PHOENIX (CN) - Arizona telemarketers defrauded nearly 5,000 people, many of them elderly, of $6.3 million in a scam that used victims' credit-card limits to determine how much to charge them for setting up a "web mall" from which they allegedly would get commissions, the Arizona attorney general says. Telemarketers exchanged notes on their victims such as "'Old dude, has no clue' and 'living on social security,'" according to the complaint.
Four Arizona LLCs and 11 Arizonans who live in or around Phoenix are the defendants. Christopher Lewallen and James Lewallen Jr. are the lead individual defendants. They ran defendants Solid Ad Solutions, Solid Tech Solutions, Freedom Billing, and E-Web Financial.
E-Web Financial and Freedom Billing "made illegal telemarketing calls to consumers offering them a home-based business opportunity" through setting up an Internet "web-mall," Attorney General Tom Horne says in Maricopa County Court.
The defendants promised their victims "a business coaching program that would show them how to successfully operate their business," and promised to "buy the program back at the end of one year 'if for some crazy reason you don't make your investment back,'" according to the complaint.
"Once a consumer agreed to purchase the 'web-mall' the charges to their credit card were immediately processed," the state says.
The telemarketers "completed an order form with each successful sale stating the names of the opener and closer, the price paid, the package ordered, contact information and notes about the consumer to assist the upsell defendants in making further sales." The telemarketers then passed on the information to Solid Ad Solutions and its successor, Solid Tech Solutions, according to the complaint.
"These notes included statements like, 'Has 9K available on this card today,' 'BACK END CHA-CHING!! YOU ARE WELCOME!' 'Old dude, has no clue' and 'living on social security.'"
Telemarketers from Solid Ad or Solid Tech then called the customer back, claiming to be the business coach, and would offer website advertising and website traffic for $500 to $33,400 based on the available balance on the consumer's credit card.
The defendants encouraged victims to buy the program by "promising that they would soon be able to use the proceeds of their internet business to pay back the amount charged to their credit cards," according to the complaint.
However, "Once payment was made the 'coaches' became unavailable to consumers," the state says. "The contract offered by Solid Ad Solutions and Solid Tech Solutions gave consumers only three days to cancel, purposely confusing consumers who believed they were entitled to the 30, 60, or 90 day to a year cancellation policy offered by defendants E-Web Financial and Freedom Billing."
Horne says the web sites were "amateurish," and the "web traffic or 'hits' directed to the sites was purchased in bulk, generated by computers automatically scrolling through websites and not made up of actual consumers."
The state adds then when someone did buy something from a "web-mall," the victims were not paid commissions and attempts to get refunds were "stonewalled." Victims were transferred to "very aggressive sales representatives who talked them out of canceling or convinced them to wait for their 'first quarter commission check' or 'until after the Christmas shopping season,' knowing full well that the consumer would then be past the allowable cancellation period and well past the dispute deadline with their credit card," Horne says.
The defendant companies promised that their victims would make $1,000 to $2,000 a month to $3,000 to $7,000 per month, and that 3.9 percent of "web-mall" visitors would buy something, the complaint states.
Horne seeks restitution, an injunction and $10,000 for each violation of the Arizona Consumer Fraud Act.
The family relationship, if any, between Christopher Lewallen and James Lewallen Jr. is not stated in the complaint. Defendant Denise Lewallen is James' wife.
Defendant Lisa Shepard Angelini was office manager.
Defendant Anthony Angelini is Lisa's husband.
Defendant Forrest T. Anderson was the manager and sole member of E-Web Financial from 2008 until it dissolved in 2010.
Defendant Matthew A. Porterfield was operations director of E-Web Financial.
Defendant Cody A. Tolbert was a manager and salesman for E-Web Financial, and worked as a closer for other telemarketers.
Defendant Andrew L. Hepfinger, aka Brandon Sheridan, was a telemarketer and salesman, as was defendant Paul J. Therianos.
Defendant Melissa Therianos is Paul's wife.Follow @jamierossCNS
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.