Feds Round Up Alleged Internet Scammers

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.


“Scams on the Internet spread very quickly,” said J. Howard Beales, director
of the FTC’s Bureau of Consumer Protection. “That’s why the FTC and our
partners are moving aggressively to shut these schemes down.”


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.

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