Feds Round Up Alleged Internet Scammers
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Nineteen civil and criminal law enforcement actions were announced Tuesday by federal, state and local law enforcement agencies against scamsters in the Midwest and West who allegedly bilked Internet users out of amounts running into the millions of dollars.
Agencies involved include the Federal Trade Commission, the Federal Bureau of Investigation, U.S. Postal Inspection Service, Securities and Exchange Commission and the Commodity Futures Trading Commission, as well as 10 state attorneys general and 11 other state and local law enforcement agencies.
Scams targeted included securities fraud, auction fraud perpetrated at both eBay and Yahoo, and one of those common "make money at home stuffing envelopes" deals that was promoted via spam and Web site advertising.
A "discount" Web services operation also was targeted, accused of cramming unauthorized charges onto consumers' credit cards for supposed "excess bandwidth" use.
One conviction was announced, a Missouri case involving Phillip Chapman and Amanda Warren. Chapman was sentenced May 17 to 12 years in prison and Warren was sentenced June 28 to 12 years in prison for, among other things, Internet auction fraud (7 years for stealing by deceit -- charges related to Internet auction fraud -- and 5 years for bad check charges).
The FTC said that the envelope stuffing scam required consumers to pay $40 in exchange for the defendants' promise to provide sales letters and pre-stamped, pre-addressed envelopes. Consumers were told they would earn two dollars for every envelope they stuffed. One of the sites was called Stuffingforcash.com. Other defendants include National Home Employment Services.
Consumers who sent their money didn't receive envelopes. If they received anything -- and many didn't -- they got materials urging them to solicit self-addressed envelopes from third parties and forward them to the defendants. At the request of the FTC, a U.S. district court judge prohibited the defendants, including Stuffingforcash and a host of individuals in the Illinois area, from engaging in further deceptive practices and froze their assets, pending trial.
In the Web services case, the FTC alleged that the defendant, Brian Kruchten, doing business as Page Creators in Minnesota, put unauthorized charges onto consumers' credit cards. At the FTC's request, a district court froze the defendant's assets. Kruchten agreed to a settlement that bars him and his companies from billing consumers without their authorization and from representing that consumers are obligated to pay for any Internet service they did not authorize.
The settlement also bars Kruchten, for five years, from owning or controlling any business that handles consumer credit or debit card transactions, unless he first obtains a performance bond of $100,000.
Another case involved Stephen Alan Pierce, individually and Rapid Fire Swing Trading and The Chart Traders, the FTC said. The complaint alleged solicitation fraud in the sale of trading recommendation services over the Internet
A list of the actions is available here.