts, the defendants acquired positions in the securities of at least thirteen issuers and options on shares of another issuer. Then, without the account holders' knowledge, and using the victims' own accounts and funds, the defendants placed scores of unauthorized buy orders at above-market prices. After these unauthorized buy orders were placed, the defendants sold the positions held in their own accounts at the artificially inflated prices netting unlawful trading profits of at least $121,500. These transactions created the appearance of legitimate trading activity and pumped up the share price of the fourteen securities.

The Commission wishes to acknowledge the assistance and cooperation it received in bringing this case from the Computer Crimes and Intellectual Property section, Fraud section and Office of International Affairs in the Criminal Division of the Department of Justice, along with The United States Attorney's Office for the District of Nebraska, The Federal Bureau of Investigation, Omaha and Detroit offices and The Omaha office of Immigration and Customs Enforcement.

The Commission's Office of Investor Education and Assistance has previously issued an investor alert, available on the Commission's website, which provides tips to avoid becoming a victim of online intrusions. See http://www.sec.gov/investor/pubs/onlinebrokerage.htm.

For more information, see Litigation Release Nos. 20037 (March 12, 2007) and 20711 (September 9, 2008).

http://www.sec.gov/litigation/litreleases/2008/lr20816.htm

Fraud Cost Investors More Than $2 Billion

Press release from the U.S. Department of Justice:

WASHINGTON —A federal jury today convicted Lance K. Poulsen, former president, owner and chief executive officer of National Century Financial Enterprises (NCFE) of conspiracy, fraud, and money laundering, Acting Assistant Attorney General Matthew Friedrich of the Criminal Division and U.S. Attorney Gregory G. Lockhart for the Southern District of Ohio announced. The charges stemmed from a scheme to deceive investors about the financial health of NCFE that cost investors more than $2 billion. The company, which was based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November 2002.

The Columbus, Ohio, jury convicted Poulsen, 65, after a four-week trial on all 12 charged counts contained in a July 2007 superseding indictment, including one count of conspiracy, six counts of securities fraud, one count of wire fraud, one count of money laundering conspiracy, and three counts of concealment money laundering.

At trial, witnesses testified that Poulsen engaged in a scheme from 1995 until the collapse of the company to deceive investors and rating agencies about the financial health of NCFE and how investors’ money would be used. NCFE bought accounts receivable from healthcare providers using money NCFE obtained through the sale of asset-backed notes to institutional investors, including pension funds, insurance companies and churches.

Evidence at trial showed that NCFE misused investors’ money and made unsecured loans to health care providers, including those owned in whole or in part by Poulsen and other owners. Former employees testified that Poulsen and other NCFE executives covered up the fraud by lying to investors and ratings agencies. The government presented evidence that Poulsen and others created investor reports containing fabricated data, and moved money back and forth between programs, in order to make it appear that NCFE was in compliance with its own governing documents. Evidence showed that Poulsen knew the business model NCFE presented to the investing public differed drastically from the way NCFE did business within its own walls.

“Today’s conviction closes another chapter in the long effort to bring former NCFE executives to justice for deceiving investors,” said Acting Assistant Attorney General Matthew Friedrich of the Criminal Division. “The Department will continue to hold accountable those corporate executives who misrepresent a company’s financial health and then leave the public to pick up the pieces.”

“Poulsen and others made millions of dollars in unsecured loans to companies they owned,” U.S. Attorney Lockhart said. “Their actions were designed to hide a financial house of cards from investors, eventually costing investors $2 billion.”

“The IRS, along with our law enforcement partners, will vigorously pursue corporate officers who victimize their investors and violate the public trust,” said Internal Revenue Service (IRS) Criminal Investigation Special Agent in Charge Jose A. Gonzalez. “Today's verdict demonstrates the government's determination to restore and ensure that trust.”

FBI Cincinnati Special Agent in Charge Keith L. Bennett stated, “The FBI notes that today's convictions are the culmination of a six year investigation which included the review of millions of pages of financial documents by federal investigators. The resolve of this cooperative effort demonstrates that the FBI and other law enforcement will not permit a few corporate executives to hijack our financial system for personal gain.”

The maximum penalty for each count of concealment money laundering, money laundering conspiracy and wire fraud is 20 years in prison and a $500,000 fine. The securities fraud and conspiracy charges are each punishable by up to five years in prison and a $250,000 fine. A sentencing date has not been set.

Poulsen, the sixth NCFE executive convicted in connection with the fraud, has been in custody since he was arrested on Oct. 17, 2007, on charges of witness tampering. A jury convicted him of conspiracy, witness tampering and obstruction on March 26, 2008, and Poulsen was sentenced to ten years in prison on those charges.

On March 13, 2008, five former NCFE executives were found guilty for their roles in the scheme to defraud investors. Donald H. Ayers, of Fort Myers, Fla., an NCFE vice chairman, chief operating officer, director, and an owner of the company, was found guilty on charges of conspiracy, securities fraud, and money laundering. Rebecca S. Parrett, of Carefree, Ariz., an NCFE vice chairman, secretary, treasurer, director, and an owner of the company, was found guilty on charges of conspiracy, securities fraud, wire fraud, and money laundering. Randolph H. Speer, of Peachtree City, Ga., NCFE’s chief financial officer, was found guilty on charges of conspiracy, securities fraud, wire fraud, and money laundering. Roger S. Faulkenberry, of Dublin, Ohio, a senior executive responsible for raising money from investors, was found guilty on charges of conspiracy, securities fraud, wire fraud, and money laundering. James E. Dierker, of Powell, Ohio, associate director of marketing and vice president of client development, was found guilty on charges of conspiracy and money laundering.

The case was prosecuted by Assistant U.S. Attorney Douglas Squires of the Southern District of Ohio, Senior Litigation Counsel Kathleen McGovern and Trial Attorneys Leo Wise and N. Nathan Dimock of the Criminal Division’s Fraud Section, with assistance from Fraud Section Paralegal Specialist Sarah Marberg, FBI Agents Matt Daly, Ingrid Schmidt and Tad Morris, IRS Special Agents Greg Ruwe and Mark Bailey, U.S. Postal Inspector Dave Mooney and Immigration and Customs Enforcement Agent Celeste Koszut.

R. Alexander Acosta, United States Attorney for the Southern District of Florida, Michael E. Yasofsky, Jr., Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division, and Jonathan I. Solomon, Special Agent in Charge, Federal Bureau of Investigation, announced today that defendant Jeffrey Jedlicki , 38, of Delray Beach, FL, was sentenced by the U.S. District Court Judge Kenneth A. Marra to 48 months’ imprisonment, to pay $6,029,279 in restitution.  In August, Jedlicki pled guilty to an Information charging him with conspiring to commit mail and wire fraud and to defraud the United States.

According to the Information, court documents, and statements made in court, while working at multiple boiler rooms throughout South Florida, Jedlicki mislead investors into investing in foreign currency options.  Jedlicki falsely told investors that they could expect to make high profits while being exposed to little risk.  Jedlicki, however, knowingly failed to tell the investors that over 95% of those who had invested with him had lost their money and that he had been previously barred from acting as a broker by the National Futures Association.

In addition to misleading investors, Jedlicki failed to report to the Internal Revenue Service nearly  $1 million in income he had earned during tax years 2003 and 2004.  Jedlicki would divert his salary and commissions to a newly created corporation, and then falsely deduct as business expenses his personal expenses, including payments for his car, credit card bills, and meals.

Mr. Acosta commended the investigative efforts of the Internal Revenue Service, Criminal Investigation Division, and Federal Bureau of Investigation.  This case is being prosecuted by Assistant United States Attorney Jeffrey A. Neiman.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls.   Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov/ or on http://pacer.flsd.uscourts.gov/.